Should Amazon rent out its Just Walk Out tech?
Amazon.com is “in talks” to bring the Just Walk Out technology it uses to support its Amazon Go stores to OTG’s CIBO Express stores at airports and Cineworld’s Regal cinemas, sources told CNBC. Amazon is also exploring deals with concession stands at stadiums and baseball parks.
Amazon sees the potential to have “hundreds” of third-party locations using its check-out free technology by the end of 2020.
The two purposes of the move for Amazon are said to be:
- Reducing its reliance on online shopping by expanding its brick-and-mortar presence at a faster pace and lower commitment than building its own stores;
- Supporting Amazon Web Services (AWS) and other services by forming bonds with companies that would ordinarily consider Amazon competition.
The move would also enable Amazon to further test its cashierless technology amid reports that the pace of Amazon Go openings — 16 current locations — has gone slower than planned.
The CNBC report also indicated that only Seattle, Amazon Go’s first location that opened in January 2018 on Amazon’s campus, is profitable. The heavy infrastructure costs, including sensors and cameras to track what shoppers pick up, has been raised as a concern for the Go locations.
While Amazon is seen having a lead over most others, selling its Just Walk Out technology to others will face competition from Microsoft, a slew of technology start-ups, as well as homemade solutions from Walmart, 7-Eleven and others.
A bigger priority may be making retailers more comfortable signing up for AWS, the biggest contributor to Amazon’s bottom line. AWS, which controls about half of the cloud computing space, works with many suppliers to retailers but apparently few retailers themselves due to competitive concerns. Microsoft Azure clients in the retail space include Walmart, Walgreens, Kroger and Gap. Target in 2018 moved from AWS to Google Cloud.
A list of clients highlighted on AWS’ retail solutions website page includes Sainsbury, but largely it is fashion retailers selling their own brands that use the service, including Fast Retailing (the parent of Uniqlo), Levi’s, Lululemon and Tapestry.
- Amazon Eyes Cinemas, Airports for Cashierless Checkouts – CNBC
- Amazon To Expand Amazon Go Tech To Other Retailers – PYMNTS
- Amazon reportedly wants to put its Go cashierless technology in Regal theaters and other stores – The Verge
- Here is a List of Cashierless Tech Companies Gunning for Amazon Go – The Spoon
- AWS Retail – Amazon.com
- Is Amazon Go heading for a hard stop? – RetailWire
- Has Amazon figured out how to scale its Go cashier-free tech to bigger stores? – RetailWire
- Amazon Go goes live – RetailWire
DISCUSSION QUESTIONS: What do you see as the biggest motivation behind Amazon’s reported exploration of leasing its Go technology? Will the wariness of third-party retailers to work with Amazon get in the way of large scale rollouts?
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17 Comments on "Should Amazon rent out its Just Walk Out tech?"
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Founder, CEO & Author, HeadCount Corporation
While Amazon’s stated goal of diversifying revenue streams by offering Go technology to other retailers seems reasonable, I wonder if there are not additional motives – like acquiring even more data on shoppers’ behaviors and preferences. It’s not lost on anyone that the insights that can be extracted from the massive amount of data that Go-enabled stores can acquire could very well be used by Amazon to refine their own offerings, putting other retailers at a disadvantage. I think retailers are right to be skeptical and cautious in their dealings with Amazon as it tries to strike a delicate balance between service provider and competitor to retailers.
Principal, Retail Technology Group
Unless retailer renters of the technology stipulate in their contracts with Amazon Go that data processed by Amazon is not usable by Amazon, but only by the retailer renting the technology.
Founder, Branded Ground
Agreed Bob. They’ll make it cheap, easy and efficient. And any retailer that buys into it is basically letting the fox in their hen house. Amazon is never about just income–but they are ALWAYS about data. As my mom always said, “actions speak louder than words”…and their actions have been loud and clear.
Managing Director, GlobalData
In many ways this makes sense. Allowing third parties to use the technology brings in additional revenue and also allows Amazon to learn more about and invest more in the systems it is developing. I also wonder whether Amazon would retain rights to use data that the technology gathers: that would be extremely lucrative.
Chief Amazement Officer, Shepard Presentations, LLC
The obvious motivation behind Amazon leasing Go technology is another stream of income. This is a great opportunity to capitalize on the investment Amazon has made by “sharing it” (with a fee, of course) with others who can’t afford to create their own version of it. Amazon is smart to diversify their deliverables, especially when it is synergistic to what they are known for, which is retail.
Director, Retail Market Insights, Aptos
Retailers, beware the latest Trojan Horse from Amazon! In exchange for their (cumbersome, expensive and high-maintenance) cashierless technology, you will be giving Amazon revenue for AWS, and access to all your shopper data!
Founder | CEO, Female Brain Ai & Prefeye - Preference Science Technologies Inc.
Stadiums and movie theaters equate to very handy access to millions and millions of faces over time. Another prong into everyday life — Amazon facial recognition technology now scanning everywhere! Describing Amazon as a competitor seems sort of silly considering the vast depth of individual intelligence Amazon has acquired about almost every aspect of our personal lives, including how we think. AI on steroids. Privacy is so old school. Alexa are you listening?
Principal, Retail Technology Group
The question is: Is there more money for Amazon in renting the technology – as in the AWS case – or in keeping it to itself as long as possible in an effort to keep the competitive advantage?
Global Industry Architect, Microsoft Retail
Strategy & Operations Transformation Leader
Carryout As A Sevice (CAAS), has a nice ring to it and could become the next AWS services extension for Amazon. We have all seen the reports of thousands of Amazon Go stores opening up in the near future, however, it appears as though Amazon is taking a conservative approach.
Just as retailers are leveraging Amazon’s online marketplace as another channel in a frenemy-like relationship, we live in a world where Amazon’s reach in the U.S. extends well beyond online shopping. For convenience-focused retailers, why recreate the wheel of a cashierless model if Amazon is already working on perfecting this? Retailers should tread carefully, as they would enable Amazon to have access to their customer insights and transactions.
Amazon, with its focus on diversification, could potentially have another significant revenue stream on their hands if this becomes a reality.
Chairman Emeritus, Relex Solutions
It’s interesting that just as we hear that the Amazon roll out of its Go stores is going slower than expected we now see them considering leasing their technology to other retailers. Is that because they are finding traditional retail hard and would prefer others to do the hard work while they remain a technology business? Do they want to have others finance and debug their technology or is it that they just want to increase the use of AWS that is profitable for them?
The article says it all. They are competition to other retailers and they are not trusted as such. Why should any retailer queue up to assume the very high costs of their Just Walk Out technology to provide even higher profits for AWS? There is a reason Amazon have slowed their stores program. Let’s not kid ourselves that they are now doing this out of the goodness of their hearts to help other retailers.
Chief Marketing Officer, Impact 21
Leasing the technology would get it in the marketplace faster. Amazon certainly has the money, so it sounds like Amazon is struggling with store build-out red tape – permitting, etc. However, if Amazon is struggling with store profitability, I am wondering how they can make the lease price attractive enough for other companies to want to use it versus waiting for a cheaper solution (prices will come down) from a less competitive provider like Microsoft.
CEO, President- American Retail Consultants
Amazon’s goal of renting out its Just Walk Out technology is clearly to grow Amazon Web Services (AWS) or its “cloud” offering. Amazon’s own efforts to make the Just Walk Out technology profitable, and failing, demonstrate that it is not a reasonable effort for any retailer to use it. Frankly, it is a solution that is looking for a problem — at any cost. Most retailers will see this from the beginning and will opt for less costly, (i.e. more profitable) solutions from less competitive alternatives. This is a very expensive solution that has been tested and failed at offering profitable solutions at retail. Why would anyone else want to utilize this?
Retail Transformation Thought Leader, Advisor, & Strategist
Content Marketing Manager, Surefront
Amazon Go technology is barely usable by Amazon itself, much less ready to be rented out to the highest bidder. I’d argue that “just walk out” tech that doesn’t work correctly and results in alarms sounding and “staff” running over to ensure nobody is stealing is much more stressful than just purchasing from an associate in the first place.
Grab and go technology definitely has potential, but until it lives up to it I consider the concept more of a deterrent than a draw.
Retail and Customer Experience Expert
Good deal for Amazon who is ultimately a tech service provider. Would be curious to see the fine print on who has access and owns the data generated by these systems, as other panelists point out, the data is worth more than the system.
Vice President, Research at IDC