Amazon’s Retail-as-a-Service Expands into Payments, AR, and Salons
Amazon continues to pop up in strange places. You may have read about its recent move into salons for example. Though odd at first, motivations behind such moves can often be reasoned out. For example, as we predicted in 2018, Amazon Go stores were really just a trojan horse to incubate its “just walk out” technology.
Similarly, new Amazon salons will test and optimize its “point and learn” technology. This involves cameras and sensors that let customers point at items to then be schooled on product details by nearby displays. This and a series of smart mirrors for AR-based cosmetics try-ons will be featured throughout the store.
All of the above collectively traces back to Amazon’s broader play: Retail as a service (RaaS). Think of this like AWS: An internal function gets tested and optimized, then spun out for the rest of the world to use. With “just walk out,” Amazon has already gotten started with a few retail partners. This is just one piece of the RaaS puzzle.
Follow the Money
The most exposed move in Amazon’s RaaS playbook so far is is of course its Whole Foods acquisition, which could serve as a testbed for a variety of RaaS tech that it continues to develop. The retail chain will also feed into Amazon’s logistical and shipping infrastructure for a range of e-commerce fare (a different story).
In that light, another RaaS domino recently fell for Amazon: next-generation POS payments. Specifically, the company announced it’s rolling out its Amazon One palm-reading terminals to a handful of Whole Foods stores in the Seattle area. These are meant to speed up transactions by authenticating users with a palm scan.
From a user perspective, Amazon One plays out in a few ways. In some instances, it’s positioned so users can scan their palms when entering a store. That shopper is then associated with their payment method on file and Prime status, which is all set up on the first use. Then, they can “just walk out” when done shopping.
The other way that the technology works is directly at the point of sale. Eschewing the palm scan-upon-entrance method, this instead has shoppers scan their palm at the POS, just like they would enter a credit or debit card in a standard checkout scenario. This is the flavor of Amazon One deployed in the current Seattle rollout.
Name of the Game
One reason for the POS-anchored Amazon One approach is that it has less friction and can ease people into the technology. That goes for user habits and comfort levels as well as retailer logistics. Though Amazon is aggressive with tech implementation, it’s not ready to rip out checkout aisles and redesign Whole Foods stores altogether.
The key word there is “acclimation.” In fact, that aligns with the broader Amazon RaaS play, which is all about incubation, as noted. Amazon One will simply be another payment method offered at checkout. This means that the name of the game will be incentivizing users to try it … which is always a challenge for new payment methods.
Just ask any mobile payments player. Not only are consumer payment habits entrenched and anchored in a perception of security, but also, traditional payment methods aren’t really broken. No one is complaining about swiping a debit card, which stands as one of the biggest inhibitors to mobile payments adoption.
So, for Amazon One to get over that adoption hump, it will likely have to offer some other value exchange. That could be onboarding promotions or marketing campaigns that stress time savings for frequent and/or rushed shoppers. It could also lean on the “touchless” angle to play into Covid sensitivities.
Meanwhile, Amazon is attacking from several angles. In addition to Whole Foods, Amazon One scanners have been installed in several Seattle-area Amazon Go and Books locations. It claims to have enrolled “thousands” of shoppers in the program. It’s not Amazon scale, but it’s a start.
As Amazon continues to mature, it needs to find revenue growth in new, creative places. The company’s booming advertising business is one such conquest. Iterating on the AWS playbook by bringing tech-fueled logistical innovations to physical stores could be another. Or perhaps Amazon just likes grocery stores and salons.