Retail technology: Amazon leapfrogs RFID shopping

Q. A few years ago, I saw you demonstrate technology for RFID (radio-frequency identification) shopping at a CPA conference where you predicted this technology might one day replace bar codes. Do you still believe RFID technology is the future?

A. You are correct. I predicted big things for RFID retail shopping in both my conference presentations and my November 2013 JofA Technology Q&A topic “What’s Next?”, but it now appears that this technology may be derailed. RFID retail shopping technology consists of electronic bar codes that send a radio signal about 30 feet in every direction, broadcasting bar code-like information. This technology enables an accounting system (connected to RFID readers) to automatically track inventory as it moves through an organization, increasing tracking speed and accuracy while also eliminating the need for manual inventory-tracking methods.

In 2004, Walmart announced plans to require its top 100 suppliers to add RFID tags to their pallets of merchandise and cases of goods so its accounting system could track the products as they entered and moved through the retail giant’s warehouses and store locations. It seemed like a natural progression for RFID tags to reach the retail shopping environment, enabling customers to enjoy “walk-away” shopping, which would eliminate the need for cash registers and cashiers. But subsequently, the adoption of RFID technology at the retail shopping level has been somewhat stifled, primarily by the higher costs of attaching RFID tags to individual products.

Now, Amazon has announced it is embracing newer technology that could possibly leapfrog RFID technology. Specifically, Amazon claims to have adapted the same type of visual technology used in self-driving cars to track customer purchases in their retail stores, as follows:

As customers enter the store, they scan their Amazon Go app (installed on their smartphone) on a kiosk (or present their ID to a store employee), enabling the store’s technology to identify the customer. Thereafter, cameras located throughout the store track each customer and watch him or her shop. As customers remove items from the shelves, the Amazon Go technology adds those items to each customer’s virtual shopping cart; if a customer puts an item back on the shelf, the technology removes the item from his or her virtual cart. The customer continues shopping, selecting items, and placing them in his or her pockets, bags, or physical shopping carts. Once the customer is finished shopping, he or she simply walks out of the store. As the Amazon Go technology sees the customer leaving, it finalizes and completes the transaction by charging the customer’s debit or credit card set up in the Amazon Go app, where the receipt will appear.

Though it might sound a little creepy to have technology watching so closely while you shop, it works using recognition algorithms. Once you scan the app or show your ID upon entering the store, the technology recognizes you and digitally maps your face, hair, and even your clothing so it can track your movement throughout the store. Much in the same way self-driving automobiles can recognize stop signs, traffic lights, and oncoming traffic, this visual shopping technology (which Amazon calls “Just Walk Away”) recognizes when you remove an item from the shelf.

Effectively, this new technology achieves the same result that RFID shopping promised nearly two decades ago, but it sidesteps the need to attach individual RFID tags to each product. With this cost-prohibitive obstacle removed from the equation, “walk-away shopping” has a chance to become commonplace in the foreseeable future. Amazon’s first Amazon Go store opened for testing in the fall of 2016 in Seattle.

Based on this newer technology, I will renew my prediction that within the next five to 10 years, you may be faced with the decision to shop at either a store with cash registers, cashiers, and waiting lines, or a store without them. Further, I predict that you will select the latter option because it will be a faster shopping experience and the store will likely be able to offer lower prices as it eliminates the costs of cash registers, cashiers, and square footage for checkout lanes. As an additional benefit, this new technology could possibly reduce or eliminate shoplifting, thereby lowering the store’s costs of operations even further. An Amazon-produced video demonstrating this technology is available at youtube.com.

About the author

J. Carlton Collins (carlton@asaresearch.com) is a technology consultant, a CPE instructor, and a JofA contributing editor.

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