The News: Amazon has been under fire online regarding its strategic direction regarding its Just Walk Out technology and the underlying use of AI-driven computer vision. Read the article that started the avalanche here.

Amazon Under Fire: Just Walk Out Technology Causing Waves

Analyst Take: I had the opportunity to visit Amazon’s executive briefing center this week in New York and to speak to Dr. Matt Wood who leads AI for the company. I also had the opportunity to engage with Jon Jenkins, the VP responsible for Just Walk Out technology, and get their perspective. I learned from both engagements that, as is increasingly the case, the reality differs somewhat from what the mainstream non-technical press has written and, regrettably, has distilled down and widely shared on social media. Before we get into resetting what is actually going on with Just Walk Out and dash carts in Amazon’s retail footprint, let’s set the stage for Just Walk Out.

Just Walk Out: What Is It and Why Is It Important?

Amazon’s Just Walk Out technology represents a paradigm shift in the retail shopping experience, harnessing the power of AI and computer vision to create a seamless and more efficient consumer experience. This technology, first introduced in Amazon Go stores, eliminates the need for traditional checkout processes, enabling customers to simply enter a store, pick up their desired items, and leave without the need to stand in line or interact with a cashier.

At the core of Just Walk Out technology is a sophisticated network of cameras and sensors throughout the store, meticulously tracking items as customers pick them up or put them back. This system is underpinned by advanced computer vision algorithms, deep learning, and sensor fusion technologies that, together, can accurately identify and record products being taken off the shelves. Upon exiting the store, the customer’s Amazon account is automatically charged for the items they have selected, and a receipt is sent to their phone. The other option currently available is Amazon Dash Cart, which is a smart shopping cart designed to streamline the grocery shopping experience by allowing customers to quickly find, add, and weigh items, and then skip the checkout line for a faster exit. Shoppers log in using a QR code, scan and place items into the cart, and can remove any unwanted items. They also have the ability to purchase alcohol after ID verification by a store associate. Notable features include a built-in weight scale, a touch screen for live receipts and product recommendations, and compatibility with various items and payment methods through the store’s loyalty program, enhancing convenience and personalization in grocery shopping.

The significance of Just Walk Out technology extends beyond convenience for the consumer. It offers a glimpse into the future of retail, where AI and machine learning (ML) can optimize inventory management, reduce theft, and tailor the shopping experience to individual preferences. Moreover, it showcases the potential for AI-driven technologies to reshape industries by improving operational efficiencies and creating new customer experiences. For retailers, adopting such innovations can lead to significant cost savings and competitive advantages, setting a new standard for the integration of technology in everyday commerce.

The Real Story of Amazon’s Strategy

As part of a more general AI-focused briefing, I spoke with Matt Wood about the Amazon strategy as it relates to AI-powered checkout and computer vision augmented systems. His overwhelming sentiment was that Amazon is still 100% committed to Just Walk Out for the long term. He shared that the company has found that Dash carts fit the customer needs better at large format grocery stores, where the basket size is greater and the time spent in-store is longer.

He also shared that repeat users of Dash carts spend significantly more over the course of a year. Amazon also claimed a very high satisfaction rate with Dash carts. Consumers also drive from farther away to shop at a store with Dash carts, and a very high percentage of Dash cart users are repeat users. The team at Amazon did not share the source of the data but were willing to share this information readily and have me share it in my coverage.

Looking at it from a shopper perspective, the cart provides real-time feedback about spending, location-aware information in-store, and personalized content via its built-in screen. Said another way, for large-format grocery shopping, Just Walk Out is fine, but Dash carts are better. Just Walk Out remains the best option for smaller store formats. In first party, that means Amazon Go and Amazon Fresh UK will continue to use Just Walk Out. Most of their growth will likely come from third-party stores in various verticals (stadiums, education, travel, healthcare, and convenience) that typically have smaller formats. From my conversations with the Amazon Web Services (AWS) team, they see huge ROI from Just Walk Out in stores via increased throughput, labor optimization, reduced shrinkage, and extended hours of operation.

I also had the opportunity to engage with Jon Jenkins, VP of Just Walk Out Technology. He went on record to say, “The misconception that Just Walk Out technology relies on human reviewers watching shoppers live from India is misleading and inaccurate. As with many AI systems, the underlying machine learning model is continuously improved by generating synthetic data and annotating actual video data. Our associates validate a small portion of shopping visits by reviewing recorded video clips to ensure that our systems are performing at our high bar for accuracy, which is made possible because we continuously improve both our algorithms and use human input to correct them.”

Looking Ahead

Amazon’s Just Walk Out and Dash carts represent more than mere innovations; they herald a transformative era where AI-driven solutions redefine consumer interactions and operational efficiencies. The discourse surrounding Just Walk Out, sparked by widespread media and online debates, underscores the complexities and misconceptions inherent in implementing cutting-edge technologies. However, direct insights from Amazon’s executives reveal a nuanced strategy, emphasizing a commitment to enhancing the shopping experience through AI and computer vision while adapting to consumer needs and store formats.

The distinction between the applicability of Just Walk Out and Dash carts in various retail environments illustrates Amazon’s flexible approach to innovation, optimizing customer satisfaction and operational benefits. The substantial ROI from Just Walk Out in diverse settings, alongside the overwhelming positive consumer feedback on Dash carts, showcases the potential for AI to streamline shopping experiences and drive significant business growth.

Looking forward, the journey of Just Walk Out and Dash carts is emblematic of the broader trajectory of retail technology, where AI and ML continue to push the boundaries of possibility. As Amazon iterates and refines these technologies, the retail industry stands at the cusp of a revolution, poised to embrace AI’s transformative power. The ongoing dialogue between technological advancement and consumer expectations will undoubtedly shape the future of retail, making it more personalized, efficient, and seamlessly integrated into our daily lives.

Disclosure: The Futurum Group is a research and advisory firm that engages or has engaged in research, analysis, and advisory services with many technology companies, including those mentioned in this article. The author does not hold any equity positions with any company mentioned in this article.

Analysis and opinions expressed herein are specific to the analyst individually and data and other information that might have been provided for validation, not those of The Futurum Group as a whole.