Is It Too Late for ‘Just Walk Out’ Tech?

Amazon sells its frictionless checkout concept to retailers amid fierce competition
Photograph courtesy of Amazon

SEATTLE — Amazon is officially selling its patented retail system that allows customers to walk into a store, grab what they want and walk out without standing in line. But the move to sell the technology to legacy retailers such as convenience stores might have come too late for the juggernaut to properly capitalize on its ingenuity.

The online retailer made big waves in the world of physical retail when it announced plans to unveil its first Amazon Go store in Seattle in December 2016; however, the store did not open to the public until more than a year later, in January 2018.

During that time, new frictionless checkout companies such as Zippin, Standard Store and Grabango either emerged or were in development. These rival concepts bring tools that emulate or improve upon Amazon’s “just walk out” model. Other companies, such as Skip, have released similar checkout systems that allow customers to scan items with their phones as they grab the items from shelves.

Grabango’s entire sales pitch revolves around the idea that it will sell retailers a better version of “just walk out” technology without the Amazon-level cost. Grabango allows consumers to pay at participating stores with a variety of options, including by app, card or cash. Amazon and Grabango have not released exact costs of their frictionless checkout products publicly, but an Amazon Go store reportedly absorbs costs of $1 million, or about $500 per square foot, for a 2,400-square-foot store.

Ever since the company unveiled Amazon Go, commentators in and beyond retail have speculated that Amazon would sell its “just walk out” tech to retailers as a service. Many compared the business concept to a physical version of Amazon Web Services (AWS), the web hosting tool Amazon licenses to online customers.

AWS is the 800-pound gorilla of web hosting, with 32.4% market share, according to Canalys, a market analyst website. However, AWS had quite the head start on the competition, as Amazon CEO Jeff Bezos pointed out in a quarterly investor call in 2018.

“AWS had the unusual advantage of a seven-year head start before facing like-minded competition, and the team has never slowed down,” Bezos said. “As a result, the AWS services are by far the most evolved and most functionality-rich. AWS lets developers do more and be nimbler, and it continues to get even better every day. That’s why you’re seeing this remarkable acceleration in AWS growth, now for two quarters in a row. A huge thank you to all our AWS customers, and you can be sure we’ll keep working hard for you.”

Amazon’s “just walk out” technology does not have nearly as much of a head start in its respective market, which is good for c-stores. More competition means more options. In a low-margin business beset by increasing regulations and disruption from all sides, options are always good.

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