- Amazon announced on Monday that it will start selling its cashierless store technology used in Amazon Go stores to other retailers.
- But retail experts told Business Insider that Amazon still hasn’t answered some important questions about its new service.
- It’s still unclear how exactly Amazon plans to use the shopping data it collects or how it will protect personal data, experts say.
- The biggest question, however, may be just how useful cashierless technology really is.
- Visit Business Insider’s homepage for more stories.
Amazon said on Monday it will start selling the cashierless store technology it uses in its Amazon Go stores to other retailers.
Called “Just Walk Out” technology, the system allows shoppers to buy things without having to check out and pay with a cashier. Instead, shoppers just enter the store, pick whatever they want off store shelves, and walk out of the store — and their credit card is automatically charged.
While the new technology is generating lots of buzz because of its wow-factor, retail experts say there are still some major unanswered questions that Amazon needs to address if it wants other retailers to adopt the technology. These are the main questions about Amazon’s cashierless store tech that could determine how soon it turns up at your local corner store:
Amazon said on Monday that it’s only collecting the data needed “to provide shoppers with an accurate receipt.” But it didn’t specify how exactly it’s going to use other more sensitive data it collects. That includes not just purchase data, but also in-store shopper behavior and inventory levels throughout the day that retailers don’t like to share with others, much less a competitor like Amazon.
Stephen Beck, managing partner of business consultancy cg42, told Business Insider that it’s important to know what kind of “wall” Amazon is putting between the team that runs the cashierless system and the rest of the company. Without clear guidance on this issue, most major retailers will have misgivings about using the technology.
“If I were a retailer, this is the question that would be top of mind because I wouldn’t want to give Amazon more intelligence than they already have,” said Beck. “They’ve only answered it through the lens of the consumers — they have not answered it through the lens of the retailer.”
In an email to Business Insider, Amazon’s spokesperson said, “Amazon prohibits the use of Just Walk Out technology data for anything other than supporting Just Walk Out retailers.”
Amazon told Reuters that it signed “several” deals with retailers for this technology, but declined to name any of them.
The name of the first large scale retailer to adopt Amazon’s cashierless store system is important because it would serve as a “proof of concept” for other retailers that are on the fence about it, according to Tom Forte, an analyst at D.A. Davidson. Just like Netflix was the “poster child” of a company willing to use Amazon’s cloud service early on, a well-known retailer would need to adopt Amazon’s cashierless technology to make others more comfortable using it, he said.
“It’s dual proof of concept that the technology could work for someone other than Amazon, and then proof of concept that another retailer would trust Amazon with that incremental level of data sharing,” Forte said.
Forte said Kohl’s would be a good candidate to test it early on, given the retailer’s existing partnership with Amazon. Kohl’s currently accepts Amazon returns at its stores, and has tested Amazon-branded pop-up stores in the past. Other convenience stores would be a natural fit to try Amazon’s new technology too, Forte said, as Amazon Go started out in a smaller convenience store format.
Amazon didn’t share how much the service would cost, or how exactly it plans to implement the technology in other stores.
Those are important questions to answer because this technology involves more customization and local services that don’t easily scale as cloud services. For example, if the in-store system breaks down, Amazon would need service reps who are able to fix the issue right away. For remote areas, Amazon may want to use a subcontractor to install the system. Other questions, like whether the system will run through the cloud or on-premise software, haven’t been answered either. Depending on how Amazon decides to sell this, the price and deployment time would vary.
“This is somewhat new ground for Amazon,” Rick Watson, CEO of RMW Commerce Consulting told Business Insider. “The level of per-store customization could be higher than expected.”
Several cities and states, including New Jersey and Philadelphia, have recently banned cashless stores, saying it discriminates against the unbanked population who typically come from lower income households. In response, Amazon has started accepting cash at its Go stores.
It’s unclear whether Amazon will help retailers looking to adopt its cashierless technology in regions that ban cashless stores. In an email statement to Business Insider, Amazon’s representative said, “cash acceptance is up to the retailer who runs the store.”
Given the scale and scope of personal data collected in systems like Amazon’s cashierless stores, it’s important to establish clear personal data rules, according to Leonard Lee, managing director of neXt Curve, a business advisory firm.
For instance, Amazon needs to set clear guidelines for who’s responsible for protecting personal data, and strict rules that comply with regulations and state requirements. That would include options for opting out and the right to be forgotten from Amazon’s Just Walk Out systems, Lee said.
“There is the question of liability — What is the governance model that needs to be in place and agreed upon before signing on the dotted line?” said Lee.
The biggest question, however, may come down to this: Does cashierless technology really matter?
Beck, at cg42, said the technology feels more like a “solution looking for a problem,” as it doesn’t dramatically improve the shopping experience. He said the demand for Amazon’s Just Walk Out technology may not be as high because it doesn’t create a completely “different paradigm” around the consumer.
“It’s more gimmick quite honestly than fundamentally disrupting the retail experience,” Beck said.
Amazon may need to spend more resources promoting the technology and educating retailers about the real benefits of the technology, especially if the installation cost is high. Retailers will want to know whether consumers really care about killing the check out line, and whether it’s a “revenue and profit enhancer” for the stores using it, neXt Curve’s Lee said.
“The question remains how valuable this experience is to consumers,” he said.
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