Why retail cashierless checkout, a.k.a. Amazon Go, faces more than a few challenges ahead

| by Judy Mottl
Why retail cashierless checkout, a.k.a. Amazon Go, faces more than a few challenges ahead

Photo by iStock.com

A retail cashierless checkout experience, which likely ignites 'Jetson' cartoon images in the minds of shoppers decades older than millennials, is no longer a futuristic development on the horizon.

Amazon deployed it in public fashion this January, after a 14-month beta trial, at its Seattle-based Amazon Go supermarket. Upon entering Go, customers scan a smartphone app that registers them into the store. After choosing their items, customers are free to leave the store, as the app handles the payment transaction. In announcing its debut, initially called 'Just Walk Out,' Amazon said the experience is driven by the same technologies used in self-driving cars, sensor fusion and deep learning.

And, so far, consumers are responding with enthusiasm to not having to wait in line to check out.

"We've been delighted with customer response," said Gianna Puerini, vice president of Amazon Go, during a keynote presentation at the ShopTalk conference held in early March in Las Vegas. Puerini noted Amazon was surprised by the crowds that showed up when the store opened to the public in January. A recent ChargetItSpot poll revealed consumers are hoping Amazon deploys the technology at Whole Foods, the grocery chain Amazon acquired in 2017 for $13.7 billion.

But Amazon isn't alone in its quest to make grocery and retail shopping as quick and seamless as possible for today's consumer. As Retail Customer Experience reported just this past week, China's BingoBox is already several steps ahead of Amazon on advancing the unmanned retail front, with plans to expand internationally.

BingoBox, where consumers enter by scanning a QR code at the door, is installed in more than 300 locations in 30 cities in China, according to a presentation at the recent ShopTalk conference at the Sands Expo Center in Las Vegas.

In comparison, Amazon is getting ready to deploy six more Go locations, according to a Recode report.

While Amazon and BingoBox may be the top names driving the cashierless experience evolution, other big retailers are clearly interested in providing a faster and more rewarding checkout experience.

Within the past two years, Walmart commenced the rollout of its Scan and Go app to more than a dozen stores, enabling consumers to scan and pay for items without the need to wait in line, and Panera Bread offers self-checkout options that include kiosks in-store and mobile order-ahead in its app.

Yet, despite all the movement and innovation and Amazon's public deployment, the cashierless checkout is still very far from becoming an installed technology across the retail sector for more than a few reasons.

Why cashierless adoption will be slow

One is the complexity of such new technology, which Amazon discovered very quickly in its Go pilot as its tracking technology initially couldn't handle more than two dozen shoppers in the store.

Other reasons range from retailer investment to consumer acceptance and expectations, according to Keith Jelinek, managing director of Berkeley Research Group's retail and consumer practice

"At this point, expansion is very slim. In our view, the adoption timing will be slow as there is a lot of experimentation that will need to be completed around customer acceptance, justifying the cost of capital for an return on investment, store formats and how to handle product that needs to be 'scaled,' or weighed to generate a price," he told Retail Customer Experience in an email interview.

The fact that Amazon Go is getting consumer love may be solely tied to one factor — the Amazon Go customer is a millennial and most testing and pilots taking place with cashierless check out focuses on that shopping population.

"Most millennials are quick to adapt to change, and use of new technology," explained Jelinek, adding there still needs to be testing around multi demographics of customers.

"What we hear, is that the customers that have used it so far, have tried it more as a 'new thing' to check out, kind of like a craze. The real test will be in gaining customer feedback and user experiences over a multi time frame, to see how they adapt and change, and eventually completely accept."

One big caveat for retailers installing a cashierless option is that consumer add-on sales take a dive — consumers aren't tempted to grab an extra item or any other impulse buy given there is no checkout line to stand in.

"This is a big concern. When self checkouts went in, there was a loss of add-on sales from the check stands — think magazines, gum, mints, candy, and toys that kids would ask parents to buy for them. That has been a loss of those types of sales in self check out environments," said Jelinek.

Then there's the consumer comfort aspect. Some big name retailers, including Costco, have offered the option of self checkout and then removed it.

"They discovered that the customer wants personal interaction, and that trained cashiers can be more efficient —especially when the transaction is more then one to two items," said Jelinek.

And, as he added, self checkout or cashierless checkout, completely removes the in-store retail associate customer connection.

"The other item for consideration, is the personal touch of a cashier is the last touch you have before a customer leaves a store. If that is not in place, you lose that important interface," he said.

With either self checkout or cashierless, consumers also face a bit more responsibility when it comes to tracking pricing during checkout and checking receipts after the purchase event.

As Jelinek explained, most customers today are okay with getting an email receipt but that requires an email on file. To shop at Amazon Go customers need to be Amazon Prime members, which means the customer email is already in place.

"But for non-Amazon Prime or other retailers that customers are not signed up in a loyalty program of sorts, there is an issue with easiest way to capture the email address," explained Jelinek, adding "customers are also wary of technology that will automatically calculate a price," and will want to see a transactional receipt quickly.

"If this can be moved to mobile devices, with an email or phone number captured, this can be solved for viewing on mobile devices quickly," he added, but that will require more work for the retailer and there is still much to be done in providing a rewarding mobile retail experience on its own.

Yet, in the long run, retailers will benefit and win given a customer-friendly cashierless experience as it can go a long way to reduce operating costs in an industry dealing with thin margins.

"It certainly sets a tone for the race to provide efficient service, in what could be a game changer," said Jelinek.


Topics: Assisted Selling, Automated Retail / Vending, Consumer Behavior, Customer Experience, Marketing, Merchandising, Mobile Retail, Omnichannel / Multichannel, Payments, Point-of-Purchase / POP, POS, Retail - General, RFID Technology, ROI, Self-Checkout, Shopper Marketing, Supermarkets & Grocery Stores, Technology, Top 100 Retail, Trends / Statistics

Companies: Amazon



Judy Mottl

Judy Mottl is an experienced editor, reporter and blogger who has worked for top media including AOL, InformationWeek and InternetNews. She’s written everything from breaking news to in-depth trends. She loves a great pitch so email here, follow on Twitter and connect on LinkedIn.

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