Do traditional brands need technology innovation? Most probably nod their heads outside, while sinking their hearts inside.
Yes, they need, but more often than not, they need something easier to deploy, cheaper to pay, and above everything else, instant and measurable KPI growth, especially in sales.
These criteria usually put quite a lot of fancy tech innovations into a standstill.
And what about those AI driven big data analytics? Well, the reality is traditional brands have tons of data sitting there, in silos, disintegrated, unorganized…and it often requires the top level decision makers to push a top-down approach for a radical yet baby-step of data integration. Because without various data sources consolidation, the much acclaimed AI analytics simply cannot perform the magic.
But one breed of startups might wiggle its way and become a favorite in the eyes of CPG brands like Coca-Cola. For years, these traditional companies send people to offline stores/supermarkets, manually count the products one by one and conduct tedious surveys on the spot, in order to figure out shelf display, out of stock, promotion compliance or even competitive intelligence. That is why startup like Trax, headquartered in Singapore with backbone research in Israel, came into the scene. You still send people to the store, but instead of some old school store-check method, prone to human errors, you just ask them to take product shelf photos via their mobile phone and upload them to Trax’s platform. A combination of image recognition, machine learning artificial intelligence blah blah blah…will then be used to analyze those images and give CPG companies insights much faster and more accurate on any shelf pattern or change.
It does not sound a much revolutionary idea at first, though Trax made a rather attractive video demo. On second thought, the solution somehow fits the “innovation criteria” mentioned above, which traditional brands embrace wholeheartedly. No wonder Trax is appealing for investors and has secured USD 286 million in its pocket so far.
By the way, it does not mean Trax does not have equally competent rivals, such as Planorama from France.
Today Trax has determined to expand into the China market, but it is actually facing more fierce competition than anywhere. Recently I sat down with a two years old, Shanghai-based startup Clobotics whose core business model walks on two legs: New Retail + Wind Energy…not sure how they came up such combo, but apparently they think it will succeed and Jenny Lee from GGV, one of the most renowned VC women sitting on its seat of the board of director seems like a proof of concept.
A recent interview with Trax’s China managing director (see link here) revealed that its core clients include Coca-Cola, Nestle, Heineken, Tsingtao, AB InBev, Diageo, Molson Coors etc. But according to Clobotics’s sales team, they have already snatched the Coca-Cola deal away from Trax, in North America, in China (Its China contract is signed with the Coca-Cola’s JV with COFCO) and in Thailand. One very convincing strategy they are using is fiercely undercutting the pricing of Trax in order to win big-name clients. Its founding team is basically the former Microsoft clan and their technical expertise should not be inferior to Trax. The company is even willing to start a free pilot project, as long as the contract mechanism requires that their clients must sign a full project once pre-designed key metrics meet improvement target after the pilot.
Additionally, Clobotics is offering the IOT solution of upgrading Coca-Cola’s existing branded cooler, by installing sensor and camera inside for real-time analysis at the cost of less than RMB900 per se.
Clobotics told me it has a certain kind of side-dish business as well, for instance, by collaborating with Edenred, it helped Sophora to build a forecasting model in order to predict its loyal customers’ next purchase behavior and rank their product preference just based on its CRM data.
In the past, I witnessed more and more local startups are crowding into this “easy innovation” arena, for instance, another noticeable startup is Tunicorn which raised USD37 million in series A in 2017. Last time when I talked to the company, it claimed to have clients like Bailian Group, Mondelez, Nestle under its belt. Of course, things can change quite rapidly these days. A pilot project can be dead, or full project cannot be renewed.
To attract more CPG clients and have a substantial market dominance will be an uphill battle for these startups in the long run because the innovation needs for the traditional brands are not as much urgent as we might perceive.
By: Cecilia Wu