Amazon Expands Sales of Its Cashierless Tech, While Scaling Back Itself

(Bloomberg Businessweek) -- Almost a decade ago, Amazon.com Inc. leased a space at the base of a luxury apartment building in Seattle’s Capitol Hill neighborhood to build what was supposed to be its first retail store. The company outfitted it with technology that, it said, would allow people to purchase items by plucking them from the shelves and leaving without stopping at a cashier. Amazon called the system “Just Walk Out.”.When the store opened on the eve of the coronavirus pandemic, it was a 10,437-square-foot demonstration of the retailer’s technological prowess and its ambition to reshape how people shop in the physical world. But Amazon quietly shut it down in April. The company also plans to strip the cameras and shelf sensors from the two dozen Amazon Fresh grocery shops in the US that use Just Walk Out, replacing them with so-called smart shopping carts, which operate as wheeled self-checkout machines..Battered by headlines describing a retreat from a technology that Amazon founder Jeff Bezos had personally helped steer, the company now says it plans to put the same system it’s removing from some of its own stores into at least 120 additional stores run by other retailers by the end of the year. “We’re going to have way more stores and way more successful launches,” says Jon Jenkins, vice president of Just Walk Out. The company has also told employees the technology is on a “path to profitability,” according to people familiar with the matter who asked not to be named discussing internal communications..The moves confirm what analysts and rival retailers have long suspected: Amazon is giving up on an ambitious rollout of the technology for its own use and instead will focus on licensing it to other retailers. Under Andy Jassy, Bezos’ successor as chief executive officer, Amazon has been cutting costs and scrutinizing investments, laying off workers even in prized, long-term research and development-heavy initiatives like the Alexa digital assistant and a would-be drone-delivery program. Jassy has wooed Wall Street by focusing on profitability and speed in getting packages to people. In some areas, he’s positioned Amazon as a company that sells services—advertising and other tools to independent sellers, say—rather than taking on the full risk of running a business itself..Amazon started developing Just Walk Out in the early 2010s, when the company was gliding toward dominance in its core business and Bezos encouraged lieutenants to tap new markets. The company saw the potential to help its march into physical retail by deploying increasingly sophisticated computer vision software that could learn from patterns in customer behavior..For Bezos and other executives, who watched as Amazonians piled into the few overcrowded lunch spots around the company’s bustling Seattle headquarters, the tech offered a particularly tantalizing possibility: It could eliminate the checkout line entirely..In 2018 the first Amazon Go store opened in an 1,800-square-foot space at the base of the company’s new headquarters in Seattle. It was heralded as a marvel. Amazon considered plans for thousands of stores, and executives envisioned a Starbucks-like proliferation. The 10,000-square-foot grocery store finally opened in the Capitol Hill apartment building in early 2020, a sign the technology was capable of identifying produce and other loose items, opening the door to Amazon someday equipping a cavernous 55,000-square-foot suburban grocery store. “There’s no such thing as size constraints” on the system, Dilip Kumar, one of the team’s founding executives, said at an Amazon trade show around that time..The apparent magic behind the technology helped paper over a reality that had worried some early engineers: The costs of adding depth-sensing cameras and shelf sensors to the low-margin business of selling snacks and sandwiches could be justified only in places that attracted heavy shopper volume. Foot traffic in Go’s initial cities—central business districts in Chicago, New York, San Francisco and Seattle—cratered during the pandemic. Amazon closed eight stores in 2023. Today it operates 20 Amazon Go convenience stores in the US, and 20 more in greater London under the Amazon Fresh brand. The few openings in recent years have been a new style of suburban markets around Los Angeles and Seattle, slightly larger convenience stores with made-to-order sandwiches and frozen yogurt..Another thing that wasn’t obvious was how Amazon employed humans as a check on the system, both to improve the software and to adjudicate cases where algorithms weren’t sure which product someone had grabbed. This work would come to be done in India, where employees reviewed video footage of people shopping, identifying for the system where a human hand entered a shelf, say, or which brand of soda someone took, says one person who did that work. That’s a common practice in technology development, an open secret that applies to most products marketed as artificial intelligence. “It’s not magic,” the person says. “They are working toward creating the magic.” Amazon says that it uses its human reviewers mostly to train its system, and that only a small percentage of individual shopping trips are reviewed for accuracy..Current and former employees, who requested anonymity to discuss internal matters, describe working on Just Walk Out as a build-the-plane-while-flying-it culture, with engineers rushing to keep pace with executives’ ambitions while also pushing down costs. At one point, a team was spun up to see if it could build a version of the system from scratch using a small fraction of the sensors. Another team succeeded in building homegrown networking infrastructure to get around expensive, off-the-shelf components from vendors. Hardware engineers sought economies of scale that didn’t pan out because Amazon’s orders were too small, even as the store count passed 100..By the time it began opening large, conventional grocery stores in 2020, Amazon had hedged its bets. Some of the new stores would get Just Walk Out cameras and sensors, while others would come with the smart carts, known as Amazon Dash Carts..In a little-noticed 2022 reorganization, Amazon also moved the teams that built Just Walk Out from its retail division and assigned them to Amazon Web Services, the cloud unit that sells computing services to other companies. The change assured competing retailers that Just Walk Out was a potential partner, not a rival. It also signaled that Jassy and Amazon brass viewed the technology foremost as a service it could sell externally, not limited to a single product like Amazon Go..Internally, employees working on the project knew for more than a year that Just Walk Out’s days were numbered in Amazon’s biggest grocery stores..Tony Hoggett, Amazon’s grocery chief, confirmed in an interview with the published in April that new and updated Amazon Fresh grocery stores would come with smart carts and old-school self-checkout, not overhead cameras. The week that news became public, hundreds of employees from Amazon’s Physical Retail Technology team were laid off. One Just Walk Out employee says the cuts would shelve most of the research and development in their unit. Teams working on Amazon’s Dash smart cart, as well as a newer initiative to use radio-frequency identification tags for goods like apparel, were spared. Amazon says hundreds of engineers are still dedicated to the project, and Jenkins dismissed the idea that the company was abandoning research and development..Teams trying to sell Just Walk Out to other retailers found few takers in the grocery aisle but have built a growing franchise with retailers operating in settings where shoppers are pressed for time, such as basketball arenas and airport terminals. It helps that those tend to be places where people have been conditioned to expect big markups. The biggest user of the technology is Compass Group Plc, which operates more than 40 Just Walk Out-equipped locations at stadium and entertainment concessions, university canteens and other storefronts..Jenkins, who’s in his second stint at Amazon after leading technology teams at the company in the early 2000s, says Just Walk Out followed a typical pattern at Amazon in which engineers try to nail a basic concept, then see how far they can push it. “It’s kind of like, ‘OK, well, we know the extent of the technical capabilities,’” he says. “‘Now, where does it fit from a business standpoint?’”.More stories like this are available on bloomberg.com.©2024 Bloomberg L.P.

Amazon Expands Sales of Its Cashierless Tech, While Scaling Back Itself

The company is cutting back on the “Just Walk Out” tech in its own grocery locations.

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