Five companies to watch in the retail online to offline sector

Retailers are approaching the most important time of the year – the holidays. These few weeks are the retail industry’s most lucrative period, which account for nearly 40% of most stores’ annual sales (source). According to the National Retail Federation (NRF), this year’s outlook is very optimistic with November and December sales for all purchases (excluding auto, gas, and restaurant sales) projected to reach $616.9B, 4.1% higher than 2013. The NRF’s chief economist contributes this optimism to macro trends such as increased consumer purchasing power and a rise in disposable incomes (source).

Despite the good news, retailers should always be looking for other opportunities to add new value and unlock different segments of consumers. I took a look at the retail online to offline startup space and picked out some of the most interesting companies of this year. Just to note, this is the beginning of a longer set of posts I plan to do on various macro trends.

Cover (In-Store Experience, raised $5.5M in July): Cover’s tagline is “Uber’s payment experience at restaurants” and enables consumers to easily pay for your meal on your mobile device. The app also allows multiple users to split checks, automatically calculate tip, and provides a digital receipt detailing charges.

Why it’s interesting: Compared to the broader retail and e-commerce groups, there has been significantly less innovation in restaurant and food service technologies. However, with mobile payment platforms on the rise and food-tech deal activity climbing by as much as 37% year-over-year (source), timing seems to be spot on. As of September, Cover is working with 97 restaurants in New York and 32 in San Francisco, it averages about 75 seated tables per night in New York with a monthly growth rate of 30%.

Shopkick (In-Store Experience, Local Incentives, acquired by SK Planet in September): Shopkick is a smartphone app that offers in-store marketing and check-in services for retailers. In addition to driving people into brick and mortar locations, the company also engages with in-store shoppers using contextually aware promotions. In September 2014, SK Planet acquired Shopkick for $200M to branch out into the US mobile commerce space (source).

Why it’s interesting: On the path to purchase, 50% of decisions are changed in store (source), so its important for merchants to be able to engage with shoppers during this crucial period. While this concept has been around for some time (e.g. coupon dispensers on store shelves), new technologies for richer campaigns such as smart phones and beacons are becoming much more ubiquitous and ingrained into consumer behaviors. Furthermore, the 10x acquisition by SK Planet and numerous positive indicators (e.g. Macy’s announced it was installing 4000 Shopkick beacons in its stores) for Shopkick indicate market validation for their model.

Blippar (Retail Augmented Reality): Blipper is an augmented reality app and technology platform that works with brands to help build and execute marketing campaigns with rich, interactive content (e.g. posing with a celebrity, unlocking an exclusive location-based video, virtual fitting rooms).

Why it’s interesting: Augmented reality enables marketers to create new experiences that maximize the capabilities we currently have available to us. The company counts global brands such as L’Oreal, Universal Pictures, and Jaguar among its clients and will be partnering with 50 big brands in India as it continues to expand globally. In June 2014 the company also acquired Layar, another player in the augmented reality space.

Instacart (Convenience as Marketing, raised $44M in June): Instacart is a same-day grocery delivery service that partners with local stores such as Safeway and WholeFoods. The company uses a crowdsourced marketplace model to connect users with personal shoppers who pick up, and deliver the items, sometimes in as little as an hour. The service currently operates in 15 areas including San Francisco, Los Angeles, New York City, Austin, Boston, Chicago, Philadelphia, Atlanta, Seattle, and Washington, D.C and more.

Why it’s interesting: Similar to how Amazon Web Services disrupted traditional cloud infrastructure costs, Instacart and other last-mile-logistics players have an opportunity to shift the way goods are delivered to consumers.

Estimote (Retail Internet of Things): Estimote builds wireless sensors that use Bluetooth low energy, known more commonly as beacons, to locate and communicate with mobile devices. The company also provides the corresponding software development kit (SDK) that developers can integrate into their apps.

Why it’s interesting: Beacon (or as Apple has coined, iBeacon) has been attracting massive amounts of interest from merchants and marketers as of late due to the variety of use cases and ubiquity amongst consumers (thanks Apple). While retail is currently the biggest interest, this is only the beachhead market with expansion into other areas such as sports stadiums, music venues, and more.

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