Amazon Rival Grabango Shutters Due to Lack of Funding for Cashierless Technology

Cashierless Checkout Startup Grabango: Key Insights

• Grabango Failed to Secure Funding: The startup launched in 2016, when the investment frenzy for cashierless technology began. Since then, a growing number of startups have struggled to secure funding for new ventures.

• Amazon Remains the Leading Player: Amazon's secure financial footing gives it more freedom to try innovations that startups typically don't have. While the Just Walk Out (JWO) technology is being rolled out in public places, Amazon is not exempt from challenges.

Grabango is a venture-backed startup that was working to beat Amazon in the race for cashierless checkout technology. But Grabango has now been forced to shut down, as the startup was unable to raise enough funding to continue operations. 

Grabango was founded in 2016, around the same time that Amazon introduced the concept of contactless checkout for its Amazon Go stores. The first Amazon Go store opened in 2018, while Grabango has been working with other grocery competitors such as Aldi and Giant Eagle.

Tough Investment Climate Since 2022

According to CNBC, Grabango raised over US$73 million, with its most significant funding round in 2021. Since then, the venture capital market for innovative startups has seen fewer and fewer funds go through. Grabango was able to raise US$39 million in June 2021 and has announced a planned IPO. But investment has been harder to come by because of a climate that discourages spending, fueled by inflation and economic uncertainty. 

Since 2022, only a few venture-backed companies have debuted on the U.S. stock market. Analysts conclude that the days of easy venture backing are over, and startups are more exposed to rivalries and financial losses. Other startups in the cashierless technology sector include AiFi and Trigo.

Amazon Sets the Stage, Again

The largest player in the field is Amazon, however. The eCommerce giant has set the stage for cashierless technology, bringing a glimpse of the future to grocery shopping. While the technology has been tested and is available in public venues such as stadiums, arenas, conference centers, and airports across the U.S., some challenges remain. 

These include privacy concerns, the accuracy and functionality of the technology, and whether the overall costs are worth the potential benefits. All of these issues likely contributed to Amazon's decision to scale back the technology in its Amazon Go and Whole Foods stores.

Physical stores account for only a small portion of Amazon's total revenue. In 2023, revenue from physical stores was US$20 billion. Cashierless technology was seen as a differentiator for Amazon's physical store network. Now, however, the Just Walk Out technology is being implemented in other locations. The company has also moved the JWO unit into its cloud computing division. 

Amazon's deep pockets allow it to try out new store concepts more freely than startups, which are more dependent on consistent backing. It is a safe bet that cashierless checkout will become the standard in the future. The new industry is going to continue expanding, the question is only which of the many contenders get to participate.

Sources: CNBC: 1 2 – European Data Protection Supervisor – The Spoon