Amazon’s answer to its grocery store woes: Skipping the checkout line

Both locations could be studied as prime examples of mismanagement. The grocery typically offers just one manned checkout line and four self-service kiosks, forcing customers to wait in lines stretching several people deep. Ditto for the post office, which often provides a lone employee who seems committed to moving as slow as humanly possible.

Every time I walk out of both spots, I say to myself: “This is why Amazon runs everyone out of business.”

In the coming years, we might see if that sentiment bears fruit. As New York Times tech reporter Cecilia Kang writes in a moderately dystopian dispatch, a new prototype at an Amazon-owned Whole Foods store in Washington, D.C., aims to end your in-person shopping aggravation through the use of copious technology. The trial run sets the stage for another test of consumers’ willingness to tolerate Big Brother–like monitoring in exchange for convenience.

So how does Amazon, the king of e-commerce, envision a better brick-and-mortar experience? By eliminating the aforementioned checkout lines.

Rather than piling your products on a conveyor belt, the Whole Foods location uses hundreds of sensors and cameras to track your every move, spotting when you pluck a peach or select a steak. When your cart is full, you can Just Walk Out—Amazon’s name for the all-encompassing technology—and Amazon will bill your credit card on file with the company.

“We observed areas that caused friction for customers, and we diligently worked backward to figure out ways to alleviate that friction,” Dilip Kumar, Amazon’s vice president of physical retail and technology, told Kang. “We’ve always noticed that customers didn’t like standing in checkout lines. It’s not the most productive use of their time, which is how we came up with the idea to build Just Walk Out.”

Kumar wouldn’t tell Kang whether Amazon plans to scale up the system at the company’s 500-plus Whole Foods stores, which were acquired in 2017 in a $13 billion deal. However, Amazon does plan a similar launch at a Los Angeles location later this year. The company has employed similar technology over the past few years at about 30 Amazon Go convenience stores and niche Amazon Fresh grocery stores.

It’s easy to slough off this experiment as yet another ill-fated Amazon foray into the grocery sector. As CNBC detailed last month, Amazon has made several attempts to break into the grocery and food delivery business over the past decade, with surprisingly little to show for its efforts. (Don’t feel too bad for Amazon: the grocery business is practically a rounding error for the company.)

If this technology takes hold, however, Amazon could finally gain some stronger footing.

For all the fascination with Instacart and its grocery delivery ilk, the vast majority of Americans still shop in person. A Gallup poll from July 2021 showed only 12% of respondents order groceries online once a week. Kroger, the nation’s second-largest grocer by sales, reported about $10 billion in online orders in 2020, accounting for less than 10% of its grocery revenue.

And while most grocery shoppers remain satisfied with their in-store experience, according to the American Customer Satisfaction Index, any growth helps in a high-volume, low-margin business. Notably, the survey suggests slow checkout lines rank among the most frustrating parts of the grocery shopping experience. Respondents also rated Whole Foods as one of their least-favorite supermarkets.

Amazon surely would have to acclimate some wary shoppers to its high-tech stores. But as the past couple of decades have shown, the populace is more than willing to sacrifice a modicum of privacy for better, faster, easier experiences. Is a camera watching your produce purchases any worse than your smartphone constantly tracking your whereabouts via cell tower pings?

If it means that I can avoid the poorly run grocery store down the street, sign me up for the Whole Foods of the future.

Want to send thoughts or suggestions for Data Sheet? Drop me a line here.

Jacob Carpenter

NEWSWORTHY

‘Do svidaniya’ means goodbye. Top social media companies are stepping up their censorship of Russian state media organizations in Europe, aiming to head off pro-Kremlin propaganda pushing the federation’s war with Ukraine, the Washington Post reported Tuesday. YouTube, Facebook, and TikTok said they will no longer allow the Russian outlets RT and Sputnik to operate on their platforms in Europe, a dramatic step that follows more modest efforts last week to stop the networks from monetizing ads on their sites. The moves follow increasing pressure from Ukrainian and European Union leaders to curtail Russia’s access to platforms where government officials have direct access to millions of active subscribers.

Taking a stand. Netflix plans to defy Russian rules that require the streaming service to carry state-run channels on its platform, setting the stage for a showdown with the Kremlin in a new market for the company, the Wall Street Journal reported Monday. The decision comes four months after Russian officials notified Netflix of a new regulation mandating that international streaming services must offer local news, sports, and entertainment programming. Kremlin officials haven’t commented on whether they will take any action against Netflix, which has amassed fewer than a million subscribers in Russia since launching in October 2020.  

Pumping the brakes. Shares of Zoom fell Tuesday after the videoconferencing company issued a disappointing outlook for 2022, predicting slower growth as employees return to offices in the coming months, CNBC reported. While Zoom reported $1.07 billion in revenue for the fourth quarter, squeaking by analyst estimates of $1.05 billion, the gloomy forecast sent shares down 3% in midday trading Thursday. Zoom sales rose 21% year over year in the quarter, the company’s slowest growth rate on record.

Starlink wish granted. Ukrainian leaders received a shipment of equipment that would allow the country to gain access to SpaceX’s low-orbit satellite internet service, known as Starlink, according to a tweet from a top government official Monday. Ukraine Deputy Prime Minister Mykhailo Fedorov thanked SpaceX CEO Elon Musk for the delivery, which Musk promised to make Sunday in response to a Twitter plea from Ukrainian officials. The hardware could let Ukraine circumvent Russian attacks on the country’s internet infrastructure, though it’s unclear how widespread access will become.

FOOD FOR THOUGHT

Thinking outside the box. In the first year of the pandemic, Nielsen Holdings, best known for measuring television viewership through its Nielsen ratings brand, made a giant mistake. The company reported inaccurate viewership totals to its network clients, the result of technical glitches in roughly one-quarter of its tracking hardware. As a result, networks likely lost somewhere in the neighborhood of $2 billion in ad revenue. As Fortune’s Shawn Tully reports, the snafu added another layer of complexity to the task facing CEO David Kenny, who’s also trying to keep Nielsen afloat in the streaming age.

From the article:

That migration from broadcast to streaming may indeed turn into bad news for the networks. But Kenny aims to make sure that it’s good for Nielsen. Indeed, he hopes to make the company just as dominant in measuring audiences for streaming as it is in broadcast, with leading-edge hardware and data-crunching technology—and a surprisingly prominent role for the much-criticized, old-fashioned panels.

As the digital barbarians storm the gates of broadcast TV, Nielsen hopes to seamlessly join, and eventually lead, the audience-measurement revolution. That goal presents both technical challenges and major business hurdles.

IN CASE YOU MISSED IT

Hacker collective Anonymous declares war on Russia, by Chris Morris

Tesla rival Lucid announces new factory in hopes of diverting attention from a savaging in the markets, by Christiaan Hetzner

BitConnect founder Satish Kumbhani disappeared from India, SEC says, by David Voreacos and Bloomberg

Warner Bros. whips away ‘The Batman’ from Russia, while Green Day and other major artists are stopping the music, by Sophie Mellor

Whitelists are the golden ticket to buying NFTs for cheap. Here’s how get on one, by Mahnoor Khan

It’s time for women to take control of their finances—and tame crypto, by Lauren Anastasio

BEFORE YOU GO

A little too real. If you’re tired of constant Zoom calls, this product ain’t for you. As Axios reported Tuesday, a company called PORTL is making waves with its commercial 3D hologram product and is planning to debut a two-foot-tall piece of hardware later this month at SXSW. Price tag: $2,000. The miniature version comes on the heels of a seven-foot-tall device that could project a life-size human replica, winning plaudits at CES in January. Let’s just be glad Prince wasn’t around to see this.