Hey retailers, it might be time to ditch your stores, move your inventory to the metaverse, replace your staff with robots, switch from cash to crypto and invest all your profits in some blockchains.

But before you do, it might be worth stopping to consider all the technological utopias that have not come to pass.

Operational complexity, low margins and the eagerness to please hard-to-please consumers makes retail an ideal industry for marketing new technologies, both practical and fanciful.

The turbulence in the industry and jitters around Amazon’s rapid growth last decade has driven smart technological adoption like new inventory management systems, as well as lots of splashy experimentation that hasn’t come to much.

There’s more than a few technologies that, a few years ago, set retail observers and insiders abuzz with excitement. Some of them have taken longer to come to market or catch on than initially thought. Others simply proved less convenient or useful than advertised.

Below we look at just a few technological revolutions that are taking a little longer than boosters and techno-optimists anticipated, and might not ever advance like once thought.

1. Just-Walk-Out’s slow walk  

In September 2018, Bloomberg published a story with the headline “Amazon Said to Plan Up to 3000 Cashierless Stores by 2021.”

At the time, the e-commerce giant had just a handful of the small-format Go stores. One of their main selling points was their just-walk-out payment technology, which allows customers to, well, just walk out of the store with their items. No stop at a cashier’s lane or even a self-checkout terminal. Go in, pick your stuff, walk out. Easier than easy.

Such an expansion would have made Amazon one of the largest convenience store operator’s nearly overnight. But it never happened.

At the time of this writing, Amazon has just 27 Amazon Go locations. The expansion of its cashierless technology has become broader than Amazon Go, but not that much broader. It has more than 40 locations of its Amazon Fresh grocery concept, which incorporates the cashierless technology, and the company also added the tech to its first Whole Foods this year. Most of those stores are in large, wealthy markets.

Amazon is not the only maker of the technology. Others, such as startup Trigo, have also developed just-walk-out payment systems. Even so, just-walk-out stores are nowhere near ubiquitous or even very common as of yet.

So what happened? Why hasn’t the country become a utopia of frictionless convenience, with not even a few button pushes standing between consumers and the transfer of their money to retailers? There are a few obstacles between reality and the mass adoption of this supposedly friction-free form of shopping.

A team from Alvarez & Marsal noted in a recent paper that first-time use by customers of just-walk-out technology can require “a little bit of patience.”

The Alvarez & Marsal team found that barcodes for goods on the Amazon app, for example, “took longer than it (probably) should have,” and they observed a crowd of five or six customers at the entryway an Amazon Go store who appeared to be “struggling in their own ways to determine how to enter the shop.” 

At one of Amazon’s Whole Foods stores using the just-out-walk technology, the Alvarez & Marsal team were able to “trick” the system — by moving items around, returning them, returning them to the wrong spots and so forth — into ringing up four wrong items out of 19 on checkout, an error rate of over 20%. 

“I went in, and I took my organic avocado, and I walked around the store and I stacked it with the conventional avocado. And then I switched,” John Clear, director in Alvarez & Marsal’s consumer retail group, and one of the study’s authors, said in an interview. “I did all that kind of stuff to try and get the cheaper stuff for the customer.” 

While customers might not mind an error in their favor (the A&M team also found errors in the store’s favor as well), such mistakes by the system can inhibit retailers from using the technology.

Shrink is a major profit suck for retailers, and just-walk-out technology holds the promise of a solution, but whether it has fulfilled that promise is still an open question.

“In theory, this is a shrink killer,” Clear said. “You track the product the entire way through the store, and customers can't get it unless you have their credit card number on file. It's pretty difficult to steal, right?”

It’s not entirely clear today just how much the system is able to eliminate shrink, though. Amazon doesn’t disclose shrink numbers from its just-walk-out stores. And Clear pointed out that other firms that specialize in just-walk-out technology haven’t put a ton of emphasis on shrink elimination when marketing to retailers.

“I would have expected that they would put that front and center as a benefit,” Clear said. “But right now they haven't. So, it may not be impacting shrink as much as they expected.”

If using just-walk-out technology is difficult for customers at first, for a retailer it is exponentially more challenging to implement, and costly.

“It's an extremely expensive technology to employ. And I just think that is a major barrier to adoption,” Neil Saunders, managing director with GlobalData, said in an interview. “In a small store, it's expensive, but it kind of works. You think about a larger store like Walmart, how on earth do you deploy it? It would be an absolute nightmare from a cost perspective.” 

For consumers, Saunders said that “I don't think most people are like, ‘You know what, it saves me four or five minutes of my time in the grocery store by not having to line up, I will therefore use this retailer.’”

Even with the challenges, Clear thinks broader adoption of just-walk-out is inevitable. “This is a when, not if, conversation,” Clear said, pointing to retailer’s struggles to procure enough labor in stores as well as the potential cost savings. “The retailers who are proactive stand the best chance to succeed in the long run, which is why you see innovative companies already looking at it in such detail.”

2. Alexa, how about you leave the shopping to us?

Like just-walk-out technology, shopping via virtual assistant promised a revolution in convenience for shoppers. Rather than typing words into a search bar and going through a digital checkout, a robot named Alexa or Siri or Google could do all the ostensibly arduous work of online shopping for you. In the most breathless imaginings, smart speakers and voice assistants can act as (algorithmic, corporate-controlled) personal shoppers and stylists. 

But voice shopping, depending on a customer’s goals and preferences, can also introduce a host of new, unintended complications and frictions through its essential features, starting with its verbal nature.

“Shopping is very visual. People like to see products they're buying, especially with things like fashion but even some very simple things,” Saunders said. 

He added: “If you say to Alexa, ‘Oh, reorder batteries’ — there's lots of questions over that. What batteries? What brand are they? How big is the pack size? What is the price? All of those things are very easy to do online, they're very easy just to quickly look on a website and make a choice. With voice shopping, it's actually very difficult to make that choice and selection because you don't get all the information you need.”

One study from 2018 found that 35% of voice assistant users had purchased products through the technology, and it projected that 40% of consumers would use the technology as an alternative form of purchasing versus mobile apps and websites. 

For now, though, adoption is still fairly modest. In one of its most recent voice commerce surveys, payments publication PYMNTS found that 26% of consumers had used a voice assistant to make e-commerce purchases in May — a figure that has trended upward over time but is still short of some past projections. A survey from Commerce Next found that only 8% of consumers regularly purchase via voice assistant when shopping online. 

At their most practical, voice assistants could save time and effort on repeat purchases. Adam Pressman, a managing director in AlixPartners’ retail practice, said in an interview that voice shopping might be a more attractive option for those purchases that are focused on replenishment, reordering or tracking the status of a purchase. “Where you run into more headwinds is in discovery, and searching and browsing and comparison,” Pressman said.

But reordering on many websites today is both easy and efficient. If the site has payment information for a customer already, it can easily take less than a minute.

Even for those simple tasks, many consumers may not be interested in shopping by voice. “You would in theory think, ‘Boy shopping is easier, because you can just do everything without having to scroll through websites,’” Saunders said. “It's actually more difficult. It actually puts a lot of friction in place. And I think that's one of the things that happens with a lot with technologies.”

Amazon may be rethinking its own technology. This company is reportedly laying off as many as 10,000 employees with a focus on its device division including Alexa.

3. Drones in a holding pattern 

To look at the patent office files from 2017 and 2018, one might guess that Amazon and its rivals were engaging in a contest to see who might come up with the most science fiction-like concepts for e-commerce delivery. 

Amazon, for example, described in some patent materials otherworldly possible machines, including a blimp-like aerial fulfillment center that would hypothetically float at 45,000 feet and serve as a launching station for drones to pick up and deliver packages to nearby customers as they placed orders. 

Also consider Amazon’s drone “beehive,” a vertical fulfillment center design that would be a central station for delivery drone traffic. (Amazon also applied for patent technology to help drones respond to terrestrial signals such as screaming voices and frantic arm waving from future humans who might perhaps be trying to get out of the way of delivery drones.)

In 2013, Jeff Bezos predicted that Amazon’s drone delivery system could be operable in five years. But it’s been nearly 10 years since Bezos made that bold pronouncement, and Amazon and others are still testing technologies and systems that are still in their early stages. In everyday reality for the vast majority of consumers, packages are still dropped off by humans in trucks — and trucks that can’t even drive themselves at that.

Use of drones for delivery will likely depend on context. “The use case, like value of product, urgency of need, safety of delivery, all of those would need to factor in,” Pressman said.

Purchases like medications, where the urgency and value is high, could justify drone use more than others. Whether deployment of drones is a part of an overall last mile model or a core feature will also be a factor in their uptake, according to Pressman.

“I can see where it would have a component, but it’s not yet clear whether that becomes a primary vehicle or a complimentary vehicle, if you will,” Pressman said. 

For all the setbacks and the elongated time frame, work is still being done on drone delivery. It’s hard to go through a quarter without a headline making test or development. Walmart is working with DroneUp to add more than 30 drone delivery sites by the end of the year that would give the retailer the ability to deliver 1 million packages per year by drone, David Guggina, senior vice president of innovation and automation at Walmart U.S, said earlier this year.

Amazon has also added locations for its (still-budding) drone delivery program, with the company adding drone delivery to two cities, in Texas and California, this year. The company also recently unveiled a new model of delivery drone, set to come into service in 2024. 

4. ‘It’s just kind of dumb’: A failed robot uprising

More than five years ago, Retail Dive staff stood face to hangdog face with Pepper, a four-foot humanoid robot developed by SoftBank Group, walking the convention halls at NRF’s Big Show in 2017.

Pepper had already been deployed in stores around the world by that point. Its creators trumpeted the number of interactions it had with customers.

“You can extrapolate out, then — not only can Pepper walk you through a decision tree, but also calculate how many people walked by, how many people engaged, and how long they engaged for,” SoftBank Robotics’ general manager told Retail Dive in 2017. “And then, because we have emotional software built in, it can gauge your facial expression to get a sense of whether you were happy, were you not happy, so now you can start to gradiate those impressions.”

Along with the nuanced customer interactions, the technology promised to free up employees for other, more meaningful and valuable tasks while the robot took on the menial stuff. 

Such has always been the process of automation and robots, which have, to be fair, taken on a lot of rote tasks over the decades. Since Retail Dive has been introduced to Pepper, the poor robot has reportedly been fired and assaulted, but mostly ignored in the U.S. Reuters reported last year that SoftBank axed the Pepper line as the Japanese company scaled back its ambitions in robotics.  

“There is a lot of potential for robots behind the scenes [in] digital fulfillment and automation centers,” Saunders said. “Robots on the shop floor doesn’t really work. First of all, because a lot of robots are just silly. You ask a robot where something is and it takes you there. It’s just kind of dumb, to be quite honest.” (Other words Saunders used to describe in-store robots include: “pointless,” “gimmicks” and “expensive.”)

Pepper didn’t thrive in stores, but its robot brethren have made some inroads recently. Sam’s Club, as one example, has deployed robots to check inventory and clean floors.

But Saunders noted that even those robots focused on specific physical tasks can be expensive, and misguided. 

“The thing that a lot of people miss about them is, actually, you don't really want a robot doing that. You want a member of staff doing that,” Saunders said. “Yeah, [human workers] may be a little bit more inefficient, and maybe it costs a bit more, but the staff looking and making sure things are in stock on shelves — they're a presence on the shop floor.”

Saunders added: “You can say, Hey, there's someone, I can go and ask if I need to find something. There's someone I can talk to. There's someone who smiles at me and says, ‘Hello.’ These are all really soft things that robots do not fulfill and accomplish.”

5. Paper books: the un-disruptables

The paper book was once a disruptive technology in its own right. In the digital age, paper books and the brick-and-mortar stores that sell them have proven stalwart, harder to knock aside than many technologists and analysts might have thought.

To be sure, there has been retrenchment in book retail with the death of Borders and other closures. The number of bookstores fell by roughly half between 1998 and 2019, according to the Census Bureau.

That happens to coincide with spectacular growth at Amazon, which, you might recall, started out as an internet bookstore. Whatever cause-and-effect relationship, Amazon’s cheap shipping of paper books may well be the starker disruptive force for book retail rather than the company’s e-reader (the Kindle) and e-book business.

Some analysts in the years prior predicted that ebooks would match or overtake printed books halfway through the 2010s. As things played out in reality, unit sales of e-books went years without growth after 2013 before getting a bump in 2020 due to the widespread closure of retail stores during the early pandemic — only to fall again in 2021, according to NPD Group. In the first half of the year last year, ebooks made up less than one-fifth of all book sales, making them vastly outsold by paper books.

That matters for retail. Consider the digitization of other media, including movies, music and video games. Consider the fates of Blockbuster and other video stores, Tower Records and Sam Goody, and the current struggles at GameStop as video games become increasingly sold in digital form. Meanwhile, Barnes & Noble is still standing (though has its scars). And the ranks of independent booksellers has actually grown since the pandemic started.  

As a retail product, and medium for pleasure and knowledge, paper books and the physical stores that sell them have proven durable. Perhaps for the simple reason that physical books are just more fun to curl up with. 

“A lot of people like the physical product, they like the touch and the feel of a book,” Saunders said. “They like the sort of history of a book, especially if it's a used book. They can pass it among friends. There's also people who just say, ‘Look, you know what? I spend most of my day looking at the screen, through my work. I do not want on my downtime to pick up another screen.’”

It’s hard to not bring up self-checkout when discussing the convenience store industry’s evolving use of technology. 

Over the past few years, major c-store players like Circle K, Wawa and Sheetz have taken on autonomous checkout in various forms like standard kiosks or mobile scan-and-go. Smaller chains such as Spinx and Texas Born are tapping into the technology as well. 

Self-checkout can speed up a customer’s store visit, and it appeals to those who don’t want to interact with a cashier.

“Having a self-checkout option gives people an option who are just looking to grab something and get out quickly or not have to speak with somebody as part of their transaction,” Linnea Geiss, chief operating officer of retail loyalty and technology company PDI Technologies, said in a recent webinar breaking down c-store trends for 2023.

While retailers can use self-checkout to eliminate their cashier roles altogether, Geiss said the retailers she’s seen deploy self-checkout have used it to augment the interplay between cashiers and customers — not to replace that dynamic entirely. 

This could, in turn, give retailers a bit more freedom in terms of how they staff their stores, she said.

“Maybe you don’t need to have your cashier shifts staffed to peak transition times because you can use your self-checkout to augment it,” she said. 

This appears to have been Spinx’s mindset when the retailer took on the technology last year. When Spinx launched its self-checkout kiosks, it moved those teammates who usually run the registers to instead focus on store cleanliness.

“We’ve heard from some peers in the industry that customers can get upset and interpret the implementation of this technology as reducing jobs, but in our case, nothing could be further from the truth,” Spinx President Stan Storti said at the time.  

Costs and drawbacks

Although the different self-checkout technologies vary in cost, a new self-checkout kiosk averages around $30,000, while a four-lane kiosk setup averages around $125,000, according to pricing information site KompareIt.

Geiss said if a retailer has the capital and the transaction flow to support getting a self-checkout system, then it could be worth the investment.

On the other hand, standard self-checkout kiosks aren’t the most reliable systems and can often frustrate those operating them.

About 67% of consumers said they’ve had a self-checkout machine fail on them while using it, according to a 2021 survey from experience management platform Raydiant. Additionally, self-checkout systems can lead to increased theft at stores, whether intentionally or by customers accidentally making a mistake with how they scan their items.

Moreover, some people may not know how to use self-checkout systems altogether, creating even more frustration for customers and staff.

“I think we can all relate to the experience of being behind somebody [in line] who doesn’t know how to use that technology,” Geiss said. 

Follow the customer

So is self-checkout worth the investment? That depends — and it essentially comes down to who the customer is and what they want.

“If you’re in an area where the volume warrants it, I think it’s worth trying,” Geiss said.

PDI CEO Jimmy Frangis said in the webinar that leveraging traditional self-checkout is a “great tool under the right circumstances.” 

However, he noted that while standard and mobile self-checkout platforms “will be important moving forward,” knowing how consumers want to transact and interact with c-store retailers — and meeting those needs — is the main priority.

“I think we should be prepared to give consumers those choices,” he said.

Ah, the metaverse. There’s that buzzword again.

What is it? And where do you find it?

Some consumers might have those exact questions. A Piper Sandler survey of 7,100 U.S. teenagers from April found that 48% said they are unsure of or not interested in the metaverse. Even more, a September report from Wunderman Thompson Intelligence found that only 38% of global consumers were familiar with the concept.

Whatever it is, retailers are diving head first into it — and there are plenty of users watching.

Companies across the industry are increasingly holding activations on platforms deemed to be part of the metaverse. Definitions of what the metaverse actually is (or is meant to be) can vary, but generally, it is a virtually immersive version of the internet. Roblox, Decentraland and Sandbox are all spaces retailers are exploring to tap into the metaverse, even if they aren’t as interoperable as some want them to be at the moment.

Roblox may be one of the biggest platforms with 58.8 million daily active users, a 24% increase from a year ago, according to its latest earnings report. The platform is resonating with younger users as well: As of Q2, 24.2 million daily active users were under the age of 13, according to Statista.

With that age group destined to gain buying power over the next decade, it’s no wonder retailers are trying to reach them where they are.

Companies from Gucci to Walmart to Gap have launched activations on Roblox, ranging from well-designed virtual pop-up stores to interactive games.

But is the metaverse just a virtual billboard for brands, or is there a way to connect real-world merchandise and revenue to it? Here’s a look at how some retailers are using the space for tangible benefits.

‘Consumers continue to prioritize physical interactions’

Beyond developing aesthetically pleasing activations in the space, retailers have started to incentivize benefits such as real-world apparel collections, discounts and loyalty perks to it.

Accessories retailer Claire’s launched ShimmerVille in Roblox last month, with a focus on self-expression using virtual accessories that are also sold in its real brick-and-mortar stores. Victoria’s Secret’s youthful sub-brand Happy Nation collaborated with Roblox in June by launching a virtual obstacle course, where users could help donate actual pairs of underwear from the brand to Undies for Everyone, as well as view the latest capsule collection. Ralph Lauren announced a clothing capsule for players on the gaming platform Fortnite earlier this month, which is tied to a physical clothing collection with a limited edition version of the brand’s iconic logo.

These brands could be clued into what’s important for consumers when it comes to virtual worlds, according to Forrester data. In a survey from April, Forrester asked more than 1,500 adults to rank what mattered most to them when considering visiting a metaverse space. Behind respecting data and privacy, U.S. respondents indicated that “receiving an offer/discount/coupon on physical products from the brand” was the second most important considering factor.

In April, restaurant chain Chipotle even released a burrito-making interactive game within Roblox that yielded users in-game Burrito Bucks which could be exchanged for real-world entree codes.

“The whole point here is that out of a list of maybe 10 things, the top four were all related to physical environments,” Mike Proulx, vice president and research director at Forrester, said. “What this tells us is that consumers continue to prioritize physical interactions over immersive or virtual interactions. Where the space becomes interesting is when it becomes more of a hybrid.”

Deloitte’s Digital Principal Kevin Rose would agree that there is a lot of potential in connecting more tangible benefits with the metaverse. The space can also be great for product testing, according to Rose.

“If you think about the way you had to really test products in the past, the only real way to test features and attributes of many products was to develop a batch of those products and get them out to market, which is expensive,” Rose said. “But the ability to launch that from a digital perspective … allows you to do things that scale in a much cheaper way.”

Definitions of what the metaverse is and could be may differ, but Deloitte sees a hybrid environment as the more likely case in the future, meeting somewhere between fully immersive day-to-day life and augmented physical interactions.

Justin Hochberg, CEO and co-founder of Virtual Brand Group — the company that worked with Forever 21 to launch its Shop City on Roblox — agrees that product testing is a helpful way to use environments like Roblox, where dressing up avatars is a fundamental part of the experience.

“What about things that really are not part of your product category, but really could be if time and money were no object?” Hochberg said. “In the metaverse, I can create a race car as quickly as I can create a T-shirt … That is the power of using the metaverse as a virtual research and development lab. And we're doing all of that to great success.”

What about an immediate ROI?

Whether or not these virtual worlds can bring in real revenue for brands in the near term is less decided by experts.

Certainly, there is money being put into platforms like Roblox. In its most recent earnings report, the virtual world showed revenue was at $517.7 million, up 2% year over year.

The metaverse could create $5 trillion in impact by 2030, according to a McKinsey estimate from June. The report said the metaverse would have a $2 trillion to $2.6 trillion market impact on e-commerce. And in March, Citi estimated the addressable market for the metaverse could reach between $8 trillion and $13 trillion by 2030.

But can brands see more immediate returns on their investments?

For Forrester’s Proulx, he sees it as more of a space to learn and test out at the moment, where brands can focus on garnering the attention of new audiences.

“In only rare circumstances is the brand going to see a monetizable return on investment,” Proulx said. “We're bullish on testing and learning. But temper both your expectations and your investments in the metaverse ... If you promise your CEO that there will suddenly be a 2% increase in revenue, that's just not going to happen today. That's not to say that it can't or won't happen in the future. But today, it's just way too nascent.”

And Hochberg thinks the metaverse as it exists right now could be useful beyond marketing for brands.

“I think that is one of the biggest myths that is hurting the metaverse right now, is that it’s just for marketing,” Hochberg said. “In general, I think that that is a faulty assumption ... What you’re telling me is that you've gone into a world that has no physical constraints, where you can create anything, engage people in any way and the only thing you're doing is creating a more sophisticated Time Square billboard?”

Hochberg looks to his work with Forever 21 as proof of the revenue possibilities on Roblox.

When someone searches Forever 21 on the publicly available Roblox Avatar Shop, the top rows of results are all virtual avatar accessories and apparel, all sold by the retailer. These items are available for purchase using Robux currency (which is purchased with actual money) and can generate real-life revenue for the sellers. Thousands of black Forever 21 beanies sell on Roblox every day, according to Hochberg.

Not all brands on Roblox are opting to sell their own virtual goods. When searching for other brands who have held activations in the space, such as Nike or Gap, the top results are items designed and sold by individual creators rather than the brands themselves.

But whether or not profits can come from the metaverse immediately or in the future, many agree that the concept itself has lasting power, regardless of what it ends up looking like.

“Even though it seems like that hype cycle [around the metaverse] has ended, I would actually say that companies are probably as invested and as focused now as they've ever been in the last six months and I think that’s going to continue,” Rose said. “I think the reality of this is that these technologies are going to change our lives. This is here to stay. There are those people who thought that the internet was just a hype cycle ... And I think this is going to have a similar impact.”

Crypto has had a chaotic year. 

“I think after the market rout in the last week or two, I’m not sure any of us are truly ready for cryptocurrency,” said American Eagle Outfitter’s Chief Marketing Officer Craig Brommers at the CommericeNext 2022 conference last month. The retailer made the decision not to accept cryptocurrency as a form of payment when it was developing an NFT collection last year.

The crypto market crashed in May, with extremely volatile trading trends. Consumer Financial Protection Bureau Director Rohit Chopra even cautioned businesses, telling Bloomberg that stablecoins might not be ready for payment. Nonetheless, plenty of retailers have announced they are accepting crypto as payment. Brands such as Gucci, Balenciaga, Alo Yoga and Tag Heuer are some notable companies that entered the crypto game recently.

Even brands within the same arena are thinking about digital currencies differently. Pacsun and American Eagle Outfitters are both betting big on digital transformation as a way to attract and retain a youthful audience. Both brands have been involved in virtual shopping and gaming experiences by launching initiatives in Roblox. Pacsun released mall rat-themed non-fungible tokens this year and auctioned some off at the immersive virtual shopping event ComplexLand 3.0. American Eagle Outfitters also released an NFT collection last year, and recently created an apparel collection with designs from NFT creators. 

The key difference in both brands’ NFT launches: Pacsun sold them in exchange for crypto and American Eagle Outfitters did not. 

In October of last year, Pacsun started accepting crypto as payment through BitPay, dubbing itself as the first “youth fashion retailer” to do so. 

"The Gen Z audience, our primary consumer, is very tech oriented, and we dedicate a lot of our efforts towards social media and ecommerce to align with their lifestyles and resonate with them on a more personal level,” Michael Relich, co-CEO at Pacsun, said in a statement at the time. “Seeing their increasing desire towards cryptocurrency, it was clear that we needed to adjust and offer BitPay as another payment option, to further instill their confidence in us as one of their go-to retailers that truly listens." 

American Eagle Outfitters thinks otherwise.

“When we thought about our 15- to 25-year-old customer, the reality is they were not ready for cryptocurrency,” Brommers said at CommerceNext.

Who is using crypto? 

Data paints the picture that usage of crypto, whether for investment purposes or as a form of payment, is very different across gender and age.

A survey released by the Pew Research Center in November 2021 showed that men are twice as likely to say they have used crypto compared to women. Looking at the age group of 18- to 29-year-olds, 43% of men said they’ve invested in, traded or used crypto. This compares to only 19% of women in the same age group.

Crypto currently attracts a younger audience for both men and women, which is likely of interest to Pacsun and American Eagle Outfitters. Thirty-one percent of 18- to 29-year-olds surveyed have used crypto in some capacity, compared to only 8% of those 50 to 64 years old.

Using crypto for investment purposes or through the purchase of an NFT is quite different then using it as a form of payment, though. A May 2022 report by The Federal Reserve Board says that crypto used for financial transactions or purchases is much less common than its usage for investment. 

The report found that in 2021, only 2% of U.S. adults used crypto for payment over the prior 12 months. Those who used crypto only for investment purposes tended to have a higher average income, had a relationship with a traditional bank and had retirement savings compared to those who used crypto for payment purposes. 

But this is the current demographic, and won’t necessarily stay the same over time.

“When we look at the totality of the research, no doubt that the group that has been more active in adoption of cryptocurrencies and stablecoins has skewed younger,” Deloitte U.S. Banking and Capital Markets Payments Leader Zachary Aron said in an interview with Retail Dive.

“And there's also a correlation that the younger demographic ... tends to have been more underbanked overall as well,” said Aron. 

When asked about how retailers should consider that data in their decision making, Aron said, “I wouldn't necessarily evaluate it just on the premise of accepting crypto or not, but really on the premise of who's my customer base that I'm trying to attract.”

Deloitte recently released a report on its survey of 2,000 senior executives at U.S. retail companies to examine interest and investment into crypto as a form of payment. The report found that 64% of merchants surveyed indicated that their customers have a significant interest in crypto payment options, and 83% expect that interest to grow over the next year.

Based on this data, many companies are looking at the long-term role of crypto in retail transactions, perhaps expecting the current user demographic to grow and change over time.

Crypto users aren’t too swayed by market fluctuations, according to a study by Gartner’s Software Advice. Its 2022 Cryptocurrency in Ecommerce Survey, which surveyed 596 U.S. consumers who have used crypto as a payment type once per month in the past year, found that over half of respondents plan to spend more using crypto in the next year. Only 29% of respondents who intend to spend more with crypto in the coming year are deterred by its value fluctuations.

That said, the report cautioned small- and medium-sized businesses from jumping into crypto payment too soon, stating that some perceived consumer benefits for this payment type don’t necessarily help retailers. For example, the idea that crypto transactions are private isn’t completely true since businesses need to report any changes in crypto value as they are subject to capital gains taxes. Additionally, the idea that transaction fees are low doesn’t always remain true for merchants since the fees change over time, per the report.

American Eagle Outfitters’ Brommers appears to be taking the short-term view though, based on what is known about the current active crypto audience and how volatile the digital currency market has been this year. Pacsun, on the other hand, is likely looking at the long-term potential of widespread crypto adoption.

“We certainly think that there are attitudes around digital currencies that are obviously influenced by the investment side of the digital currencies space,” Deloitte’s Aron said. “Businesses are taking that longer-term view, they do recognize that there will always be short-term ups and downs. But the longer term aspect of digital currencies being a part of the payment space and how it can enhance the customer experience is something that likely is going to endure.”

The past few years catapulted retail into a digital transformation.

When shoppers were stuck indoors due to COVID-19 restrictions, retailers started investing more in digital strategies to grow sales and entice new buyers. While this meant expanding order pickup technology or creating a more user-friendly e-commerce site, it also meant a push toward augmented and virtual reality.

From trying on glasses and makeup using smartphones to creating more tech-enabled fitness equipment, brands continue to invest in the space.

This also means brands are finding new and varied ways of collecting and using consumer data — a fact shoppers are increasingly aware of.

Consumers want more transparency from companies about how personal data is used, according to Cisco’s consumer privacy survey of 2,600 adults across 12 countries, including the United States. The study found that privacy laws are mostly viewed favorably by consumers. That may be because respondents indicated they are very concerned about how personal information is used in artificial intelligence settings. 

When asked what they think is the most important action a company can take regarding data transparency, 39% of respondents said providing “clear information on how my data is being used” is the top priority, per Cisco. Of the 43% of those surveyed who said they are not able to protect their data effectively, 79% said this was because they can’t figure out how companies are actually using it.

U.S. state governments aren’t waiting for companies to make that information clearer either. 

In 2022 so far, two new state laws have already been signed regarding data privacy, according to the International Association of Privacy Professionals’ 2022 U.S. State Privacy Legislation Tracker, which was last updated on October 7. Three other state laws were signed between 2020 and 2021. Nine other state bills are active and nearly 50 are in inactive statuses across the country.

This indicates that state-level momentum for privacy bills is at an all-time high in the country, according to the IAPP. And tighter scrutiny comes just as companies like Walmart, Peloton and Snap are diving deeper into tech that has the potential to collect biometric identifiers.

It isn’t just new legislation that could impact how companies gather consumer information, as some existing laws are already changing the way brands use technology. One decade-old state law has put retailers in a unique spot, and has already taken multiple of them to court.

Welcome to Illinois

In 2008, a biometric privacy law was passed in Illinois that has recently thrown a wrench in brands’ plans.

The Biometric Information Privacy Act— commonly known as BIPA — defines biometric data or identifiers as “a retina or iris scan, fingerprint, voiceprint, or scan of hand or face geometry.” These characteristics are unique and specific to individuals, whereas more broad characteristics (such as having brown-colored eyes) can apply to many individuals.

The law was enacted nearly 15 years ago because “public welfare, security, and safety will be served by regulating the collection, use, safeguarding, handling, storage, retention, and destruction of biometric identifiers and information.” It also specified that while private information like social security numbers can be changed, biometric identifiers are tied to a person’s biology.

BIPA requires that private entities collecting biometric identifiers must inform people of its collection, the length of time such information is stored and receive a written release from a person to do so. It also states that entities cannot sell, trade or otherwise profit from the collected biometric information. 

The U.S. Department of Homeland Security defines biometric data more broadly as “unique physical characteristics, such as fingerprints, that can be used for automated recognition.”

BIPA outlines what it does not consider to be a biometric identifier as well, which includes information from written signatures to demographic data to donated organs.

What makes this law more unique (and more concerning for brands) compared to other state laws is the fact that citizens, not just the government, are allowed to sue under it, according to Matthew Kugler, professor of law at Northwestern’s Pritzker School of Law.

“The Illinois statute lets you file private lawsuits for guaranteed payouts,” which has driven litigation in the state, Kugler told Retail Dive.

Walmart, Best Buy, Kohl’s, Giorgio Armani, Louis Vuitton and Estee Lauder are all on the receiving end of lawsuits in Illinois under BIPA. Several of these cases are related to virtual-try on technology.

In 2021, Sephora, Meta and TikTok all settled cases in which they were sued for violating the law.

But why has a law from 2008 suddenly brought on so many lawsuits over the past few years?

“At the time this law was passed, no one was really paying all that much attention,” said Kugler. “And what seems to have been the case is a couple of people who were paying attention, like some aspects of the banking lobby, got exemptions under the law.”

That’s changed over the years though, as more companies are being brought to court. Now brands are paying attention, according to Kugler, and many have lawyers on the books who are well versed on the topic.

Treading lightly

In September, Walmart released a large upgrade to its virtual try-on capabilities for apparel. With its new Be Your Own Model functionality, shoppers can try on over 270,000 women’s clothing products by uploading a full-length image of their body — which is saved to a user’s account — through the company app. The function specifically recommends users wear fitted, minimal clothing and heels. 

When asked if any company employees were able to access those customer images, a Walmart spokesperson told Retail Dive “we are focused on protecting our customers’ personal information and do not make these images broadly available to our associates.”

Walmart’s new feature doesn’t copy and paste the image of a shirt or dress onto your photo, but it uses what Walmart calls “algorithms and intricate machine learning models” to realistically drape the clothing over the body. 

The spokesperson also said that “some images may be used to improve object recognition using computer vision for this tool” after they are blurred and anonymized in an automated process.

When it comes to data used in machine-learning and AI, 54% of respondents in Cisco’s survey said they are willing to provide their anonymized data to improve the technology. However, 60% expressed concern over how their data is used for AI by companies. 

The anonymization of data, generally speaking, doesn’t always protect everything about consumers’ identities, according to Jiaming Xu, associate professor at Duke University. Xu says that the unique behavior patterns of an individual can still be used to identify someone even after the data about them has been anonymized, according to a blog post from Duke University’s school of business.

When a consumer uses Walmart’s new function in the app, they must agree to a list of privacy terms, including the acknowledgment of the following:

“This tool uses body scanning technology to collect and process your image and biometric information to measure your unique body features.” 

Another condition says the “experience may require your measurements and images to be shared with a third-party service provider.”

Other aspects of the privacy terms include a note about how long the images are stored for (no longer than four years) and what happens to them if a user’s account is deleted. This could be an indication that Walmart is aware of the unique storage and destruction aspects of BIPA.

The same Walmart spokesperson told Retail Dive that though the company does not currently share any customer images, “it is our plan for any customer images to be blurred and anonymized before sharing with a third party.”

When asked if the functionality collects biometric data, the spokesperson said “we only collect biometric data consistent with our Walmart Privacy Policy.” That privacy policy might not be read by all customers though, as only one-in-five Americans say they always or often read such policies, according to a Pew Research survey in 2019.

As retail tech advances, ‘get your paperwork in order first’

Regardless of whether or not a company is based in Illinois or is actively working with data that falls under BIPA, many are still cautious.

“Even companies that don't do business in Illinois are trying to be a little bit better with their disclosures to take into account these other laws that are emerging,” said Kugler.

At-home fitness brand Peloton has a detailed biometric and fitness data privacy policy as well, outlining information on the retention and destruction of such data. 

The policy states the company “may process your Biometric and Fitness Data to make automated decisions about you.” It also mentions that “biometric data is temporarily processed by your Peloton Guide to support the functionality of the product.”

However, when asked to confirm if the Peloton Guide — a strength training device with a camera that uses AI —collects biometric data, a company spokesperson told Retail Dive that it does not. If it does begin to collect such data in the future, Peloton will have members “go through a consent flow prior to any collection being gathered.”

In general, retailers using technology involving cameras may want to be up to speed on privacy laws, according to Kugler.

“If your product involves a camera it isn't that difficult to tell apart, for example, members of an individual family based on their faces. And that is facial recognition,” Kugler said. “So if you're thinking of doing something like that, certainly you want to get your paperwork in order first.”

Social media platform Snapchat — which is run by parent company Snap — has learned this the hard way.

Snapchat has steadily been increasing its usage of augmented reality lenses for retail applications. In October, the platform announced a collaboration with Disguise to release Halloween costume virtual try-on lenses. 

It’s the platform’s lenses and filters that landed it in a class action lawsuit under BIPA. The company settled the suit in August for $35 million. 

When asked if Snapchat’s latest Halloween costume lenses collect biometric data, the company told Retail Dive that they do not collect biometric data tied to specific people, but instead identify eyes or noses from a face generally. The company denies violating BIPA, but earlier this year added an in-app consent notice for Illinois users.

BIPA may have set the stage for such litigation, but it isn’t the only state where brands are being sued for privacy violations.

Sephora agreed to settle a California lawsuit in August for $1.2 million after the state claimed it was selling customer data without informing them. The lawsuit came from the enforcement of the state’s California Consumer Privacy Act, which started taking effect in 2020.

Additionally, Texas opened a lawsuit against Google in October, claiming it violated a state law requiring companies to inform citizens of the collection of biometric identifiers. 

With more states enacting stricter privacy policies to protect consumers, some retailers may be wary to advance their technological capabilities. That skepticism might be useful, according to Kugler.

“There's often a kind of vendor-driven acquisition of new technologies, or someone sells you on this latest and greatest thing, and a fair amount of skepticism is warranted,” said Kugler. “In those cases, if your business is doing just fine without it, ask yourself: 'Do you really need this?'”

Whether it comes to dealing with Illinois or California state laws, Kugler’s advice for retailers is simple.

“There’s always a great virtue for not being the first to do something,” said Kugler. “You want to know whether it's OK to have a virtual try-on room when Walmart does? Give them a year. Find out. In the privacy space, companies like Facebook will always be sued first.”

As Walmart’s business model evolves, a focus on omnichannel strategy is the thread tying together its e-commerce business, fulfillment services, advertising and more, Walmart President and CEO Doug McMillon said at Morgan Stanley’s Global Consumer & Retail Conference on Wednesday. 

Walmart hasn’t been shy about touting its omnichannel efforts and why catering to meet shoppers’ needs across in-store and online channels can boost profitability. 

“We’ve shared before — if people buy in-store and online with Walmart.com, they generally spend twice as much and they shop in-store more often,” McMillon said. The retailer giant is “very excited” about automation as it builds out its e-commerce fulfillment, McMillion added.

McMillon’s sit down with Morgan Stanley Analyst Simeon Gutman provided more details into the role automation plays, which fulfillment methods the retailer is relying on and how e-commerce connects to its alternative income streams and overall profits. 

High-tech supply chain

McMillon said his confidence in Walmart growing its top-and bottom-line growth is partly driven by the chance to improve productivity through automation, particularly with its supply chain. 

“There's more in front of us to do with the supply chain in particular and we're very excited about automation. And I think it's going to really help our store associates and help us with productivity,” McMillon said.

He continued: “Specifically, what we're seeing is — after a number of years of work — there are opportunities to use automated storage and retrieval systems in ambient distribution centers, food distribution centers, e-commerce fulfillment centers and eventually market fulfillment centers next to stores.”

Automation can create customized e-commerce orders for customers or as department- and store-specific pallets, McMillon said. In the U.S., the retailer already receives grocery products on pallets, which make freight handling easier. Now, the retailer wants to use that model for general merchandise and enable stocking from the pallet, he said. 

“It's a different process, eliminating a lot of the hours that we invest in today in the back room of our stores,” he said.

Walmart is turning to automation to not only boost productivity but also to help reduce labor costs. “One of the biggest costs that we have in our e-commerce businesses is for store-level wage investments to pick orders,” McMillon said. 

McMillon said Walmart is working with four different partners on the four types of fulfillment centers. As Walmart has layered on those different types of fulfillment centers, starting with ambient and then adding food and e-commerce with different operating systems, the retailer has worked to sync them together and optimize inventory. Data and algorithm improvements and robotics with its supply chain are allowing for better demand forecasting, allowing for new ways to reduce costs, McMillon said.    

Walmart has also focused on outfitting its existing distribution centers with automated storage and retrieval systems to avoid having to build more facilities, McMillon added.     

In some cases, the retailer is choosing to add new facilities where they’re needed, including a recently opened one in Chicago — the first of four high-tech fulfillment centers Walmart is building over the next three years.        

“There's not a lot of human engagement with that product,” McMillon said about the Chicago facility. “There's still some, which eventually we'll work through to an even greater degree, but it is really slick and also more accurate.”  

Walmart is also using store-level fulfillment in other cases, leveraging the last-mile advantage of store locations near customers and carving out space for micro-fulfillment centers (MFC) while retaining in-person shopping, McMillon said. 

This fall, the retailer bought MFC developer Alert Innovation, following work on a multi-year pilot of the company’s robotic grocery order-fulfillment technology, known as Alphabot. Walmart Chief Financial Officer John David Rainey told investors during its third-quarter earnings call that the retailer is expanding its buildout of MFCs that are attached to or inside its supercenters. 

Evolving business model

The multi-year investment in revamping its supply chain is happening in tandem with changes to the retailer’s business model to focus more on omnichannel strategy, McMillon said.

Walmart has long focused on its stores. But as the retailer built up its e-commerce business, in-store and online shopping felt siloed as recently as last year, McMillon said. Through organizational structure changes, the retailer has achieved a more seamless shopping experience by doing away with channels, McMillon said.

The company is using income from its fulfillment services, advertising and Walmart+ membership to help support its investments in areas that are not yet profitable, while also running its retail business, McMillon said. Among its alternative businesses, Walmart’s marketplace is the top priority due marketplace seller fees and its connection to the retailer’s fulfillment and advertising offerings, he said. 

Building out digital relationships with customers can help the retailer steer people toward its Walmart+ memberships. 

“The primary reason why someone would want to become a Walmart+ member is for free delivery and our food
and consumables customer value proposition is attractive. ... Our challenge is to take that frequently purchased set of items in that relationship and have it extend into more discretionary items and build the basket out over time,” McMillon said. 

Ultimately, Walmart can “see all the pieces” of the technologies it’s leveraging adding up to a profitable model, McMillon said.

So far, the work appears to be paying off: For its U.S. business, Walmart recorded e-commerce sales growth of 16% and 12% in its third and second quarters of fiscal year 2023, respectively — a jump from the 1% increase it recorded in its first quarter. 

“Now, I think we are truly an omnichannel retailer,” he said. 

NEW YORK — Metaverse activations and game-like experiences continue to be on the rise this year as marketers look to reach digitally driven consumers, but until such plays are seen as an experience versus an experiment, valuable success metrics will likely remain out of reach, according to Eric Pulier, CEO of Web3 enterprise class platform Vatom, who discussed metaverse marketing tactics during an Advertising Week panel on Thursday. 

In the past year, brands have leveraged the metaverse in a variety of ways, whether it be a virtual storefront, collection of mini-games, augmented reality experience or as a pathway to nonfungible tokens (NFTs). The number of users visiting such activations and the time spent per session offers some insight to performance. However, a data gap lies in the inability to track success beyond walled gardens, begging the question of whether or not such channels are worth it.

“In the end, the data that you’re getting is similar to doing a very successful television commercial — it’s exposure,” said Pulier. “You’re not really building a relationship with that audience, you’re not getting the first party data, you’re not then following up and creating that ongoing experience that is really the essence of a communication strategy.” 

In its current stage, Pulier defines the progression of marketing in the metaverse as the “first inning,” and to move the needle, brands need to be adopting an always-on mindset that keeps the end-consumer in mind, he said during the panel titled “Marketing in the Metaverse,” which also featured panelists from Procter & Gamble and iHeartMedia. 

In one example, the exec pointed to PepsiCo’s Frito-Lays, which this week launched its FIFA World Cup campaign. As part of the campaign, consumers who buy select Frito-Lay products can scan a QR code on a product bag to be prompted to take a selfie, which will then appear on a giant, digital soccer ball. The experience, perhaps the largest cumulative art project in history, Pulier said, offers an initial trade-off — data in exchange for an experience — but also holds the potential for FIFA fans to check back in to see new faces and a finished product.

“You have this notion of this experience that you’ve taken part of in a virtual plane that now results in an emotional experience and an ongoing dialogue with the brand that is positive — value is on both sides,” he continued.

Global stage

IHeartMedia has already begun making good on the concepts outlined by Pulier with the launch of its always-on iHeartLand in Fortnite in August. The space, which boasts a virtual concert arena sponsored by State Farm, has plans to host 20 events over the next year. 

Building iHeartLand meant stepping back and unpacking what the team believed the metaverse was in order to move forward intentionally, said Rahul Sabnis, chief creative officer at iHeartMedia. A key priority throughout is ensuring digital spaces are easily accessible, opening the door without potentially complex add-ons, like cryptocurrency or blockchain technology, so that a wide range of consumers would feel compelled to play and brands, like State Farm, have the opportunity to tap into multiple audiences.

“It’s not just a one and done but creating an ongoing dialogue with our communities where they are,” Sabnis continued. The concept has proven successful so far — Charlie Puth headlined the first concert hosted at the virtual arena, and in one weekend, Puth had the audience equivalent to 50 performances at Madison Square Garden, per the executive. 

IHeartMedia also partnered with Vatom to create a platform built off a scannable QR code that takes existing live events and creates a blended reality opportunity intended to enhance experiences on site with exclusive opportunities and perks that wouldn’t be accessible otherwise.

“That’s the exchange of data that we feel is very transparent,” Sabnis said. “One of the things that we look for when having people come to our concerts is that they can take more control of their identity and have an ongoing relationship with events.”

The scannable QR code that makes up iHeart’s strategy is representative of the evolution from Web2 to Web3, Pulier said. In the past, fans scanning a QR code would likely be prompted to download a plethora of apps for exclusive benefits. Now, consumers from a single connection point can opt-in to individually, legally and ethically have a relationship with every brand partner that iHeart brings to the table. 

“Those ongoing relationships are how you measure success,” Pulier continued. “Did you get the data, did the experience create value for both sides, and do you have an opportunity to follow up? It’s marketing, advertising and loyalty all collapsed into one.” 

Changing behavior

Procter & Gamble is still nailing down their metaverse strategy, according to Kimberly Doebereiner, group vice president, Future of Advertising and head of P&G Studios, but it’s already found brand-exclusive ways to offer value to consumers. 

In one example, the exec pointed to a tie-up with Vatom and Tied to create a program as part of its “Turn to Cold with Tide” sustainability campaign that allowed consumers to log how many cold laundry washes they do for the chance to level up and earn prizes — 80% of consumers said they would enjoy doing it again, Doebereiner said. In a similar example, she referenced the P&G LifeLab, a virtual world that focused on sustainability education with highlighted brands like Charmin and its forestry efforts — the average session length in the world was 20 minutes.

“It’s not always on yet, but it is a way for us to create those in-depth people experiences that allow them to have information the way they want to receive it,” she said.

A promising value exchange could also be centered around accessibility. Doebereiner pointed to a Snapchat augmented-reality tool created by Pampers that allows a storybook to come to life for parents to have the opportunity to read to their children. The fact that 40,000 books have been read nods to the potential for consumers to not only come back to the experience, but even integrate it into their routines, she said.

“That’s an amazing way for Pampers to serve the parents who may or may not have access to books all the time,” she said. “To me that is moving us along, how do we create more immersive personalized experiences that the consumer is in control of that the brand is able to serve.

Amazon plans to begin making drone deliveries in Texas later this year, the company announced Friday.

Customers in College Station, Texas, will be able to receive goods via Prime Air, according to a company blog post. The city's mayor, Karl Mooney, said in a statement that Amazon "presents a tremendous opportunity for College Station to be at the forefront of the development of drone delivery technology."

College Station follows in the footsteps of Lockeford, California, as a city set to receive some of the earliest U.S. Prime Air drone deliveries. Once onboarded in the program, customers in the cities will see Prime Air-eligible items on Amazon, spokesperson Av Zammit said in an email.

"Amazon is now reaching out to customers in both locations, offering them an option to receive free and fast drone delivery on thousands of everyday items–the largest selection of items to ever be available for drone delivery," Zammit said.

The College Station City Council unanimously approved a zoning proposal early Friday to allow an Amazon Prime Air Drone Facility within city limits, The Bryan-College Station Eagle reported. The facility will include three buildings to house inventory and the drone services. The drones could make 25 to 200 trips a day, said Sean Cassidy, Amazon Prime Air director of safety and regulatory affairs, according to the report.

Amazon, which has spent years developing its Prime Air program, is among other large companies like Walmart and Alphabet subsidiary Wing making progress in the drone delivery space.

In an effort to expand accessibility for beauty consumers, L’Oréal last week showcased its new handheld, computerized makeup applicator called HAPTA. 

The beauty corporation’s HAPTA technology aims to help those with limited fine motor skills apply makeup more easily using an ergonomic handle with a magnetic attachment at the top, per a company press release. HAPTA also has a “clicking” function that allows users to maintain the application position they’re in, and save it for future use. 

HAPTA will be piloted through L’Oréal brand Lancôme this year, beginning with a lipstick applicator and expanding application options in the future.

"For years, Lancôme has sought to provide every woman with beauty solutions adapted to their needs. Beauty tech has enabled us to fulfill this mission in an even more powerful way, revolutionizing the way we develop beauty products and services and enabling greater personalization," Françoise Lehmann, Lancôme global brand president, said in a statement. "With HAPTA we are going one step further by making beauty more accessible to use, because everyone should have equal access to it."

Along with HAPTA, L’Oréal also released a new eyebrow makeup applicator called L’Oréal Brow Magic, which offers in-home AR technology through a handheld device with 2,400 tiny nozzles to print a recommended shape onto a user’s brows. The technology will officially launch this year, with the goal of providing more precise eyebrow application without the need for more invasive procedures like microblading.

L’Oréal isn’t the only beauty company interested in making the industry more inclusive, however. Estée Lauder on Wednesday released a voice-enabled makeup assistant mobile application to help visually impaired users apply makeup. Guide Beauty was created by founder Terri Bryant in 2020 to help makeup users have an easier time using products. Bryant founded the brand following her Parkinson’s disease diagnosis, and brought on actress Selma Blair — who has multiple sclerosis — as chief creative officer.

Guide’s patented design eyeliner applicator uses a “wand” shape with a built-in finger rest and a window on the tip for application visibility.

Amazon unveiled a new delivery drone design on its website Thursday as the company continues to advance its Prime Air service ambitions.

The MK30 drone is set to come into service in 2024. It's lighter and smaller than the MK27-2, which Amazon plans to use for Lockeford, California, and College Station, Texas, deliveries later this year.

"The MK30’s increased range, expanded temperature tolerance, safety-critical features, and new capability to fly in light rain will enable customers to choose drone delivery more often," according to Amazon.

The MK30 will also have custom-designed propellers to reduce its perceived noise by 25%. The newest drone design will undergo "rigorous evaluation" by authorities such as the Federal Aviation Administration in order to prove its safety and reliability, the company said.

Amazon has spent years developing its drone delivery program in an effort to ferry goods quickly and cost-effectively. Customers in Lockeford and College Station will be among the first to receive Prime Air drone deliveries in the U.S.

"To sustainably deliver a vast selection of items in under an hour, and eventually within 30 minutes, at scale, drones are the most effective path to success," Amazon said.

Amazon's continued push to advance its drone technology comes at a challenging time for the company compared to the previous two years of skyrocketing demand. It is weighing changes to unprofitable business units, according to a Wall Street Journal report, in addition to cutting added operational costs and freezing corporate hiring. The company also confirmed last month that it would be ending field tests for its delivery bot Scout.