In China, 'Amazon Go' style stores are almost old news
The cashierless Amazon Go concept is inspiring fear in traditional U.S. retailers, but the idea is already mainstream in China.
A cashierless chain called BingoBox has grown to 300 locations and 30 cities in China in about two years, and is planning to expand to other cities in and outside of China. To shop at BingoBox, consumers use an app to gain access to the store by scanning a QR code. They then select items and pay via WeChat Pay or Alipay, with sensors "checking" the card to make sure no unauthorized items were selected.
By comparison, Amazon opened its first Go store in January in Seattle, and will reportedly add up to six stores by the end of this year. Even though that's much less than BingoBox, there are some signs that Amazon's pace of expansion may be too fast given the lack of consumer adoption of the necessary technology in much of the U.S.; and there's no sign Amazon is planning to turn its acquired Whole Foods network into cashierless stores.
In China, BingoBox isn't the only major cashierless chain in town. JD.com, China's second- largest online retailer after Alibaba, is in the midst of opening hundreds of unstaffed stores in collaboration with the real estate developer China Overseas Land & Investment, according to The Telegraph. These stores use facial recognition technology to generate heat maps to identify and track users, who then pay via a linked mobile app. JD is also piloting driverless cars to deliver groceries.
There's very little migration toward no-cashier stores elsewhere in the U.S. Starbucks is testing the concept in Seattle—a relatively tech-savvy location that won't provide a lot of intel on the concept's potential elsewhere. A couple of startups, Standard Cognition and AiFi, are building systems for traditional brick and mortar chains with technology mostly at the demonstration stage.
"The success of new payments in general indicates there is an appetite for this kind of thing," said Michael Suswal, COO of Standard Cognition, who adds U.S. retailers tend to be more conservative than Asian retailers in adopting technology. "What's going to do it for them is is seeing one or two retailers having success."
In Europe, the trend is also very early, with German electronics retailer Saturn being among the early testers of cashierless stores. Saturn is collaborating with MishiPay, a mobile self-checkout platform, to preregister consumers to check into stores and automatically pay for items before leaving.
Elsewhere in Europe, an IT developer has opened a small convenience store in with no cashiers in Sweden, though consumers don't pay automatically at the store. It's a membership store in which consumers pay an aggregated monthly bill.
"The trickiest part is ensuring that all physical items appear in that virtual shopping basket and are charged accordingly," said Zil Bareisis, a senior analyst at Celent. "Retailers have been experimenting with different approaches, such as self-scanning [or] Amazon’s smart shelf technology, while BingoBox uses a special checkout counter equipped with image recognition and machine learning technologies to recognize the items."
AiFi uses artificial intelligence, sensors and cameras to detect shoppers and items, then executes payments via the consumer's mobile wallet. Standard Cognition uses cameras. Amazon has not released a lot of details about the technology that powers Go, but it's reportedly using sensor fusion, which combines information and images from sensors to improve performance.
Amazon faced early issues with its technology, reportedly with sensor identification, that caused delays in its opening. BingoBox is not only larger, it's more mature—having been steadily opening stores for two years.
BingoBox's investors include the Beijing and San Francisco-based GGV Capital. GGV also invests in Coinbase, Alibaba and Grab, the Asian ride-sharing and financial services app. Like BingoBox, Grab has quickly integrated value-added technology to its core ride-sharing app much faster than a famous American counterpart, in this case Uber.
BingoBox and GGV did not return requests for comment. Hans Tung, a managing partner at GGV, said last week at a retailers conference that checkout at BingoBox takes about one second, compared with 8.6 seconds for a manual checkout, and BingoBox is achieving 99.6% accuracy.
Tung's link of digital payments to in-store activity is supported by broader consumer trends in China. Retailers are quickly eliminating cash as a payment option, which dramatically boosts mobile technology use, argues Azoya managing director Franklin Chu. The trend is benefiting China's mobile wallets, which are growing much faster than U.S. wallets.
Ironically, this speed is driven by BingoBox's use of simpler tech. China's mobile payment apps rely on technology that's mostly in wide usage, encouraging easy use and uptake. And BingoBox positions itself as a simpler, smaller store than a major big-box supermarket.
"The fact that BingoBox has been described as a 'cross between a convenience store and a vending machine' and has limited stock is also a factor in its success," Bareisis said.