Grocers, alarmed at Amazon.com Inc.’s rapid growth in Europe, are considering fighting back with the help of a tiny Portuguese startup.

Sensei, a 16-month-old technology company based in Lisbon that’s backed by Germany’s Metro AG and Portugal’s Sonae SGPS SA, is pitching its technology to European supermarkets as they race the e-commerce giant to open the region’s first checkoutless stores.

Sensei says three major European grocers, including a U.K. supermarket operator, have tapped its technology for stores they plan to open this year — potentially getting in ahead of Amazon. The U.S. behemoth has reportedly scouted space for its Amazon Go stores in London, but has not announced any openings.

Amazon operates 10 Go stores in Seattle, Chicago and San Francisco and plans to open as many as 3,000 more by 2021, people familiar with the situation have said. It also owns Whole Foods Market, which has seven stores in London. As consumers shop more online and Amazon pushes into food, Sensei sees an opening.

“Amazon Go is the best thing that happened to us,” Vasco Portugal, Sensei’s co-founder and chief executive officer, said in an interview. “It would have been much more difficult for us if they didn’t exist, because this is an emerging technology and they are putting pressure on the market to move in this way.”

Automatic Payment

The startup uses overhead cameras and artificial-intelligence software to detect what’s picked off shelves and calculate the bill. It can also determine whether products are put down again anywhere in the store, so that shoppers aren’t charged. Customers check in with a payment card or mobile-phone code when they arrive, and the store automatically takes payment when they leave.

Amazon has not detailed the technology in its Go stores, but analysts who have inspected them say it relies on a variety of sensors, including so-called smart shelves that can determine when an item is removed, as well as cameras that can read patterns printed on package labels. Payment is made via a mobile app. The company declined to comment on European plans for checkout-free stores.

Sensei’s technology may be cheaper to deploy. It’s easier to retrofit existing stores with AI-driven, camera-only approaches than with multisensor systems, said George Lawrie, a principal analyst with research firm Forrester.

Checkoutless systems still face hurdles. Both Amazon and Sensei’s systems work only with packaged items, yet grocers are coming under growing pressure from environmental groups and politicians to cut back on plastics. Sensei says grocers could solve the problem with a small number of employees in the fresh-food aisles, scanning loose produce.

Sensei’s technology also requires retailers to provide examples of every item they sell, which they then photograph from multiple angles to train the computer-vision algorithms that underpin its software.

Other Startups

While other startups, including San Francisco-based Standard Cognition and Trigo Vision Ltd. in Israel, are developing checkoutless technology, none has advanced beyond the pilot stage, according to Gartner. Only Amazon and China’s Alibaba Group Holding Ltd. are currently able to operate such stores, said Joanne Joliet, a research director at the firm.

Joliet said that while her team had not yet looked at Sensei’s offering, camera-only systems struggle outside of controlled demonstrations. “It might know you took a bottle of Diet Coke from the shelf, but it can’t tell if that was a 12-ounce bottle or a 16-ounce bottle, especially if they are shelved together,” she said.

Sensei’s four co-founders all have extensive experience in technology and retail. Portugal has a PHD in engineering from Massachusetts Institute of Technology, while Chief Operating Officer Joana Rafael comes from a retail dynasty whose Dielmar brand provides suits for the Portugal national soccer team. The venture-capital arms of food wholesaler Metro and supermarket owner Sonae together invested 500,000 euros ($560,000) in a February 2018 funding round for undisclosed stakes.

Sensei declined to identify the grocers it’s working with, but said they’re planning to open one store each to start, ranging up to more than 5,000 square feet. Portugal said the company is talking to about a dozen retailers in Europe.

“This shows just how competitive the industry is now,” said Richard Curry, a partner at property consulting firm Rapleys who covers the U.K. grocery sector. “If supermarkets want to boost their market share, they need to be the first to provide this kind of technology.”