Smoothest Checkout Experience | Abhinai Srivastava

Launched in 2013, Mashgin was perfecting its AI technology seven years before the pandemic accelerated retailer adoption of cashier-less checkout. Founders Dhankar and Srivastava first met at the Indian Institute of Technology Delhi, where they lived in the same dorm. They graduated, and followed separate career paths, but met again in Silicon Valley and began work on their startup idea.

“I remember the day Mukul created a simple demo with a table lamp and a webcam,” remembers Srivastava. That was nine years ago. While they thought creating the tech would be a six-month project, it took them five years to develop the technology in a cost-effective way.

“We understand that 75% of retail is still offline. When retailers use our technology, in many cases the sales go up by a huge margin just because there are no lines anymore.”Abhinai Srivastava, CEO Mashgin says, “Mukul and I drove to a convenience store in the middle of July, stood there for two weeks, and took 20 to 40 pictures of every single item in the store,” says Jack Hogan, senior vice president at Mashgin about how they initially built a database of 20,0000 images to train their algorithm. To date, 35 million transactions have taken place on Mashgin kiosks, and each transaction adds more images to the algorithm, making it stronger.

Dhankar, who came up with the idea for the quick and easy checkout system while waiting in line at a cafeteria, says the system is now more than 99% accurate. “It gets exponentially harder as you get towards the 95% goal,” he says.

Nearly a decade later, Mashgin competes in an increasingly crowded market. Artificial intelligence and computer vision technology have perforated every aspect of the modern-day retail experience: from H&M’s voice-activated smart mirrors that allow shoppers to take selfies to Amazon’s smart grocery carts that use computer vision to scan items and pay through the cart itself.

Smart checkout technology is expected to be a roughly $400 billion business by 2025, according to Juniper Research. In 2021, Instacart acquired checkout tech platform Caper AI. Other AI startups in the same category such as Tel Aviv-based Trigo and Shopic have pocketed large amounts of VC funding amid the frenzy. This in turn has kindled concerns about how smart checkouts run the risk of displacing workers, most of whom are women.

But the founders say they are meeting the needs of a nationwide labor shortage rather than reducing jobs. According to a study by S&P global, 6.3 million retail workers quit their jobs in the first ten months of 2021. Technologies like Mashgin in turn help employees by relieving the pressures on understaffed retailers, Srivastava says. “Many of our customers are actively trying to fill thousands of open positions. Mashgin helps their employees focus on the things you can’t do with automation,” he says.

Mashgin charges approximately $1000 per machine per month, while the cost of production is lower than competitors. The hardware is produced in California, instead of being imported from other countries. “We actually use really inexpensive cameras commodity hardware, We can deploy a site in 15 minutes and very cheap,” Srivastava says. To be more inclusive of the unbanked and areas with poor connectivity, Mashgin’s checkout systems accept cash and can function without the internet.

The company’s kiosks can be found in Madison Square Garden in New York and Arrowhead Stadium in Kansas City, among other major arenas. You’ll also find them in major airports as well as Delek US convenience stores in Texas. The Palo Alto-based company is the self-checkout tech choice for Compass Group, the largest contract foodservice company in the world.

A Big Name

Mashgin, which makes a cashierless checkout kiosk stated that its technology is now in use in nearly 500 locations worldwide and that it has processed roughly $100 million in sales transactions.

Unlike other players in the cashierless checkout space that are relying on in-store camera installations or smart shopping carts, Mashgin’s solution uses a countertop device that can sit anywhere in a store. Shoppers place items on the device where cameras and computer vision identify all of the products and tally up the bill. Up until now, Mashgin accepted credit cards for payment, but the company also announced today an integration with Glory to enable contactless acceptance of cash payments as well.

Talking to Chris Albercht of The Spoon, Jack Hogan, Vice President of Partnerships at Mashgin said the sweet spot for Mashgin’s technology is in places like sports stadiums and convenience stores — locations where people are grabbing 1 – 10 items and want to get in and out of the store quickly.

In addition to identifying consumer packaged goods, Mashgin’s technology also identifies plated foods in settings like cafeterias. Users place there tray of food on the Mashgin device and the cameras can identify everything on the plate and charge accordingly.

Cashierless checkout has been one of the big news stories of 2021, as the pandemic accelerated retailer’s plans for more contactless shopping experiences. Throughout the year we’ve seen a number of cashierless checkout store launches with startups around the world including Zippin, AiFi, Imagr, and Trigo.

Hogan said that even though the pandemic has pushed retailers into more human-free checkout solutions, that’s not the biggest concern from partners. “The number one thing people have said is speed,” Hogan said, “Get in and out as soon as possible.” With cashierless checkout, retailers are able to kill two birds with one stone, providing line-free speed with a contactless experience. Mashgin said that deployments of its checkout kiosks grew more than 100 percent in 2021 and can now be found in convenience stores, airports and sporting arenas such as Mile High Stadium and Madison Square Garden.

Though the cashierless checkout space is crowded, Mashgin’s most direct competitor at this point is Caper. In addition to making smart shopping carts, Caper debuted its own computer vision-powered countertop kiosk last year. The small footprint of devices like Caper’s and Mashgin’s could prove attractive to c-stores and other locations where consumers aren’t buying a lot of stuff and want to get in and out of the store quickly. A countertop device doesn’t require retrofitting a store with cameras or buying new shopping carts, and can be set up with easily at a checkout stand.

It’s not hard to imagine that as part of the growth of cashierless checkout over the coming years, we’ll be seeing more players offer a similar type of kiosk as well.

Mashgin Smart Checkout at Circle K

Circle K will begin installing Mashgin’s self-checkout machine, powered by artificial intelligence, at 7,000 locations. This builds on its pilot program of using the technology in 500 Circle Ks. Mashgin says it has reached an accuracy rate of 99.9%, after processing some 40 million transactions at its kiosks. It has raised $75 million in funding from NEA, Matrix Partners and others and was recently valued at $1.5 billion.

It’s part of a bid to get rid of checkout lines (and, presumably, many of the human cashiers that staff them), with so-called smart checkout technology expected to process roughly $400 billion in transactions by 2025, according to Juniper Research.

A throng of well-funded companies are tackling the problem in different ways. Amazon, along with startups like Standard Cognition, Grabango and Trigo, are trying to scale fully autonomous checkout technology that allows shoppers to pick up items and leave the store without waiting in any kind of checkout line. Instead, each movement is tracked by a combination of cameras, sensors and artificial intelligence, which can register each item a shopper leaves with and bill them later. All customers need to do is swipe a credit card or smartphone during their visit.

Another solution: smart shopping carts. Amazon has its own version, called the Dash Cart, in its Amazon Fresh grocery stores, which scans items automatically when they’re added to the cart. Kroger has tested a smart grocery cart made by Caper (acquired by Instacart last year), while Albertson’s has tested another version made by Veeve. Shopic is also developing a smart device that’s affixed to regular grocery carts and registers items put in the cart.

Many retailers are exploring smart checkout technology in some way, but treading slowly, assessing what customers think of the changes and whether it’s worth the investment. Most providers of the technology say it leads to higher sales and bigger basket sizes, because customers can get in and out of the store faster and aren’t deterred by long lines. It can also help retailers identify out-of-stock items faster.

However, it can be difficult and expensive to deploy. Mashgin says its technology can be scaled faster than competitors, with setup time as little as 15 minutes at a cost of $1,000 a month to run.

Circle K said it decided to install Mashgin’s technology in thousands of stores because of the success it had in its test markets, with 80% of customers reporting that this had become their preferred way to pay. It’s expected to drive more shoppers and help the company meet its stated goal of doubling its Ebitda, or earnings before interest, taxes, depreciation and amortization, in five years.

“It makes the most boring part of the transaction with us much, much faster,” said Magnus Tägtström, Circle K’s vice president of global innovation.

Circle K has experimented with a range of smart checkout technologies, including from competitors like Standard Cognition and Grabango, and said those tests are ongoing. However, they are also far more limited than the Mashgin tests. For instance, Circle K is running Standard Cognition’s tech in just two of its stores in Phoenix. Grabango is up and running in six Circle K stores.

Mashgin has made several updates to its machines to get them store-ready, like giving customers the ability to pay in cash, use a loyalty card and take advantage of frequently changing promotions. Customers still have to request help from an employee to purchase alcohol or cigarettes.

The company plans to continue to focus on convenience stores, airports and entertainment venues in the coming years, where it sees plenty of demand, but said its technology may eventually make it into grocery stores or big-box retailers. There’s no reason it couldn’t be installed over a conveyor belt in order to ring up a cartful of items, Srivastava said, so it can save shoppers the trouble of entering the code for yellow onions and not red, white or green.