DEEP DIVE: Shoptalk 2017 Workbook Startup Pitch Series: The 15 Startups

KEY POINTS

At this year’s Shoptalk, Fung Global Retail & Technology Managing Director, Deborah Weinswig, will emcee a startup pitch competition with 15 innovative early-stage companies.

Over the past three days, we published three reports, each profiling five of the 15 startup participants.

Each company fits into at least one of the four areas of opportunity for retailers: retail as a platform, connected technology, experiential retail and product curation.

In this wrapup note, we include all 15 companies that have the potential to disrupt the entire retail value chain and list the 17 trends that will drive changes in the retail landscape in 2017.  

For the second year in a row, Fung Global Retail & Technology is partnering with Shoptalk. This year, Fung Global Retail & Technology Managing Director, Deborah Weinswig, will emcee a startup pitch competition with 15 innovative early-stage companies. Each company will present their businesses to a panel of distinguished judges from the investment community to vie for two $25,000 prizes. One winner will be selected by the panel of judges and the other through audience voting.

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In our 2017 Trends Report we identify 17 trends that will disrupt and define the retail industry in 2017. These include:

  1. The Path to Consumers Will Be More Direct
  2. Battle of the Marketplaces Is Set to Continue
  3. Retail Store Closing, Consolidating and Going Bankrupt
  4. Monobrand Apparel Set for Sustained Outperformance
  5. US Retailers Will Face Increased Competition in Grocery and Apparel
  6. The Year of Online Grocery
  7. The Robots Are Coming to Boost Productivity
  8. Digital Tools to Improve Customer Service
  9. Supply Chain Visibility; Last-mile Innovation and Collaboration
  10. Drone Delivery: China Takes the Lead
  11. Artificial Intelligence Will Generate More Hype
  12. Expect to See more Virtual Reality Shopping
  13. Augmented Reality Will Gain Traction
  14. Personal Livestreaming to See Significant Growth Powered by Niche Use Cases
  15. “Cewebrities” and Influencers Redefine Social Commerce
  16. Wearables Making a Comeback
  17. Spectacles and the Case for Wearable Cameras

As we discuss in our report, the retail industry is undergoing a retail revolution, and the companies that survive will do so only if they embrace the new wave of retail opportunities: executing retail as a platform, making use of connected technology, engaging in experiential retail and providing product curation. In response to these trends and strategic opportunities, retailers in all channels are changing to accommodate shoppers’ shifting preferences. The fifteen companies pitching at Shoptalk are: ShopperKit, Everywear, Obsess, Busker, TigerTrade, AdeptMind, Commerce.AI, Myagi, Returnly, Ziel, DropSpot, Feed.fm, Fract, Hanger and QueueHop. Each company fits into at least one of the four areas of opportunity for retailers outlined above.

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Artificial Intelligence (AI) has experienced a period of rapid development over the past decade. AI is an area of computer science that has existed long before the invention of personal computers and cell phones. Machine learning and its subcategory deep learning have accelerated the commercial applications of AI.

The rapid development is driven by three factors: the availability of big data to train AI systems, acceleration of computing power and heavy investments in this area. Retailers and brands have experimented with AI-based technologies such as automated customer service bots, social media analysis and recommendation optimization.

Company Description

AdeptMind Inc. is a company that improves the search and customer service Q&A experience using deep active learning. The company aims to provide e-commerce small- to medium-size enterprises (SME) with a turnkey solution to improve the search and product inquiry experience. The AdeptMind-powered system allows customers to input their requirement details into a search bar and the system can return with accurate search results. AdeptMind estimates there are at least 100,000 e-commerce SMEs that are in need of this service.

What Problem is AdeptMind Solving?

AI-based software improves product search accuracy and broadens the scope of the words being searched by customers. It also provides instant answers about products and shopping details such as shipping costs and installation services using deep active-learning technology.

Revenue Model and Competitive Landscape

Revenue Model: AdeptMind charges a commission fee on improved sales plus a monthly subscription fee.

Competitive Landscape: AdeptMind competes with natural language search startups like Zettata, Twiggle and AddStructure.

Management Team

G Wu, CEO of AdeptMind, was a co-founder of Maluuba, where he oversaw engineering, and product and business development for voice assistants. Today, he has shifted his focus to deep learning applications to bolster e-commerce revenue generation.

Industry and Company Outlook

We expect to see an acceleration of AI-powered systems adoption by retailers and brands. The shift from a text-based interface to a voice-based one presents challenges to retailers in their current operations of their digital shopping channel. AdeptMind helps to improve the search-based e-commerce experience. There is increasing competition in AI-based solution providers for retail.

 

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Over the past two years, livestream content has increasingly occupied a larger share of viewing time. Mainstream social media platforms such as Twitter and Facebook also introduced their versions of the livestreaming function. China is at the forefront of livestreaming development. Livestreaming is the primary channel through which internet influencers interact with followers in China. However, there is still no dominant livestream platform in the US. After initial developments by Periscope and Meerkat, technology companies saw both potential and challenges in creating livestream platforms.

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Company Description

Busker falls under the experiential retail category. It is a livestream platform that allows anyone to showcase a talent or share a product they love. Viewers can post comments and questions to interact with the hosts real-time. Busker supports payments within the livestream videos so viewers can enjoy a see-now-buy-now shopping experience. It has built a community of 2,000 daily active users. The company aspires to become a shoppable live video platform that pairs brands with influencers.

What Problem is Busker Solving?

There is significant white space for shoppable livestreaming platforms that allow retailers and brands to interact with their customers via live content created by influencers. Retailers and brands have realized the potential of influencer marketing and the power of videos. However, combining livestreaming and shopping is still a nascent idea in the US. There has not been a go-to platform for brands to interact with their customers via live videos.

Revenue Model and Competitive Landscape

Revenue model: Busker takes a commission on transactions that occur during Busker-hosted live streaming sessions, while viewers participate for free.

Competitive landscape: Competitors include Periscope and Meerkat.

Management Team

Co-Founder and CEO, Lippe Oosterhof, has a strong track record in media. He has led sales and business development in three online video and publishing startups. Oosterhof is also currently CEO of Livestation, which is the largest online aggregator of linear news TV channels with over 5 million monthly visitors.

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Industry and Company Outlook

We expect retailers and brands to look for ways to work with technology companies to create livestream content. Busker is well positioned to develop niche shopping use cases for livestream, which is an untapped marketing area for brands and retailers to reach targeted demographics.

 

 

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Another AI startup in the pitch competition is Commerce.AI.

Company Description

Commerce.AI is an AI-powered system that sees, reads and listens to the world’s product information with deep product-learning technology. This technology helps retailers and brands to understand what customers are talking about at the product level and to build powerful e-commerce catalogues. Some users have experienced a 25% increase in sales after implementing the technology. The current system has processed 10 million products worldwide.

Commerce.AI has worked with Walmart and three other major retail brands on their merchandising optimization.

What Problem is Commerce.AI Solving?

AI-trained systems could use predictive analytics to optimize online merchandizing. Traditionally, product catalogues are selected manually by merchandisers with limited information.

Revenue Model and Competitive Landscape

Revenue Model: Commerce.AI provides an AI-based software as a service for retailers in exchange for a monthly charge.

Competitive Landscape: While there are few AI companies specializing in online merchandising, Commerce.AI competes with other omnichannel predictive merchandising startups such as Celect and Blue Yonder.

Management Team

Andy Pandharikar, the CEO and Co-Founder of Commerce.AI, is a serial entrepreneur and angel investor. He co-founded Fitiquette in 2010, which was acquired by Myntra where he took on the position of Chief Innovation Officer. Myntra was later acquired by Flipkart. In 2015, Pandharikar founded Tall Idea Labs, an incubator that incubates new ideas related to machine learning, NLP (natural language processing), linguistic algorithms, narrow AI and deep learning. He is an angel investor at SF Angels Group.

Industry and Company Outlook

AI-powered data analytics solutions are just beginning to enter the retail space when it comes to optimizing the merchandising process and improving product assortments online and offline. In the future, we see AI bringing localized product offerings in the physical space and personalized e-commerce experiences to a far greater degree that what we see today. Commerce.AI is well positioned to play in this space. The company can help retailers to optimize their product displays in order to improve conversion.

 

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As the shopping journey for customers becomes more complex and more expensive for retailers, we continue to see more creative ways for e-commerce fulfilment. An increasing share of purchases is being fulfilled through click-and-collect and from third-party collection points such as lockers. Over $100 million of merchandise was delivered via same-day fulfilment in 20 cities in the US in 2016.

Among recent last-mile innovations are experiments by large retailers such as Amazon and Walmart to redesign their stores to build in collection services. Amazon is set to open three drive-through grocery collection stores.

Company Description

DropSpot is a mobile app that turns neighborhood stores into package pickup locations. Customers receive packages through a network of neighborhood merchants, driving traffic to the stores. DropSpot solves the problem of home-package delivery by letting consumers receive their packages at pickup locations close to their home or work. The company has enlisted over 1,000 merchants across the country to become “drop spots” for packages, and the number is expected to double by the end of 2018.

What Problem is DropSpot Solving?

As e-commerce gains more share, retailers need to become more creative in tackling the challenges of last-mile fulfillment. Last-mile is often a costly part of fulfillment and is important in building good customer relations. Turning neighborhood stores into package pickup locations provides convenience to the customers, while driving traffic to the retail stores.

Revenue Model and Competitive Landscape

Revenue model: The company charges retailers a small fee for each package delivered through a neighborhood store in DropSpot’s network. DropSpot charges customers a return service fee for those who send packages back. The company also offers premium concierge and vacation storage and insurance fees for customers who would like to have a more personalized service.

Competitive landscape: DropSpot competes with other third-party last-mile delivery companies such as Postmates and Deliv.

Management Team

Co-founder and Chairman of DropSpot, Richard Waryn is a seasoned entrepreneur and private-equity professional with experience buying, growing and exiting from a wide variety of early- to mid-stage growth companies. Since moving to Colorado in 2010, Waryn has focused on investing his own portfolio in a variety of privately-held companies.

Industry and Company Outlook

We expect retailers to continue to use technologies to fulfill orders in a timely and cost-efficient manner. There will be more collaboration between retailers and third-party delivery companies to meet the growing demand for package delivery. More capital-light and flexible delivery services companies such as DropSpot will have the opportunity to take market share in this space.

 

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As traditional retailers struggle to optimize e-commerce, new specialty retailers are launching with considerable traction. Retailers such as Everlane, Bonobos, Warby Parker and Birchbox are meeting the demand for convenience and personalization. Customers, particularly millennials, are often less attracted to mass-marketed products. Niche products, experiences and service uniquely suited to individual tastes, interests and aspirations have become the new consumer interest. Consumers increasingly want products that are directed towards them on a personal level.

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Company Description

Everywear falls into the product curation category of retail innovation. It is a software solution for retailers and brands’ e-commerce websites that personalizes the user’s browsing and purchasing experience. New users are asked to go through a series of questions such as what looks would you like to see most, what age group do you fall into and what’s in your closet. Everywear then makes outfit and product recommendations based on the shopper’s closet and the shopper’s tastes.

In essence, the company provides personalized product recommendations for the customer. Through the app’s messaging system, Everywear also connects users with stylists to help them shop based on their closet and personal taste.

What Problem is Everywear Solving?

According to the shopping commerce platform ShopVisible, present conversion rates in fashion and beauty e-commerce are 5x–7x lower than in-store rates. Existing e-commerce platforms, such as Radial, Demandware, Big Commerce and Magento, capitalize on the need for search, but often lack a front-end intelligence layer that promotes cross-merchandising and discovery. Everywear is looking to fill that gap.

Revenue Model and Competitive Landscape

Revenue model: The company has two models: 1) for large department stores―it charges an upfront set-up fee, monthly licensing fee and a monthly maintenance fee; and 2) for large- and medium-sized brands―the company charges the aforementioned items and receives an incremental revenue share.

Competitive landscape: Competitors include: 1) B2C personalized styling companies such as Stitch Fix, Trunk Club and PS Dept; and 2) B2B companies that optimize consumer data for conversion such as True Fit, Shopify and Nersuite.

Management Team

Everywear was founded by CEO Brandon Holley in 2015. Holley is the former editor-in-chief for Lucky, the award-winning shopping and styling magazine. She began her magazine career as a writer for Paper, which eventually led to leadership roles at Time Out New York, GQ, ELLEgirl and Yahoo! Shine.

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Industry and Company Outlook

Everywear is currently focused on a pipeline of large fashion and beauty operations, but anticipates expansion into the home space and smaller retail venues. According to Holley, as the company enhances its technology, data capture and brand position, it envisions additional capabilities as a diverse consumer marketing delivery solution serving a range of retail segments.

 

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Retailers and brands are actively trying to build audience, engagement and retention to their mobile apps and e-commerce platforms. The US retail industry spent and estimated $15.09 billion on online and mobile media advertising in 2016, up 14.9% from 2015, according to eMarketer.

With shopping increasingly taking place on digital platforms, and consumers shopping more on their mobile devices, brands are trying to create deeper customer engagement through mobile platforms. Using music to improve the customer experience has been done for decades, but using music online to build engagement and retention is relatively new. Music can be a powerful marketing platform to increase customer engagement and loyalty.

Company Description

Feed.fm falls under the experiential retail category. It is a “music-as-a-service” platform that allows companies to integrate music into their websites and mobile apps, as well as provide statistics to the brand on how people are engaging. When customers visit the brand’s mobile app or website, they receive an opt-in option, so they can decide whether or not to play the music.

The editorial team, or music experts, works with the brands to create custom track lists based on their audience and preferences. Feed.fm handles the negotiations and licensing with the artists to make sure they are properly compensated and there are no copyright issues. In a 60-day trial period with American Eagle, Feed.fm reported a 200% increase in session times when customers engaged with the radio, a 100% increase in retention and a 200% increase in the unique visitor to order conversion rate.

What Problem is Feed.fm Solving?

Traditional retailers are trying to keep pace with e-commerce, particularly Amazon, so offering unique branded content to engage users is very important. With the rise of social commerce, retailers also face the risk of losing business to social commerce platforms such as Facebook, Instagram and Pinterest. In addition, integrating digital music into retail platforms is complex, largely because of the high costs associated with licensing songs and copyright issues.

Revenue Model and Competitive Landscape

Revenue model: Feed.fm is a subscription service that charges a monthly fee of $5,000. Clients sign annual contracts.

Competitive landscape: Other online platforms/management systems for digital music integration include Muzak, which designs, delivers and installs custom music and voice messaging, for multiple industries including retail, hospitality and restaurants.

Management Team

Jeff Yasuda, Founder and CEO, has extensive experience in software and hardware technology companies. In 2008 he founded Blip.fm, a video streaming and music discovery platform. Prior to Blip.fm, he worked with numerous technology companies in software, hardware, and computer services and telecommunications.

Industry and Company Outlook

As consumers increasingly shop on digital platforms, and social platforms gain popularity, brands will have to provide a unique and customized offering to enhance the user experience. In 2016 eMarketer predicted that mobile retail revenue in the US reached $96.2 billion, up 28% from 2015. We expect this number to continue to increase. The company can help retailers optimize their digital platforms in order to improve the engagement and brand experience.

 

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When it comes to retailers, online and offline, choosing the optimal business location is extremely important. Geospatial AI companies are increasingly working with retailers to identify suitable locations based on characteristics such as population, race, median household, income, age and employment status. These characteristics can help companies ensure businesses the optimal location. According to SAP, 80% of all data has a location/geographic element to it, which makes location analytics and intelligence one of the essential aspects of business analytics.

Company Description

Fract is an AI platform that helps retailers optimize store locations and map territories and trade areas, using geospatial intelligence. Fract collects geographic data and provides actionable insights to its customers.

Geospatial analytics enables businesses to not only take into account demographic and psychographic data, but also look at customer movement. The company provides answers to questions such as, how easy is it to get to your store? Are there any natural obstacles that customers need to overcome? Are there any competing businesses situated on the same route that most customers take to get to you?

What Problem is Fract Solving?

If your business relies on foot traffic, location is a strategic necessity. Traditionally, business owners spend countless hours studying the optimal location for their business with limited geospatial resources. In addition, as purchases continue to shift online, store and warehouse location relevant to its customers is vital in reducing shipping times and costs.

Revenue Model and Competitive Landscape

Revenue model: A SaaS subscription model based on features, such as number of users, size of business and usage.

Competitive landscape: Other geospatial AI solutions such as AmigoCloud, which is a geospatial platform that helps businesses collect, manage, analyze, visualize and choose a site location.

Management Team

Mike Mack, Co-Founder and CEO, has over 20 years of retail and business location analytics experience. Prior to Fract, Mike founded DatMap, a geo-spatial software company for big-box retailers for site selection.

Industry and Company Outlook

According to a recent study by Gartner, by 2020, every company that hopes to achieve success will need to take into account “where” the optimal location for business is. This spatial information, paired up with demographic, psychographic and sales data, can open up countless possibilities for businesses to target customers on a wider, deeper and more personalized level than ever before

 

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Personalization in fashion is a differentiating factor for retailers and brands. About 45% of online shoppers are more likely to shop on a site that offers personalized recommendations, according to Invesp. Meanwhile, social shopping platforms are playing a more important role in making more personal recommendations to customers. In 2015, over 5% of all retail spending came from social network referrals, according to e-commerce shipping company ReadyShipper.

Company Description

Hanger is a platform for tracking and sharing clothing and style inspirations within the user’s personal network of friends and family. The Hanger app connects users with their friends’ closets and helps them discover the value that’s already hanging in their own wardrobe. Hanger makes users experts in their personal style and inspires confidence in what they wear. The app has 2,600 active users and over 10,000 downloads. The company is currently in talks with major department stores and fashion brands.

What Problem is Hanger Solving?

Brand and retailers have struggled to personalize style and product recommendations based on what is already in their customers’ wardrobes. Consumers would like personalized styling advice from their peers and from brands. Hanger’s social shopping platform provides consumers with tools to manage their personal style while developing relationships with brands.

Revenue Model and Competitive Landscape

Revenue model: Hanger takes 7%–22% of each transaction that take place through Hanger’s recommendation.

Competitive landscape: Hanger competes with other social shopping apps. Savel Go is one such app that offers user the opportunity to have conversations with other consumers who are shopping for similar items worldwide and get real-time feedback. Stuff N Style is a personal styling app that collects pictures of customers’ closets and helps them find feedback in putting outfits together from others.

Management Team

Daniel Evans is the CEO and Co-Founder of Hanger, a multi-sided marketplace that provides consumers with tools and analytics to manage and share their personal style while facilitating authentic relationships with the brands they love. Prior to founding Hanger, Evans held a variety of roles across two decades in the technology field including UX/UI designer, developer, product owner and executive.

Industry and Company Outlook

We expect to see some level of convergence of social media and shopping platforms in the future. There will be increasing demand for consumers to interact with brands and retailers in a social environment and drive sales through trusted recommendations by influencers or peers. Hanger is well positioned to benefit from this social shopping trend.

 

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The internet and mobile technology has changed the way consumers interact with brands. More retailers are moving in the direction of empowering their store associates with tools to improve their performance, and this trend is expected to pick up in 2017.

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Company Description

Myagi falls under the retail as a platform category. It is a mobile- and web-based training platform that connects retailers and brands with their sales associates. Through its platform, retailers and brands create, manage, deliver and measure customer service, product and sales training at the store level. The platform allows brands to deliver messages directly to the pockets of its sales associates in order to influence customer conversations at scale in an engaging and gamified application.

Myagi gives its customers feedback to pinpoint where best to focus to continually improve the performance of their store associates. Myagi’s analytics suite helps identify the content, people and management practices that are optimal in lifting its customers’ sales and service performance. The company claims early case studies have shown a 44% increase in sales and a reduction in employee turnover of as much as 30%. Myagi currently works with leading global brands and retailers worldwide such as Adidas, ASICS and Toys“R”Us.

What Problem is Myagi Solving?

It is a challenge for traditional brick-and-mortar retailers to deliver a great experience. Customer service is one aspect of that. One area that has lagged behind the digital transformation is the management and training of store associates, who, in many cases, are still using old systems and many times do not receive much training at all.

Customers are entering the store―after interacting through different digital touch points―armed with information on product and pricing. Often, customers know more about the products and services of the brand than the store associates do. The use of enabling technologies can improve the knowledge deficiency gap for brick-and-mortar retailers’ store associates. According to RetailNext, the three key elements to help maximize the in-store experience and close the knowledge gap are: proximity marketing, interactions analysis and mobile device usage.

Revenue Model and Competitive Landscape

Revenue model: Myagi charges its customers by the number of locations and by the level of service requested.

Competitive landscape: Other online platforms/management systems for employee training that offer similar services include:

  • Mindflash―Provides a web platform for companies to easily share knowledge and train employees.
  • Docebo―Is a learning management system (LMS) to organize, track and distribute online courses to employees.
  • Experticity―Its online training platform (3point5.com) brings together brands, retailers and experts to train sales associates on their products, how they work and what makes each one unique.

Management Team

Simon Turner, Co-Founder and Head of Business Development, has extensive experience in the retail industry. He founded Fivespot, a leading wholesaler and manufacturer of high-quality outdoor products for the sporting industry in Australia, in 2005.

Industry and Company Outlook

Store associates are a key touch point with customers in physical retail, and technologies that enable staff to provide better service more efficiently will likely become the focal point of omnichannel strategies going forward. Myagi looks well positioned to meet the needs of retailers looking to optimize, digitize and optimize their store sales associates.

 

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In 2016, virtual reality (VR) applications generated significant hype across industries from gaming, to entertainment, to retail. A number of VR devices were developed last year, including HTC’s Vive, Samsung’s Gear VR and Facebook’s Oculus Rift. VR shopping blends the online and in-store shopping experience by allowing shoppers to be immersed in a store-like environment without physically traveling to the store. VR shopping also allows retailers to showcase their flagship stores to an expanded global audience.

Research firm IDC estimated that VR hardware shipments would reach 9.6 million units in 2016, and 64.8 million units in 2020, or a five-year CAGR of 184%.

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Company Description

Obsess VR falls into the experiential retail category. It is a VR shopping platform for fashion. This white-labeled VR software enables fashion brands and retailers to set up their own virtual store fronts without significant technology investments. The company aims to become the Shopify of VR shopping, and to replace today’s e-commerce experience with an immersive and interactive one. We see significant opportunities for companies like Obsess VR to provide a one-stop solution to retailers that are interested in creating a VR experience for their customers.

Obsess VR has partnered with Samsung and New York Fashion week to create VR fashion shows. In addition to the VR experience, Obsess also provides viewer’s traction data to the designers in the back-end.

What Problem is Obsess VR Solving?

The majority of retailers with limited tech investments are still in need of a one-stop solution in order to create VR shopping experiences. The VR experience also needs to integrate payment functions and retailers’ existing e-commerce operations.

Revenue Model and Competitive Landscape

Revenue model: The company charges a fee on sales and a flat fee for hosting the store.

Competitive landscape: Competitors include InContext Solutions and Nimble VR.

Management Team

Obsess VR was founded by a team of engineers with significant experience in retail technology. Founder and CEO Neha Singh spent five years at Google as a software engineer before joining luxury e-commerce startup AHAlife, where she led the product and tech team. She was most recently the head of product at Vogue. Her Co-Founder Daniel Chang spent 12 years as a software engineer at Microsoft and, most recently, he was the Director of Engineering at GQ.

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Industry and Company Outlook

While VR shopping will still likely remain “icing on the cake” for customers, we expect to see more experiments with retailers in VR application, in an attempt to create more experiences for their customers. We see a strong demand for third-party VR software providers to help streamline the development process for budget-constrained retailers.

 

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The customer checkout experience is key to customer retention for store-based retailers. A survey by eMarketer reveals that at least 30% of customers would go back to brick-and-mortar stores if smooth and quick self-checkout options existed. About 33% of customers leave the store without buying if the checkout line is longer than seven minutes. The retail self-checkout experience has evolved from the self-checkout kiosks in the 2000s to RFID-based scanners currently in use.

Company Description

QueueHop gives customers the option to check out on their phones, without the hassle of having to wait in line, using QR code-scanning and RFID-powered security tags on items. QueueHop makes Radio-Frequency Identification (RFID) anti-theft apparel security tags that automatically unlock after a payment is made. QueueHop has worked with Rebecca Minkoff to reimagine its in-store checkout experience.

What Problem is QueueHop Solving?

The in-store experience has become increasingly important as retailers struggle to drive traffic and sales to stores. Providing a speedy and convenient checkout experience continues to be a challenge for store-based retailers. Technology companies have developed various mobile-based solutions to solve this problem.

Revenue Model and Competitive Landscape

Revenue model: QueueHop charges retailers an implementation fee for adding RFID security tags to their products. Fees are not disclosed.

Competitive landscape: QueueHop competes with other mobile-based self-checkout solution providers such as Selfcart and Shopic.

Management Team

Co-Founder and CEO Lindon Gao started his career in investment banking as an analyst at Goldman Sachs and JP Morgan. He started QueueHop in 2015, a company that is set to disrupt the user-initiated payment landscape within the retail industry. He also owns a jewelry manufacturing company for designers and wholesalers called LPG Crafts.

Industry and Company Outlook

We expect to see more innovation in self-checkout experiences, especially within the fashion, grocery and drugstore space. As the price of RFID tags decreases, we expect to see more retailers invest in RFID-based solutions. QueueHop is well positioned to reimagine the self-checkout experience at fashion retail stores.

 

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The average returns rate has increased from 9% in 2013, to 30%, according to the National Retail Federation (NRF). Free shipping for returns is increasingly an expectation of consumers. The return time to receive a refund, on average, is 21 days. Slow returns processes often reduce consumers’ tendency to purchase and can affect brand loyalty and the customer experience. Amazon is known for its fast returns policy, averaging 1.3 days to return cash to customers, while most online stores will only refund shoppers once the returns parcel is in transit or has been inspected.

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Company Description

Returnly falls under the connected technology category. It is a B2B fintech platform that offers brands a streamlined returns experience. With Returnly, shoppers get Instant Refunds™ as store credit to buy again even before returning the items. Returnly takes the role of the middleman―helping consumers avoid the holdover period between the time the goods are returned and the time a refund is received. Returnly fronts the customers’ their money in the form of an online wallet that can be used for repurchases only at the same brand. Once the retailer receives the original goods, the money is taken out of the customer’s wallet (if it has not yet been spent) and put back into the customer’s account. Returnly takes 100% of the returns and consumer risk so the merchant is never at a loss.

According to Returnly, because of the instant refund, shoppers are 3x more likely to purchase from the same brand, which increases shopper loyalty and the likelihood the shopper will buy more expensive items. The company is currently working with over 400 brands and retailers, including Shopify, KITH, Goop and Russell Athletic.

What Problem is Returnly Solving?

Most online product returns result in lost sales for the retailer and or brand and frustrated shoppers. It takes brands 21 days, on average, to process a refund. The shopper starts the return process, the carrier delivers the goods to a warehouse, the warehouse inspects the returned goods, the brand issues an order refund and finally the money is returned to the shopper. Retailers often cannot take on the product returns risk to shorten refund times to their customers.

Revenue Model and Competitive Landscape

Revenue model: Returnly charges an initial setup fee after an online retailer first adopts the service. The company collects nearly all of its revenue from commissions on post-return sales (undisclosed).

Competitive landscape: Returnly is uniquely positioned and currently, there are no other companies offering a similar service.

Management Team

Founder and CEO Eduardo Vilar established Returnly in 2014. He previously founded Integralcom, a software company that built custom e-commerce storefronts and content management systems. The team has a strong background in fintech and e-commerce engineering.

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Industry and Company Outlook

To help alleviate the rising costs of returns, retailers are increasingly working with third-party logistics firms to speed up the process. Returnly offers a niche service that is risk-free for brands. As online shopping continues to increase, with more brands offering free returns to stay competitive, we expect more brands to look for ways to work with technology companies, like Returnly, to streamline the returns process.

 

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Although online grocery sales represent a very small portion of the overall grocery retail market, the segment is amongst the fastest-growing in the category. Online sales topped $48 billion worldwide in 2016, up 15% during the past year and accounting for 1.4% of the total grocery market, according to Kantar Worldpanel and our estimates. We expect the pace of growth in grocery e-commerce to accelerate, and for the online channel to capture 2% of total grocery sales in the US by the end of 2017

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Company Description

ShopperKit falls into the connected technology category of retail innovation. It is a software platform that enables existing brick-and-mortar stores to receive, prioritize and process online grocery orders. ShopperKit designs store planograms and product zones within the store to create picking paths for store associates. As a result, merchandise is picked faster and allows for multiple orders to be shopped at the same time, which reduces the labor costs of online fulfillment and faster pickup times.

ShopperKit’s API integrates with any online storefront or host system, so there is no need for nightly data transfers into a separate database. This eliminates complex data logs of store inventory for retailers, faster store integration times and lower startup costs. The software also provides ways to communicate directly with store associates for real-time customer communication. Grocers who communicate real-time with their customers through ShopperKit have shown an overall increase in basket size for these orders.

What Problem is ShopperKit Solving?

With the growth of food retail expected to remain low over the next few years, and the increase in grocery e-commerce penetration, retailers must consider the potential that digitalization offers to engage with customers and open new revenue streams. However, digitalization presents new challenges for retailers, as the logistical costs of e-commerce threaten to erode profit margins.

E-commerce will become even more important for store-based retailers, furthering the need to implement online fulfillment capabilities. Partnering with digital grocery-order and delivery startups offers cost-effective solutions to reduce fulfillment costs and compete more aggressively.

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Revenue Model and Competitive Landscape

Revenue model: The company charges a one-time fee for POS integration. Beyond that, ShopperKit licenses its technology on a subscription basis.

Competitive landscape: Competing e-commerce platforms that have some level of fulfilment include MyWebGrocer, Buy4Now and Freshhop.

Management Team

ShopperKit was founded and developed by a team of experts with deep online grocery fulfillment and domain experience. Jack Record, CEO of ShopperKit, was one of the first employees at VersionOne, an Atlanta technology startup focused on agile/lean products and services.

 

For 2017, we expect e-commerce to become even more important for store-based retailers in the US as they face stronger competition. As more shoppers are becoming comfortable with purchasing grocery items online, brick-and-mortar retailers have the potential to attract more shoppers through online ordering and delivery services.

Since launching in 2016, Shopperkit has been working with four major retailers, and expects to be in over 200 stores in the next 12 months.

 

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The off-price sector in value terms represents $90 billion in apparel and $280 billion across all categories. The market share for the off-price sector is expected to grow to 10% of overall apparel sales by 2018.

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Company Description

TigerTrade falls under the retail as a platform category. It is an online B2B wholesale marketplace for buying and selling excess inventory. TigerTrade’s platform is disrupting a highly inefficient market by automating trading and enabling real-time bidding, vendor verification and end-to-end fulfillment using its proprietary technology. Sellers can quickly sell their overstock merchandise to trusted buyers on the platform. The company currently works with leading global brands in apparel, footwear and fashion accessories. The platform has over 1,200 registered buyers from over 100 countries.

What Problem is TigerTrade Solving?

The buying market for the off-price market is extremely inefficient due to the lack of digital marketplaces to match the opportunistic excess inventory supplies with suitable buyers globally. There are many challenges in terms of international trade regulations when it comes to moving inventory across borders in time for sale.

Revenue Model and Competitive Landscape

Revenue model: TigerTrade provides the end-to-end service in exchange for a percentage of transactions taking place on the platform.

Competitive landscape: Competitors include Inturn.

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Management Team

Tanjila Islam, CEO and Founder of TigerTrade, is an international trade expert and economic development specialist. She has designed large-scale trade promotion programs for the World Bank and USAID throughout South and Southeast Asia. Islam’s adventure in global trade inspired her to create TigerTrade in order to bring international trade online.

Industry and Company Outlook

The off-price sector is expected to outpace the overall retail industry growth. We expect significant demand from off-price buyers for excess inventory globally. On the other hand, the current buying model, with primarily relationship-based inquiries and few digital tools to enable the transactions, is expected to transform into a more transparent and efficient one. TigerTrade’s platform is poised to attract more sellers and buyers in the off-price sector.

 

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Consumers―particularly millennials, which now represent the largest demographic in the US―are often attracted to niche products, experiences and services uniquely suited to individual tastes, interests and aspirations. The younger generation of shoppers value transparency and sustainability. As a result, many apparel brands are turning to on-demand manufacturing to foster a sense of community and personalization amongst shoppers

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Company Description

Ziel is an e-commerce platform that enables any lifestyle company to expand the reach of its brands into activewear. The company creates on-demand, custom performance-wear apparel for its target customers, which include lifestyle brands, celebrities and influencers. Customers sign up and Ziel handles design, production, inventory management, online and offline sales and customer payments on its retail platform. Ziel also offers e-commerce integration, so brands can offer Ziel’s products on their websites.

In addition, every piece of apparel is made to order, thus limiting the environmental impact of unwanted garments, and energy and resources used to make and distribute the apparel. By building an on-demand apparel supply chain and unique design technology, Ziel can offer its clients a platform to rapidly sell limited collections, which can create an urge to buy with their customers.

What Problem is Ziel Solving?

Customers want to extend their brand to new products to generate new revenue streams, and raise awareness to their community that they are socially responsible. The high cost and high risk of the extensive development and inventory required by traditional manufacturers is a challenge to developing a branded apparel line. Ziel enables its customers to sell to and engage directly with the consumer without having to deal with large apparel manufacturers and nationwide retailers.

Revenue Model and Competitive Landscape

Revenue model: Ziel requires a one-time security deposit against theft and loss for any inventory. Ziel sets a base cost price for each item and the clients defines their mark up, or clients earn margin or commission on sales on a weekly basis.

Competitive landscape: The competition includes Artful Gentleman, a custom clothing shop, and other branded activewear.

Management Team

Founder and CEO Marleen Vogelaar has an extensive background in custom apparel manufacturing. Prior to Ziel, she co-founded Shapeways, which also offers custom products through digital manufacturing. Daniel Ifcher, Head of Business Development, was formally Executive VP/Division Head at Global Brands Group.

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Industry and Company Outlook
On-demand manufacturing enables retailers to connect with their consumers from sourcing to the finished product. We believe that local sourcing and environmentally-friendly manufacturing will continue to gain strength amongst consumers. Ziel’s platform is poised to attract more customers, as local production and eco-friendly attitudes increase among consumers.