It’s Not Just Amazon, These 130+ Startups Want to Change In-Store Retail (But Why?)

It is not just Amazon with its new beta in-store tech app Go. Investor data firm CB Insights has gathered information on 130+ startups working on transforming the in-store experience:

Startups working on in-store retail tech

Funding to startups offering technologies for use in-store is rising to an all-time high this year. These technologies, ranging from store management platforms, to wearables for store staff, to beacons for in-store analytics and proximity marketing, are on track to see over 170 deals worth nearly $800M in total this year.

It is strange that venture capitalists invest in so many startups and at the same time, e-commerce pure players have a hard time getting money. Even though it should be obvious by now were the growth potential lies. (That is why it is wise to keep up with what specialised e-commerce VCs like Forerunner Ventures are doing.)

There was a record-breaking deal count for 2016, according to CB Insights:

in-store-tech-deals-2016.png

Given the change coming to all of retail, it makes little sense to, say, fund the sixth startup doing “interactive aisle displays” or the 20th startup in the beacon-based analytics sector.

It is like putting lipstick on a pig. Just very expensive lipstick.

The future retail companies will in almost all cases not be former traditional brick-and-mortar retailers miraculously surviving the move to a world for which their cost structures, their business model and their customer value proposition were not build.

So why build for those companies?

At best, the result will be companies building carry-over technology.

Or, to put it in different terms: None of these startups will grow up to be the next Amazon or even just the next eBay or the next Dollar Shave Club.

However local places connected to commerce will look like in the future, only one thing is certain: At their core they will be driven by digital dynamics; not just at their periphery.

Don’t build for the periphery. It’s a waste of time, talent and money.

More on this topic:

9 comments

  1. […] It’s Not Just Amazon, These 130+ Startups Want to Change In-Store Retail (But Why?) […]

    Like

  2. […] It’s Not Just Amazon, These 130+ Startups Want to Change In-Store Retail (But Why?) […]

    Like

  3. After 10 years of e-commerce 90% of purchases are still being made through physical stores. Digitising and platforming the whole retail experience is where this tech is headed, I don’t think that’s a poor investment, it’s the future of shopping – to assume that growth in e-commerce is limitless or that pure-play online brands will be the only ones standing, is to miss the point that growth is limited by consumer spending power and appetite for goods, which are finite and that many shoppers crave the social, emotional and physical experiences that only bricks-and-mortar can offer.

    Like

    1. I guess we have to agree to disagree on that. I see a big systemic change coming (or being already underway) that goes beyond commerce. Mass media is changing, the way brands are built is changing, etc. There is still, in my eyes, far too little analysis out there, for example, on how new brands leverage Facebook ads and Amazon Marketplace to build out their audience. This is happening rather fast. (Because these structure don’t cost much.)
      And this happens even though the logistics part of e-commerce is still very much a 20th century operation. (and hence the bottleneck with all this) Once that changes all this will accelerate even faster.

      Anyway. Even taking that aside, trying to build and sell tech to companies that already have a (kind of) working business, that has been largely unchanged for decades, is a tough sell. You have to wrok against very ingrained culture. Add on top outside pressure to those companies (by online pure players) and the selling gets even tougher.

      I would not try to build my company relying on partners whose future is rather unclear.

      “many shoppers crave the social, emotional and physical experiences that only bricks-and-mortar can offer.”

      We don’t see that reflected in, for example, where old and new malls are heading. Or the angst around declining inner city shopping. It is not a growth market anymore, and for good reason.

      Like

    2. P.S.: just subscribed to your blog!

      Like

  4. […] It’s Not Just Amazon, These 130+ Startups Want to Change In-Store Retail (But Why?) […]

    Like

  5. Marcel, I thought about it overnight. I guess it’s a question of time-line, and that if one were to take a bet on the future (which investors must do, and which is the point of your piece) then I agree with you, betting on a old model of retail that is surely in decline is not where most of the smart money should go. I come at these things wearing two hats 1. As an agency owner, working with many legacy multi-channel retailers, who will take many years to either die or pivot their business and change their model (and the role of physical retail within that) 2. As someone who needs to be aware and prepare for what’s next and experiment with new models – We are in transition phase, but yes, those struggling to digitise the physical retail model are to some extent vultures picking over a dead model of shopping….

    By the way, I am commenting via an old account, all my recent blogging is here: https://www.omnifi.co.uk/thinking/

    Liked by 1 person

  6. […] It’s Not Just Amazon, These 130+ Startups Want to Change In-Store Retail (But Why?) […]

    Like

  7. […] It’s Not Just Amazon, These 130+ Startups Want to Change In-Store Retail (But Why?) […]

    Like

%d bloggers like this: