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Smartcart - The Retail Revolution

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anonymous about 12 hours ago

Hi! I'm curious what is your perspective on etchical point of view in this product. If it's ment to decrease staff, then it's going to increase unemployment. Also one principal purpose of this product is to increase sales and impulse shopping. Then it's expected that it will affect on increase of consumer waste (and, in the start of the production chain, increased need for resources).

Smartcart Oy
Smartcart Oy
about 12 hours ago

Hi! Our product is not designed to decrease staff, instead we believe that some part of current staff should be do customer service, instead of 1/3 being tied up with a basic cashier function. The biggest advantage of brick n' mortar retail is still the customer service and physical presence. We do believe that a more effective brick n' mortar shop will prevent unemployment, which would happen if online sales with zero cashier salaries, took over. When it comes to sales and impulse, that's something that all personalised marketing aims to achieve. In order to enable services for shoppers free of charge, there needs to be other revenue sources present.

We actually believe we can help cutting down on waste by for example making it possible to offer discounted prices on groceries that would end up in thrash, if out dated. By Smartcart it is possible to launch a campaign in a few minutes, without the need of manually tagging every product with -30% or -60%. This benefits both the consumer and the retailer.

BR, Petteri Heiman

Alexey Levin 8 days ago

Hi Team.

Great business and huge opportunity ahead of you! I've got some questions before deciding to invest.

  1. How are the 16% conversions calculated? Transactions / Shop visits or Transactions / App visitors? It is not the best way to compare conversion rates of completely different environments with different user intents. If you catch a visitor inside a supermarket, he would have a 90%+ probability of transacting.
  2. Question about Scandit and self-checkout. How to check if a visitor scanned all the products correctly? Any theft protection ideas?
  3. Smartcart users spend 74 % more than the average shopper" - How can you tell with much confidence that it is Smartcart that has increased conversions? Maybe it is just a result of filtering out of more affluent visitors disproportionally attracted by a new fancy gadget?
  4. Why are your smart carts so expensive to manufacture? 10,000 Euro, really? 2,600 EUR per item for transportation and installation costs also looks too much.
  5. Do you have plans to create your own brand-agnostic shopping list app (I mean not a third party app K Ruoka, which has a poor user rating)? Users could use the list, sync it with a smartcart and shop. This could give you more power over shopping networks if users would belong to your platform/ecosystem, but not the shops. Also the app could work as a cash-back service, or best-deal locator, or an advertising platform driving foot traffic, tracking the whole online-2-offline journey, etc. In today's modern world you need to become a platform, but not just be a hardware/software commodity producer."
  6. What % of visitors start their shopping journeys in the app before visiting a store? And what % of total smartcart users actually sync the app with a cart?
  7. What % of revenue comes from a top-1 retailer? What % of growth last year can be attributed to this top-1 retailer? How may customers do you have now and how many did you have a year ago?
  8. Why did you choose Paraguay for international expansion ?
  9. Why didn't multiple attempt to create smart carts take off? See https://newatlas.com/smart-cart-sk-telecom/19368/, https://www.behance.net/gallery/7333153/Digital-Shopping-Cart-Tablet or dozens of similar cases for many years. The idea is pretty obvious and it has been attracting attention for at least a decade. Why and how is SmartCart able to crack the problem?

Best Regards, Alexey Levin https://angel.co/levin-levin

Smartcart Oy
Smartcart Oy
8 days ago

Hi Alexey,

thank you for your interest!

  1. The 16% conversion is calculated by comparing the amount of people who saw a specific add to the ones who both saw and bought the product. The number varies between products and different types off users, but 16% was the study average.

  2. Theft has been a problem in all retail stores for decades and there have been various ways designed to make it harder to steal. One could argument the use of scales etc, but the price point and customer experience easily becomes a problem if the process is to complex. When it comes to enabling the cashier function via Smartcart, we believe that the basic component for the retailer in order to prevent users from using their privilege of passing cashier queues, is to require a personal login already when entering the store, in order to do payment via cart. Random checks will be performed at exit, just like at self-checkouts now. By doing this, users will benefit from reading all the products and if they continuously fail, then loose this privilege.

  3. There are many factors that affect the shopping spend, but this study compared how much Smartcart users spend compared to the store average amongst all types of customers. In the end its about giving customers more benefits to move from baskets etc to carts.

  4. The 10.000€ calculation is for 20 carts and it includes the carts, automatic charging station etc. In our opinion the price point is one of our advantages, but economies of scale are estimated to bring this number further down in the future.

  5. Interesting thoughts, but for now we have been concentrating to just integrate with existing retailer apps. Our aim is to create the best possible customer experience by using all possible means.

  6. We don’t have permission to share the app sync %.

  7. We don’t give out retailer specific data, but in Finland we doubled the number of stores in 2018. Currently we have 110 stores altogether.

  8. We actually ended up in Paraguay by accident. In early 2017 we had negotiations with some Spanish retailers in order to learn more how the shopper in Finland differs from a Spanish one. At the same time Super6, contacted us an showed a lot of interest and a very pro-active attitude. Their team landed in Helsinki 14.000km from Ascuncion, just a month after first contact and we both were impressed. What started as an accident, is today one of the best decisions we’ve made, and we’ve gotten a lot of valuable know-how thanks to this project.

  9. The first attempts to create a digital shopping trolley go back to mid 1980. Generally, one could argue that technology needs to be able to do the job, without the price point becoming an issue. Same goes for the business model, you must come with benefits to different interest groups in order to build a cash flow that covers the costs. There actually was a cart similar to the SK Telecom one, in Eurocis a month ago. They had some similar functions to our, but basically it was still a pure demo which wasn’t very easy to use. When testing this the second time, the battery had run out and the tablet was dead. This is one of the most important innovations in Smartcart, the patented automatic charging station, which keeps the carts powered without daily assistance from store personnel in battery switching or plug-and-play charging. The other option of Unnati Dani is actually pretty similar to the one of SK Telecom, but development seems to have died out in 2009. Also, there is the lack of charging components present, which isn’t a problem in a laboratory demo, but becomes an issue when maintaining a larger fleet. We’ve proven the business model by combining the interest of the shopper, the retailer and the CPG, in order to make this expansion possible.

Great questions by the way!

Best Regards, Petteri Heiman

Alexey Levin 7 days ago

Hi Petteri

Thank you very much for the answers. I like the business and the valuation is reasonable. The only concern is with the question №7 mentioned above. If all of the business comes just from one customer, it makes very hard to make predictions. Depending just on one retailer is too risky. And your ability to onboard other retailers is yet to be proven.

One more question. Why don't you raise capital from retailers? Strategic investors with in-market expertise, besides just providing cash, would be of greater help and could potentially provide a future exit. And a kind of competition between retailers for a great piece of tech could uplift the valuation.

Smartcart Oy
Smartcart Oy
7 days ago

Hi Alexey,

thank you. We've concentrated on creating the solution with one big local retailer, in order to learn for international scalability in both technology, integrations and logistics. Paraguay has tested all of these as well. We are in the middle of many international retailer negotiations, and although their outcome is not included in the valuation, they are expected to have a positive impact on future company market value.

Very good point with strategic investors and we feel absolutely the same. Our captable includes an industrial investor from Germany in the field of shopping cart accessories, as well as major Finnish shop owners in both the grocery sector and electronics.

BR, Petteri Heiman