6 Startups Selling Retail Automation Solutions with AI
Earlier this year, autonomous retail store Amazon Go opened to much fanfare, which just goes to show you how much we love buying isht. Every organization on the planet—even the 24-hour Elon Musk show known as Futurism—covered the event as if it were a visit by the pope. Headlines declared that the store of the future is here—and then promptly chased after the next squirrel. We’ve been watching the evolution of retail automation for a while now, so as the store went live in Seattle, we wrote about 11 Examples of Grocery Store Technology that will enable the grocery stores of the future. While Amazon Go is probably the most advanced convenience store on the planet, it’s far from being the only one ushering in the era of retail automation – where self-checkout is replaced by no checkout at all.
The New York Times reported that between 30 and 50 percent of the world’s retail jobs could be at risk as technologies like automated checkout help human workers find value-added tasks in the unemployment line. To put that in perspective: About five million people are employed as retail sales workers in the United States alone, according to the Bureau of Labor Statistics. The Times also noted that venture capitalists have put $100 million into retail automation startups in the United States each of the past two years, based on research from financial data firm Pitchbook. Below we check out six startups trying to sell the world on retail automation, and using artificial intelligence to make it happen.
Check Out China
Our regular readers know that we’ve been preaching about the rise of China in disruptive technologies. The communist country with a capitalist soul is particularly interested in becoming the leader in artificial intelligence, including competing in the increasingly crowded AI chip race against top dog Nvidia. So it’s not surprising that a few companies are already opening unmanned locations where China’s 1.3 billion people can buy stuff Made in China.
Founded in 2016 and backed by $94.7 million in venture capital, including an $80 million Series B in January, BingoBox appears to be the best-funded startup of the bunch. The company has reportedly opened about 300 stores in 30 cities. However, they’re not as high-tech as Amazon Go. Yet. Instead of using artificial intelligence and computer vision to ID products to tally each customer’s bill, consumers at a BingoBox scan a QR code to enter the store where sales items have RFID tags. However, the company is in the midst of transitioning to an AI system called Fan AI that uses facial recognition (a Chinese specialty) to recognize customers (and prevent theft). The automated checkout counters can then tally up a purchase using object recognition.
The Big Brother treatment even extends to the store shelves. Cameras capture what customers are most interested in and then send promotional messages to their smartphones. We’ve seen this trick already with startups developing in-store beacons that are probably as annoying as Google ads.
Another startup called F5 Future Store has raised $8.6 million for retail automation. However, the concept is definitely on the low-fi end of things. Quartz basically refers to the unmanned convenience stores as glorified vending machines. Everything is automated by machine, from the cooking to the cleaning, but it’s hard to see where the AI piece fits in here. Just because you build a giant vending machine to sell cars out of, doesn’t mean that you’re using AI. Hopefully they’ll extend the concept to more Chinese bathrooms soon, and we’re not just talking about how to stop toilet paper bandits using AI. There is certainly no lack of unmanned store concepts popping up in China, with enough being launched that Tech Node was able to write about the Top 10 Chinese Unmanned Stores in 2017.
Startups Going Against Amazon
Of course, the Chinese and Amazon aren’t the only ones investing in retail automation. We’ve told you previously about an automated coffee kiosk with high-end beans but without the high-brow hipster snobbery. Retail automation solutions at the checkout counter have been particularly focused on security. We previously found two companies—Everseen out of Ireland and Cambridge, Mass.-based StopLift—that use computer vision to prevent fraudulent behavior or errors by customers or employees. The next logical step is to apply similar tech to automate the checkout process because we all know how well the self-checkout line works when you leave it to the humans.
Founded just last year, San Francisco-based Standard Cognition has wrangled about $6 million in funding as of October 2017 for its retail automation system powered by computer vision. Cameras ID customers and the items they grab, charging them for the products as they leave the store. TechCrunch reports that Standard Recognition’s AI does not use facial recognition and anonymizes the data it collects, storing it on-site rather than in the cloud.
Update 7/19/18: Standard Cognition raised another $5.5 million round which the company refers to as a “seed round extension” from CRV to continue their efforts in building a cashier-less checkout for bigger businesses.
Update 8/3/2018: Standard Cognition’s cashier-free checkout (comparable to Amazon Go) is going live. It announced a deal with Japan’s Paltac Corporation to roll out over 3,000 human-free storefronts by 2020.
Update 11/17//2018: Standard Cognition has raised $40 million in Series A funding led by Initialized Capital to replace retailers’ cashiers with cameras. This brings the company’s total funding to $50.6 million to date.
Another startup offering an AI retail automation solution with hopes of rivaling Amazon is Silicon Valley’s AiFi, which was founded in 2016 and backed by $4 million in Seed money. The startup says its system can scale from small mom-and-pop places to large retailers. However, from what we’ve seen so far, most of these systems—relying heavily on cameras and object recognition technology—have focused on convenience store-sized establishments. AiFi says it can track up to 500 people and thousands of product SKUs, according to TechCrunch, which noted that the system also monitors behavior to detect naughty business such as shoplifting. Eventually, the same facial recognition tech will be able to send targeted promotional ads to customers via the system’s app.
San Francisco-based Bodega, founded in 2016 with $2.5 million in disclosed funding, is more niche. It offers a grab-and-go AI retail automation system for places like apartment buildings or gyms. All customers need is an app and a code to access the goodies cabinet
A set of cameras inside the cabinet use computer vision to recognize products taken off the shelf, charging the customer’s credit card once he or she walks away. Bodega also learns what sells and restocks accordingly.
A bootstrapped startup called Poly out of San Francisco promises not just to automate the checkout process with AI and cameras. Founded in 2015, the company says its system will track inventory (something both startups and big retailers like Walmart are starting to do with robots) and produce reams of data about shopper preferences. It will even notify shoppers when they pick up an expired item in the store. The company is also working on an augmented reality app that allows customers to learn about any product by pointing a smartphone camera at it. Fast Company did a full-on feature about the company last year.
We can all agree that the self-checkout experiment, like the War on Drugs, should end. It’s time to let the machines take over. We’ve already noted some success in other areas of retail automation from startups that target inventory control and pricing. And we’re starting to see automation in other sectors of retail, from warehousing to supply chain—themes we may hit in an upcoming article.
No company in the world spends more on research and development (R&D) than Amazon, who in 2017 dropped a ginormous $23 billion on R&D. While this would certainly give Amazon a technical advantage over any of the above startups, there’s no indication the mega retailer has any plans to peddle its AI retail automation system to other customers, meaning there’s quite an opportunity for startups in this wide-open market. Other retailers certainly don’t have the technological expertise of Amazon, so if they want to find other tasks for their employees, they’ll have to turn to third-party solutions. Or, as the trend is nowadays, snatch up startups before dreams of an IPO dance in their heads.
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