GlobalData stated that the frictionless commerce market was worth only $375.4m in 2023, less than 0.01% of the global in-store retail market.
Amazon pioneered frictionless commerce with its Go stores, the first of which opened in Seattle in 2018. Since then, the tech giant has expanded its physical footprint in the UK and US to 23 Amazon Go stores, 64 Amazon Fresh stores, and two frictionless Whole Foods stores. However, the e-commerce giant could face backlash following the recent revelations about its checkout-free technology.
Frictionless commerce: what it is, pros, and cons
In the world of frictionless commerce, Amazon is a pioneer—and its Fresh and Go outlets are considered the most common and financially successful frictionless commerce stores to date. The model consists of cashierless checkout systems, where you walk into a store, pick up the items you want, and simply walk out. This replaces physical stores where tills are staffed by workers and self-checkout systems. Technologies such as connected devices, computer vision, data analytics, machine learning systems, and IoT are used to identify the shopper, recognise their chosen objects, and bill them correctly after they leave the store.
GlobalData stated that the frictionless commerce market was worth only $375.4m in 2023, less than 0.01% of the global in-store retail market (see Frictionless Commerce). Yet, the industry may still flourish depending on whether society fully embraces this new way of shopping. On one side, frictionless commerce answers today’s consumers’ demand for instant gratification. On the other, consumer and retailer enthusiasm is dampening. Many buyers are put off by requests to download an app to enter a store. Moreover, imperfect technology implementation can also cause delays and errors, alienating shoppers rather than providing convenience. The high costs associated with fitting out a frictionless commerce store and uncertain returns on investment may also deter retailers from adopting this technology.
Amazon rivals
Frictionless commerce has focused on the grocery market since its inception due to its unique selling point of a quicker, more seamless shopping experience. Amazon pioneered this approach with its Fresh and Go stores, allowing customers to enter by scanning a barcode, hovering their palm (using Amazon’s One Palm recognition software), or inserting a payment card.
Travel retailer Hudson has also deployed Amazon’s Just Walk Out technology in six of its airport locations. The attraction is evident; travellers can avoid queues on their way to and from gates, picking up grocery items quickly and easily.
Polish convenience store Żabka rivals Amazon in scale, with dozens of frictionless commerce stores in Europe. However, the chain group focuses on a wider variety of locations than Amazon, with frictionless commerce stores in railway stations and universities. This highlights the varied use cases for frictionless commerce, as multiple store formats may succeed.
Israeli store Nowpet uses biometrics to grant access to customers, allowing them to enter the store through facial or fingerprint recognition.
The pitfalls of Amazon’s Just Walk Out technology
Amazon’s Just Walk Out technology is an AI-powered checkout system introduced in 2018 at its Fresh grocery stores. The technology was created on the premise of being a pioneering alternative to cashiers and self-checkout systems using sensors and cameras to add items to the shopper’s virtual cart.
In April 2024, news emerged that the company uses 1,000 people in India to monitor buyers and train the AI model, which this workforce does by watching a buyer shop in real time. However, hiring human operatives to scan the camera feeds to ensure accurate checkouts defeats the purpose of a checkout-free shopping experience.
This allegation further adds to the costly installation and maintenance challenges, as well as previously raised privacy concerns. For example, a court case was brought against Amazon and Starbucks in June 2023 by three customers, alleging that using palm ID in Amazon stores violated New York City’s Biometric Identified Information Law. The law mandates that consumers must be given notice when entering a store (e.g., using posted signs) that the retailer will collect their biometric information. The court documents further allege that Amazon exchanged biometric information with Starbucks, violating privacy rights. At the time of writing, the e-commerce giant is currently discontinuing the Just Walk Out feature at its larger Fresh grocery stores. Amazon’s experience shows how sometimes the use of technology to improve convenience does not outweigh the drawbacks, while also raising questions about privacy and labor outsourcing.
Source from Retail Insight Network
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