Stores face new challenges in a world forever disrupted by the pandemic. Amazon and other tech giants are encroaching on their businesses. But perhaps more urgently, supply chain grunts haven’t gone away, exposing retailers to a host of inventory issues. In a Retail Insights survey from March, seven in 10 shoppers (71%) said they believe out-of-stocks — that is, times when items are unavailable — are worse now compared to at the start of the pandemic.
While there’s no silver bullet, Raz Golan says ‘smart’ store technology – especially his company’s – can help solve many of the inventory and retention issues that stores face. faced today. He is the co-founder of Shopic, a startup that sells clip-on touchscreen hardware for shopping carts that identify items to display promotions while acting as a self-service checkout window.
Investors see the potential. Today, Shopic announced that it has raised $35 million in a Series B funding round led by Qualcomm Ventures, with participation from Vintage Investment Partners, Clal Insurance, IBI Tech Fund, Tal Ventures and Shufersal. Although Golan did not disclose the valuation, a source familiar with the matter told TechCrunch it was in the “hundreds of millions of dollars” range and a “significant” upside.
Golan, a former Check Point security researcher and three-time entrepreneur, co-launched Shopic in 2015 with Eran Kravitz and Dan Bendler, who also had brief tenures at Check Point. The three met while serving in the Israel Defense Forces, where Shopic’s role model began to take shape.
“We wanted to find ways to optimize shopping experiences and bridge the gap between e-commerce and brick-and-mortar stores,” Golan told TechCrunch in an email interview. “Our first product was a ‘scan and go’ solution, using dedicated terminals or buyers’ smartphones. However, we soon realized that large supermarkets needed a different solution if they wanted to provide a more complete interactive experience for their customers. That’s why we developed Shopic’s unique smart cart solution.
Shopic’s device is designed to attach to carts and charge via a wall shelf. Two cameras aimed at the cart’s basket transmit images through computer vision algorithms, which recognize products as they are placed in or removed from the cart. Along with an invoice, shoppers see a map of store aisles and advertisements for branded or third-party products.
Stores can connect the Shopic platform to existing online and in-store advertising platforms, as well as point of sale and inventory systems. They also have the option of letting customers skip the line by paying using the touchscreen.
To train its item recognition algorithms, Shopic updates a database of more than 50,000 products on a weekly basis with up to 10,000 new entries, Golan says. There’s a bit of an onboarding process — when Shopic’s devices are first deployed in a store, they need to be exposed to each item at least once — but Golan says Shopic is making progress toward streamlining installations.
“[In the supermarket,] new items are added every week, and existing items change appearance and need to be recycled,” Golan said. “We’ve built tools, internal and external, to collect, maintain and make data more easily accessible – for example, automatic detection of package changes, to keep only up-to-date data… [O]Our algorithms automatically learn and improve as you use the system. In this way, even if a new item arrives on the shelves without having been formed at all, within a day or even a few hours, it can already be formed and recognized automatically by the system.
This year, Shopic plans to increase the amount of data it collects by introducing side cameras capturing the shelves on the device. Cameras will look for missing products as well as price labeling errors, Golan says, and if shelves are aligned with planograms, diagrams showing where items should be placed in order to maximize sales.
“This will provide very valuable data to optimize the store and its inventory,” Golan said.
Shopic claims to work with “some of the biggest supermarkets” in Europe, the Americas and Israel, but the startup faces an uphill battle in its quest to corner the market for “smart cart” technology. Amazon has a rival technology called Dash Cart that is currently being tested at select Whole Foods and Amazon Fresh locations. Instacart owns Caper AI, a company that developed self-service shopping carts, several of which were tested at an Ohio Kroger store. Israeli startup WalkOut offers a device with similar capabilities to Shopic, and Veeve – one of Shopic’s closest rivals – recently brought its shopping cart platform to Albertsons stores through a partnership.
Shopic also has indirect competitors in “cashierless” solutions like Trigo, AiFi and Grabango, which use camera systems to track items shoppers grab and automatically check them out once they exit the store. Two years ago, Amazon began licensing such a system, Just Walk Out, to third-party merchants after expanding it beyond its Amazon Go stores to Whole Foods locations.
But taking a step back, it’s not clear that buyers want to “smart carts” in the first place. Walmart understandably received some backlash for a patent describing a smart cart that could measure a shopper’s heart rate, temperature, speed and grip force as they walked through a store. Smart shopping carts also collect a lot of personal data, for example partial debit and credit card numbers, which are not always handled securely. An October 2021 security report found that Caper’s system was leaking data via the electronic receipts it sent via text message.
Golan says Shopic has been careful to protect privacy, anonymizing purchase data and blurring shoppers’ faces if caught on camera. It also says the company does not use the data for monetization or “for any purpose outside of platform boundaries,” emphasizing that the data belongs to Shopic’s retail customers. Shopic only makes money by charging customers subscription fees for using its hardware and software.
Whether shoppers like them or not, the allure of smart carts might be too strong for retailers to resist, especially if the price is right. By speeding up the payment process, they reduce the need for labor, an attractive prospect at a time when labor shortages remain widespread. Additionally, the ability of smart carts to track shopper preferences in detail promises to boost purchases, at least in theory. Citing internal data, Golan says Shopic has increased shoppers’ monthly spend by up to 8% at some stores.
“Our solution is fully commercial, and to date our smart carts have processed transactions worth hundreds of millions of dollars from tens of thousands of buyers,” Golan continued. “The pandemic has actually accelerated interest in our solution as it has increased demand for contactless shopping solutions and reinforced the need for more hybrid approaches to food retail, one that combines the best e-commerce and physical stores.We don’t suffer much impact from the general slowdown in technology since we serve an industry that is generally less cyclical and because our solution is anyway geared towards optimization and That said, we continuously monitor the macroeconomic situation and ensure that we conduct ourselves with prudence and parsimony.
In the coming months, Shopic — which has raised $56 million in capital to date — plans to focus on customer acquisition and accelerate rollouts with existing customers. The company also intends to increase its workforce, hiring about 30 employees to reach more than 100 in total by the end of the year.