By Sebastian Herrera
SAN FRANCISCO -- Amazon.com Inc. recently opened its fourth
cashierless convenience store here, all located within a few blocks
of each other. Nearby, two startups are each demonstrating their
own technology that they envision powering cashier-free stores
across America.
This roughly one-square-mile stretch in the tech capital's
bustling business district is emerging as a battleground to
eliminate retailing's centuries-old checkout process and reinvent
the way consumers shop.
Amazon's unveiling of the first Amazon Go store, at its Seattle
headquarters in early 2018, inspired several challengers to create
new ways for shoppers to grab items from a store and leave without
passing through a checkout line.
Many startups, like San Francisco-based Zippin and Standard
Cognition, are using technology similar to Amazon Go's, with camera
systems powered by computer vision and machine-learning software
that track people as they take items off shelves. Other companies
are trying to automate the shopping cart to avoid a costly store
overhaul.
The startups are pitching their technology to grocery chains,
sports stadiums and convenience stores, promising to automate the
checkout process, reduce theft and improve profit margins. Analysts
expect Amazon eventually to license its technology to retailers and
other businesses, and some startups already are positioning
themselves as the smarter alternative.
"We don't compete with our customers. And that's a big advantage
when we pitch to retailers," Zippin Chief Executive Krishna
Motukuri said.
But challenging Amazon is a tall task. Amazon can easily absorb
the costs associated with building out the technology and undercut
the competition. "They are years ahead of everyone," said Mark
Cohen, a business professor at Columbia University and former CEO
of Sears Canada Inc. "Not just in figuring this out but in actually
proving out the concept."
The technology is still nascent, relegated to small
convenience-store concepts selling packaged goods. And it is
relatively expensive for a big-box retailer to adopt the technology
at a wide scale, costing hundreds of thousands of dollars to
retrofit one store.
Amazon Go's concept, however, appears to be gaining popularity
among shoppers. The retail giant has opened 16 stores in four
cities and has plans to open two more soon, with the stores ranging
from about 450 square feet to 2,300 square feet. Amazon has added
more products, such as half-sandwiches and coffee, as it has
learned about shoppers.
An Amazon spokeswoman declined to comment on its plans and
competition.
Zippin in June opened a 200-square-foot experimental convenience
store in San Francisco's South of Market district, a quick walk
from the Amazon Go stores. Called Zippin, it offers a small
selection of energy drinks, sodas and snacks, and like Amazon Go it
uses cameras and weight-sensitive shelf sensors to determine what
people take off the shelves.
Mr. Motukuri said the technology has limits: Cameras can't yet
read some types of product labels, and clothing doesn't work
because of varied sizes.
Zippin, which is incorporated as Vcognition Technologies Inc.,
plans to open a checkout-free convenience store inside the
Sacramento Kings basketball arena in the coming season.
Further uptown in San Francisco, Standard Cognition Corp.
operates Standard Store, a demonstration store where shoppers press
a button on an app when they enter the store, instead of scanning
at a gate; they can walk out or pay at a kiosk.
Last month, Standard Cognition signed a deal with a Boston Red
Sox minor league affiliate in Worcester, Mass., to power a fan
store at a baseball stadium that is being built.
Michael Suswal, the company's co-founder, says event spaces and
small retailers have expressed interest in its technology. Amazon
is scaring retailers and other businesses into thinking "that they
need to learn more about this technology," Mr. Suswal said.
Regional grocer Giant Eagle Inc. is hoping cashierless
technology will give it an edge. The Pittsburgh-based company,
which operates more than 400 stores in the Northeast, plans next
year to open its first "pick and go" store in its hometown, powered
by technology from Bay Area startup Grabango Co.
Grabango says it plans to rely solely on advanced cameras to
track customers and refrain from using costly shelf sensors and
entrance gates. The items would be tallied automatically to speed
checkout, but shoppers would still pass by a cashier, who would be
available to take cash.
Jannah Jablonowski, a Giant Eagle spokeswoman, said the grocer
picked Grabango because it best fit the checkout model they wanted.
If ever given an option to partner with Amazon, Ms. Jablonowski
said, Giant Eagle would weigh several components, such as
technology benefits, but "I probably would be foolish to say that
we wouldn't weigh the competitive cost-benefit analysis on that,"
she said.
Other startups are focusing on the shopping cart. New York-based
Caper Inc. and Seattle-based Veeve Inc. are both developing smart
shopping carts with visual or scanning technology to tally items
including nonpackaged goods like produce. The startups say their
approach could help retailers avoid the costs of retrofitting
stores.
Costs to install cashierless technology are coming down. Two to
three years ago, outfitting a 7-Eleven-size store with cameras and
a high-performance computer server could cost millions of dollars,
said Gary Brown, who leads artificial-intelligence product
marketing at Intel Corp.'s Movidius, which supplies computing power
and cameras behind some cashierless store concepts.
Now, suppliers say, outfitting the same size store could cost
anywhere from $100,000 to $300,000, depending on the number of
cameras, the breadth of computing power and the type of hardware
used.
Write to Sebastian Herrera at Sebastian.Herrera@wsj.com
(END) Dow Jones Newswires
October 14, 2019 05:44 ET (09:44 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
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