Smart Shopping Cart, less ideal than Amazon Go, but still a growing obsession

Last week we talked about how Amazon Go (see article link) inspired the rapid growth of fully automated stores in China. In fact, the idea that applying artificial intelligence to brick&mortar in order to ease the whole shopping experience also has spawned another breed of startup family. They eye on the traditional supermarket business and claim to transform your store into something akin to Amazon Go, albeit less ideal, yet in a much cost-effective way. They hope they can play the magic on the shopping cart.

We first identified such startup called Focal Systems from Silicon Valley. Just established in 2015, it deploys the latest computer vision and machine learning technology via an easy-to-use tablet mounted on shopping cart handle-bars. It has 4 key functions (you can also check out the video demo blow):

1)Real-time out of stock detection

2)Location based promotion and advertising

3)In-store navigation and product search

4)Automated checkout

It makes sense that the US supermarkets need the machine to replace much of the human work, considering its labor costs are relatively higher. But China is in lockstep with the trend, even though labor costs are still low. Chaohi is one of the local startups we detected. It launched its product in February this year. The smart shopping cart asks the customers to use Wechat to log in the tablet, then customers can simply scan the products to do the self check-out. Similar to Focal Systems, it can offer product recommendations, discount ad push, theft prevention; except the real-time monitoring of shelf display for the retailers and in-store navigation&product search for the customers. According to Chaohi, ERP integration and installation process for the retailers are also very easy, which usually can be finished within 2 weeks.

You can also check out its video demo below:

A conventional checkout counter in supermarket usually costs about RMB20,000 (USD3,000) per se in China. Chaohi told they are pushing their product pricing below that value. Nevertheless, Chaohai is not working on a direct sale business model. It seeks to distribute their products through partners which are often long term service providers to supermarkets. They believe it is a painless way of getting momentum, with the sales target of 2,000 shopping carts for this year.

Interestingly we encountered another local startup called iCart in this arena. Though its product offer is close to Chaohi, it is trying to gain the market penetration by renting their smart shopping carts to the supermarket rather than asking its client to buy them at a hefty price. Founded in 2015, iCart told it is already signing a big pilot project with Vanguard supermarket chain.

When in talk with the local startups, they all agree that more than ever before supermarkets in China are facing constant pressure of store closures. But at this stage, overall market size is still attractive for them to carve out a niche. Or perhaps it could not be a better timing to lure supermarkets under the name of enhancing shopping experience& customer satisfaction while access to big data analytics.

We foresee more similar players in China will join this wave soon as technically speaking smart shopping cart is not that advanced at a patent pending level or that hard to copy, at least based on the feedbacks from the local startups.

Author: Cecilia Wu