In recent years, Amazon has been at the forefront of innovating how people shop. One of its most ambitious ventures was the development of cashierless technology, something that seemed straight out of science fiction. The idea was simple: eliminate the checkout process altogether. Customers could walk into a store, grab what they wanted, and simply leave, without waiting in line. This revolutionary concept was launched under the banner of Just Walk Out technology in Amazon Go stores.
But now, Amazon is pivoting its approach. The company is no longer focusing on rolling out cashierless technology in its own stores, instead choosing to sell this innovation to third-party retailers. It’s a strategic move that highlights Amazon’s evolving priorities, especially amidst changing market conditions.
The Origins of Cashierless Technology
In 2012, Amazon founder Jeff Bezos was asked by TV host Charlie Rose if Amazon had any plans to move into the realm of physical retail stores. At that time, Bezos dismissed the idea of simply imitating existing brick-and-mortar setups, saying, “We want to do something that’s uniquely Amazon.”
Fast forward six years, and Amazon launched Amazon Go, the first of its kind, a store where customers could walk in, pick up items, and leave without ever interacting with a cashier. It was a bold concept that leveraged cutting-edge technology, including cameras, sensors, and machine learning, to track what customers placed in their carts. Just Walk Out technology was born, and Amazon had high hopes for its widespread adoption. Soon, the technology was rolled out to other Amazon stores like Amazon Fresh and Whole Foods.
The Technology Behind Amazon’s Just Walk Out
The Just Walk Out system works by using an array of ceiling-mounted cameras and shelf sensors to track items customers pick up and put down. There are no checkout counters or human cashiers involved in the process. The technology is based on computer vision, machine learning, and sensor fusion. The system can tell exactly what customers have taken and charge them automatically as they leave the store.
When it launched in 2018, this technology caused shockwaves across the retail industry. Competitors like Walmart began exploring similar cashierless systems, hoping to keep up with Amazon’s innovation. However, as it turned out, implementing such a system was far from easy.
Challenges of Scaling Cashierless Tech
Despite its potential to revolutionize retail, scaling cashierless technology like Just Walk Out presented numerous hurdles. One of the biggest challenges was the cost of setting up the technology in stores. Outfitting a store with the necessary cameras, sensors, and software was incredibly expensive.
Industry experts, like Jordan Berke, CEO of retail consulting firm Tomorrow, pointed out that the initial investment for a 40,000-square-foot supermarket could run between $10 million and $15 million. For retailers, that’s a huge financial commitment, especially when weighed against the potential risks of the technology not being fully embraced by customers or operational issues arising.
Even for Amazon, the venture required massive investment. According to Berke, in 2019 and 2020, Amazon spent approximately $1 billion per year on research, development, and capital expenditures to refine and scale the Just Walk Out system.
Pivoting Towards Third-Party Retailers
Given the high costs and the slow rollout, Amazon made a significant shift in its strategy. In April 2024, Amazon announced that it would no longer implement cashierless checkout in its U.S. Fresh stores and Whole Foods locations. Instead, it would deploy Dash Carts, a more straightforward technology that allows customers to skip the checkout line by tallying items as they’re placed in the cart.
But while Amazon scaled back its own ambitions for cashierless tech in its stores, it began focusing on selling the technology to other retailers. This was a familiar strategy for Amazon, one that it had successfully employed with other ventures like Amazon Web Services (AWS). Just like AWS was built to handle Amazon’s internal infrastructure but later expanded to become a profit center by selling to other companies, Just Walk Out technology is now being sold to third-party retailers.
More than 200 stores have already adopted Amazon’s Just Walk Out system, and the company expects that number to double by the end of the year. The technology has been especially popular in stadiums, airports, and hospitals, where speed and convenience are critical. One store at Seattle’s Lumen Field, home to the NFL’s Seahawks, reported an impressive 112% increase in sales last season after implementing Just Walk Out, with 85% more transactions during games.
Why Amazon Made the Shift
One reason for Amazon’s pivot is its changing financial strategy under CEO Andy Jassy. Since taking the helm, Jassy has emphasized cost-cutting measures in response to macroeconomic conditions. The decision to scale back on its own cashierless stores is part of a broader effort to optimize Amazon’s operations.
Moreover, it’s clear that the long-term success of cashierless technology lies in third-party adoption. There are simply more retail stores owned by others than by Amazon itself. As former Amazon Vice President Jon Jenkins pointed out, “There will always be more third-party stores in the world than there will be first-party stores.”
This move also helps Amazon avoid some of the concerns retailers may have about trusting a direct competitor with their valuable shopper data. By moving the Just Walk Out team under the AWS umbrella, Amazon is signaling that it’s serious about being a technology provider rather than a rival to brick-and-mortar stores.
The Cost Conundrum
One of the biggest hurdles to the widespread adoption of cashierless tech has been the initial costs involved. For many retailers, the idea of investing $10 million to $15 million to create a computer vision-based checkout system is a tough sell, especially with the relatively thin profit margins in the grocery industry.
In response, many retailers, including Walmart and Kroger, have opted for simpler, more cost-effective solutions like mobile checkout apps or connected shopping carts. Target and Dollar General have even reconsidered self-checkout entirely due to rising theft rates, opting to add more traditional checkout lanes instead.
A Long Road Ahead for Cashierless Tech
While Amazon has made strides in pushing cashierless technology, there’s still a long way to go before it becomes ubiquitous. As Sucharita Kodali, a retail analyst at Forrester Research, noted, it will take years for the technology to gain widespread adoption, even with Amazon’s backing. The challenge is not only getting retailers on board but also ensuring that shoppers feel comfortable with the system.
Kodali believes that the shift towards cashierless checkout is inevitable, but patience will be required from investors and retailers alike. Much like any revolutionary technology, it will take time for the market to adjust, for the tech to improve, and for customers to fully embrace the idea of skipping the checkout line altogether.
Amazon’s Future in Retail Technology
Amazon’s decision to pivot from deploying cashierless tech in its own stores to selling it to third-party retailers is a clear sign of the company’s priorities. It’s no longer about dominating the physical retail space. Instead, Amazon sees itself as a technology provider, selling the tools that will shape the future of shopping.
The success of Just Walk Out technology, much like AWS, hinges on widespread adoption by other businesses. And while it may take time, Amazon’s track record suggests that it’s willing to play the long game. If Just Walk Out technology can follow in the footsteps of AWS, it could become another major pillar in Amazon’s vast empire.
