Online giant tries to overcome challenges caused by retail spaces with higher ceilings, more products
Amazon.com Inc. AMZN 0.99% is testing its cashierless checkout technology for bigger stores, according to people familiar with the matter. If successful, the strategy would further challenge brick-and-mortar retailers racing to make their businesses more convenient.
The online retail giant is experimenting with the technology in Seattle in a larger space formatted like a big store, the people said. The systems track what shoppers pick from shelves and charges them automatically when they leave a store. Although the technology functions well in its current small-store format, it is harder to use it in bigger spaces with higher ceilings and more products, one of the people said, meaning it could take time to roll out the systems at more larger stores.
It is unclear whether Amazon intends to use the technology for Whole Foods, although that is the most likely application if executives can make it work, according to the people. Amazon has previously said it has no plans to add the technology to Whole Foods.
A spokeswoman for Amazon declined to comment. Whole Foods declined to comment.
The cashierless system is already in use at seven Amazon Go convenience stores in Seattle, Chicago and San Francisco. The company plans to build more of these small stores, according to one of the people familiar with the matter. Each is typically less than 2,500 square feet and sells a range of drinks, prepared foods and groceries.
Bigger Amazon Go stores would represent another threat to traditional grocers disrupted by the online retail giant’s rapid advance into food retail. Whole Foods, which Amazon acquired for roughly $13.5 billion in 2017, has since added grocery pickups and one-hour delivery. It also has lowered prices for Amazon’s Prime members.
Some Whole Foods customers say they don’t want to see the cashierless checkout system at a chain known for its high quality of customer service.
“They need to be careful not to break what has made that business successful in the first place,” said Dennis Keim, a 65-year-old retiree from Lincoln, Neb., who shops at Whole Foods at least once a week.
Amazon has moved deeper into physical retail over the past few years after more than two decades shaping how people shop online. The company has opened more than a dozen bookstores and pop-up shops across the country.
Amazon also has continued to improve the technology inside the Amazon Go stores that first opened to the public earlier this year.
“We’re new to physical space, but it’s important for us,” said Dilip Kumar, vice president of technology at Amazon Go, on a recent tour of the first of those stores in San Francisco. “It tends to build a lot of habit.”
To use Amazon Go, customers scan an app-generated code on their phones as they walk in, then pick up what they want and leave without stopping to check out. Video cameras and other devices track customers as a three-dimensional object throughout the store, charging them for what they take.
Deploying the technology in a Whole Foods store, typically 40,000 square feet and home to some 34,000 items, would be a bigger challenge. Whole Foods sales are driven by produce items, for instance, whose prices vary by weight. Tracking them would be more complicated than tracking packaged foods of uniform shapes and sizes.
Scott Cederberg, a 38-year-old software engineer who bought a yogurt at the Amazon Go store in San Francisco recently, said he would be willing to try a bigger grocery store using the cashierless format.
“It would be convenient not to wait in checkout lines,” he said.
Appeared in the December 3, 2018, print edition as ‘Amazon Tests Wider Cashierless Strategy.’