Amazon Briefing: Why Just Walk Out wasn’t the right fit for grocery

Amazon has spent years tinkering with its grocery strategy, as well as trying to sell both consumers and retailers on the promise of Just Walk Out. But both have faced major hurdles. On the grocery side, Amazon has yet to find the right mass grocery formula. Last year, the company laid off many employees at its Fresh grocery stores and announced plans to consolidate its many various grocery efforts into one single unit.

Meanwhile, the company has been trying to further grow its Just Walk Out technology. It first started offering the program — which has shoppers give their payment information when they first enter the store and uses cameras and other tech to track the products people take so that they can leave the stores without going through a checkout — in 2020. Just Walk Out was first showcased at its Go convenience stores, but began to be implemented at some non-Amazon properties. One of Amazon’s first partners was Hudson, which tested Just Walk Out at certain airport retail locations.

Over time, Amazon has been trying to figure out other retail spaces in which Just Walk Out could be used. Specifically, the company had tried to pitch it as a worthwhile grocery investment. Last year, Just Walk Out was implemented at over 40 Fresh locations, as well as at a couple of Whole Foods stores. But it never seemed to catch on with other retailers.

Now, Amazon seems to be decoupling the two programs and rethinking both strategies. “We’ve invested a lot of time redesigning a number of our Amazon Fresh stores over the last year, offering a better overall shopping experience with more value, convenience and selection — and so far we’ve seen positive results, with higher customer shopping satisfaction scores and increased purchasing,” said Amazon spokesperson Jessica Martin in a written statement. “We’ve also heard from customers that while they enjoyed the benefit of skipping the checkout line with Just Walk Out, they also wanted the ability to easily find nearby products and deals, view their receipt as they shop, and know how much money they saved while shopping throughout the store. To deliver even more convenience to our customers, we’re rolling out Amazon Dash Cart, our smart-shopping carts, which allows customers all these benefits including skipping the checkout line.” 

Doomed from the start
According to analysts, in many ways the promise of Just Walk Out had little chance of working in a mass grocery environment. “The problem with Just Walk Out is that the way you need to merchandise a supermarket is by and large antithetical to [how the technology works],” said Bryan Gildenberg, founder and CEO of Confluencer Commerce.

The technology relies predominately on cameras, which are purported to track shoppers and discern what products they put in their baskets. But, Gildenberg said, grocery stores are jam-packed with products. “There are deals, there are end caps,” he said, which makes it difficult to track “because the cameras can’t see the shelves.”

Where such a technology can work, Gildenberg said, is in smaller and more sparse locations. “It’s isn’t necessarily a problem you would have in an airport gift shop,” he said.

In many ways, the service Just Walk Out provided never necessarily worked with what grocery shoppers are looking for. “It just wasn’t a fit for grocery,” said Anna Brennan, senior analyst of retail insights at Kantar. One main reason was the customer experience. In an environment intended for smaller purchases — like a convenience store, airport or entertainment venue — “it’s novel and fun,” Brennan said.

But grocery is a different type of shopping experience. “You’re there for a reason,” Brennan said. Namely, to buy as many grocery products as you can for as little money as possible. Removing the check-out experience aided none of this.

What’s more, Just Walk Out added new layers of difficulty. “It created friction — a barrier to actually getting into the store,” said Sean Turner, co-founder and chief innovation officer of the grocery technology firm Swiftly. “If you think about traditional retail, you want as few barriers as possible — you want as much friction as late as possible.”

As such, eliminating checkout made a bottleneck earlier in the process, which Turner said likely turned off some customers. “It was an interesting technology set and an interesting set of capabilities, but at the end of the day, all of this stuff has to engage with the consumer,” he said.

What happens next
With Just Walk Out’s sunsetting, Amazon’s grocery tech ambitions remain unclear. From the get-go, the service was pitched as a service for other retailers. But even as Amazon continues to announce partnerships with new locations, it’s unclear what major retailers would be willing to work alongside Amazon.

“Do I think Amazon is an unbelievable supplier of certain types of technology? Absolutely,” said Gildenberg. But do other retailers want to pay Amazon for services — ones that would give the e-commerce giant data about their sales? “That’s an open question,” he said. Meanwhile, other companies are offering similar services. Instacart, for example, has its own set of in-store retail tech like a smart cart it’s been trialing for the last few years. “Instacart is not an existential threat to retailers,” he said.

Indeed, even Amazon seems to be admitting that grocery isn’t the right format for such a service. The company is now touting other areas where Just Walk Out would prove useful, which includes stadiums, airports, universities, healthcare facilities and other convenience store formats.

As such, the focus now seems to be on decoupling the two projects. Just Walk Out is focused on smaller-scale store concepts. And Amazon is going back to the basics, trying to figure out the best way the company can enter mass grocery without using expensive tech rigs that surveil customers.

“They may have wanted to change grocery,” said Brennan. “But consumers didn’t want grocery to change.”

Amazon news to know

• To add to the Just Walk Out drama, Amazon is reportedly laying off hundreds of employees from its cloud computing team.
• CNBC dives into how Amazon is trying to reduce the amount of boxes it sends to customers.
• In a bid to woo more customers, Amazon is expanding its free credit credit program for startups that lets companies use AI models. Now, they will have access to more providers, including Anthropic.

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