How IoT is Powering Cashless Retail
You can think of them as a kind of store of the future — all you have to do is walk in, grab what you need, and walk out. And without talking to anyone or even stopping to scan your items, you’ll be automatically charged for the things you take with you.
It’s a new model of retail, called cashless retail, where customers don’t need to wait in line or use cash to shop, and it’s being made possible by the latest advances in the Internet of Things (IoT) technology.
Amazon’s Checkout-Free Stores
The foremost pioneer in cashless retail is tech giant Amazon, who recently opened their cashless convenience store, Amazon Go.
Inside, Amazon’s Walk Out technology — a network of smart cameras and smart-shelf sensors — track customers as they move through the store and log the products that they pick up. When a customer leaves the store, they automatically charge for the items they take with them, without needing to wait in line, talk to a cashier, or even interact with a screen.
Amazon Go is one of the ways retailers are combating one of the biggest causes of lost retail profits: long lines. An estimated $37.7 billion is lost each year when customers choose to walk out rather than waiting for a cashier. Retailers are hoping that IoT and cashless offerings can recover some of these lost profits.
However, the technology needed to run cashless stores may not be quite there yet. Amazon planned to launch 56 stores across the country by the end of 2019, but so far only 15 have materialized. It’s not clear why this slowdown has happened — best guesses include difficulty scaling up the Just Walk Out technology and fear that customers will be slow to adopt the checkout-free stores outside of major city centers.
Other Cashless Retailers
Several other smaller startups and retailers have followed Amazon’s lead and launched their cashless convenience stores. In August of 2018, tech startup Zippin launched a cashless store in San Francisco.
But the most significant advances in IoT and cashless retail outside of Amazon Go have been abroad, in China, where Alibaba and Jd.com have launched their cashless convenience stores and cafes. These stores work on the same principles as other cashless retailers, using smart shelves, phone scanners, and cameras to track customers and charge them automatically when they leave the store.
In August, convenience chain 7-Eleven piloted their cashless stores, which were closer to smart vending machines than Amazon’s high-tech offering.
Possible Drawbacks of IoT And Cashless Retail
In cases like Amazon’s checkout-free store, vast amounts of customer data — their payment info, product preferences, and even what they look like — will need to be collected and stored by IoT sensors. A breach of that data could be disastrous — both for Amazon and its customers. The average cost of a data breach is $7.5 million. That number could be even higher for cashless retailers, given the sensitivity and value of the data their IoT devices will collect.
Another downside of cashless retail is that, while convenient, these stores will effectively lock out customers who can only pay in cash. The backlash against cashless retailers even prompted Philadelphia to ban cashless retailers in early 2019 and require that all stores accept legal tender. And it’s not clear how much of the theoretical $37.7 billion lost each year to long lines would come from customers who both hate long lines and only pay in cash.
Finally, security may also be an issue for cashless retailers. Consumer IoT devices are notorious for being difficult to secure, and cybersecurity solutions that specifically target IoT devices are few and far between.
The Future of Cashless Retail
As with any new technology, cashless retail has hit some stumbling blocks. And the project also faces the difficulty of securing the massive amounts of data these stores collect. But retailers are almost sure to continue pursuing the dream of cashless stores so long as customers keep to avoid cashiers and ditch long lines.
About Author: Kayla Matthews- ‘Journalist & writer’
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