Big Data Meets Big Box: How Two Startups are Changing the Retail Game

Two St. Louis startups are working independently to change the way we shop for the basics such as groceries and hardware, with core strategies that rely on Big Data collections to transform the buying process and improve the flow of information from consumers to retailers and brands.

The startups are Aisle411.com and FoodEssentials.com. Both are small ventures with roughly 20 staffers apiece. Despite their tiny size, each is trying to make it easier for shoppers to find and understand what they are purchasing.

Aisle411 has an app that brings up maps on the smartphone for shoppers to navigate through a particular store. The maps are based on their own collection of data about the location of the various individual products that are sold by various establishments.

FoodEssentials collects data on labels from various food products; this data is then sold to retailers and others. The customer doesn’t interact with their data, other than to create it by buying an individual item.

Food Essentials focuses on the grocery store, while Aisle411 is a more general application for a wider group of retailers. The two companies have complementary approaches, and are discussing ways they can work together in the future, although have not reached any formal agreement yet.

Aisle411 began life with a simple strategy: direct shoppers to a certain item within a big box store such as Home Depot. Their goal was to reduce frustrations by shoppers who couldn’t find items and left the store empty-handed. This happens more often than you think. For example, renowned loyalty experts Timothy Keiningham and Lerzan Aksoy, in their book “Loyalty Matters,” studied customers and retail executives trying to find items on a shopping list. Both groups couldn’t find half of the products, even though everything was in stock. They wrote: “A lack of customer-friendly logic to the items placement made many items virtually impossible to find.”

Eventually, Aisle411 came up with a smartphone app that displays a map to the right shelf—an indoor GPS that helps shoppers navigate those tricky aisles. To date, the company has assembled more than nine thousand maps for Walgreens, Home Depot, Shop ‘n Save and Price Chopper, among other big box retailers. Each store has to upload their floor-plan and product mix to Aisle411’s system.

“Soon retailers who use our technology will benefit from the big data intelligence and personalization that it will provide consumers to customize the information they receive on their devices,” said co-founder Matt Kulig. “Retailers can see the consumers searching for products in their stores and how frequently they shop for particular items. This helps them to better manage their inventory and understand buying trends.”

Aisle411 has branched out with a series of developer tools that add features such as indoor location awareness. The goal was to transform a smartphone into a personal recommendation engine by understanding consumers’ buying patterns, including where they’re actually shopping. “By understanding the personal preferences, the buying patterns, and the search patterns of their customers, retailers can be reactive to changing logistical requirements to meet changing demands,” Kulig added.

Food Essentials gives insight into grocery labels. ”Retailers want to know how many low-cal products or low sodium products they have in stock,” said co-founder Anton Xavier, comparing his company’s service to Google Analytics. The company, which launched last October, now counts six retail chains among its customers—a total of 600 stores.

Before Food Essentials, food researchers had to retrieve food-label data from several different sources, including the retailers themselves, analysts and third parties who track food purchases. This resulted in paying hefty licensing fees—and the data still wasn’t current, because many of these sources offered older information about discontinued food products. Xavier and his brother began collecting food-product label data as they helped their father, who’d suffered a heart attack, shop for the right kinds of groceries.

As a result of their efforts, Food Essentials has compiled what its founders claim is the largest data collection of food product information, covering 90 percent of current food sales. (That coverage number is based on queries from developers who’ve built applications on the Food Essentials APIs.) “We can see the queries coming in and which products people are looking for, and we already have most of these food products in our database,” said Xavier.

In addition to the free version of the platform, there’s also a paid version for developers that costs $99 a month for unlimited queries. This is a very attractive price point compared to its competitors, and one of the reasons why Food Essentials has become popular in this particular market segment.

One of Food Essentials’ customers is the U.S. Food and Drug Administration, which uses the company’s data as part of its own analysis of consumer purchasing habits.

Xavier and his partners moved their company from Australia to St. Louis when they won a business startup competition from Arch Grants last year with a $50,000 prize. Both companies were also part of another startup competition from Capital Innovators, which provided an equity stake and various business-mentoring programs in exchange for investments of $50,000 apiece.

Two St. Louisans started up Aisle411, although one of them subsequently moved to Palo Alto to work more closely with hi-tech firms in Silicon Valley. “We find it exciting that Aisle411 is here in the same town, and we have heard from some of our retailer customers who want us to join forces, but nothing concrete has happened yet,” Xavier said.

Certainly, these two aren’t the only ones in the space. Neither Food Essentials nor Aisle411 is tied directly to the retailer’s point of sale systems. For example, QThru.com offers self-service scanning and checkout operations via the cloud and a smartphone app. However, what is interesting is how both companies have taken a similar approach to aggregate their product data online and made this information available to third-party developers who can leverage this data for analysis of consumer spending trends. And it is all come out of the frustrations of wandering the aisles and trying to track down products or nutrition information.

 

Image: Corepics VOF/Shutterstock.com

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