When it comes to business innovation, brick-and-mortar retail often feels like it has the last word of the development baton compared to newer, faster-growing, more quantifiable (and still far from be perfect). But brick-and-mortar retail is far from going away completely, and today a company that has developed a solution very specifically aimed at improving in-person merchandise sales data is announcing a major round of funding as it ahead of some major rollouts it’s signed with retailers – a sign of how things are changing and the market’s appetite for it.
Nexite, which has developed a radio-powered tagging system and corresponding data platform to read and analyze information about those tagged items, has raised $67m in a series funding round C, and $100 million in total, money it plans to use both for R&D as well as rolling out the services to its first customers.
“We are solving our customers’ biggest problem, which is the lack of real-time data in physical stores,” Anat Shakedd, the CEO who co-founded the Tel Aviv-based company with her husband Lior, said in an interview. . She describes Nexite’s solution as the “only technology on the market” that does not require a battery to be able to transmit substantial data over long distances.
This latest round of money was co-led by Pitango Growth and Saban Ventures, with participation from previous backers Battery Ventures, Intel Capital, Pitango First and Vertex Ventures. Before this C-series, Nexite was relatively under the radar while working on its technology and dealing with its first customers.
PitchBook notes that with this round, before its full close and only at $53 million, Nexite’s valuation was just over $340 million. Now, with Series C at $67 million, that would give the startup a post-money valuation of just under $356 million. (The company declined to comment on the figure when asked.)
The list of Nexite’s first customers testifies to a good start in the sale of its concept and its product on the market. Shakedd said the startup has two major retailers signed with “comprehensive rollout agreements” that will cover more than 1,000 stores and 80 million item tags each year when implemented. She added that Nexite has additionally signed deals with “four of the biggest retailers in the world” – no names were disclosed – which are in different stages of development, and has talks with 20 other major retailers.
The gap in the market that Nexite has targeted is that brick-and-mortar retailers today operate in a kind of data desert – they showcase items and sell them, hope to succeed, and often have huge amounts of stock that don’t sell. not ; it’s a lot of trial and error with a few bits of observation and historical data thrown in to figure out why – and yet as physical locations they’re essentially sitting on a mother lode of useful data if they can make better use of them.
Retail stores are like a black box,” Shakedd said. “Other than sales, they don’t have any data. Now they’re looking for that.
Nexite has developed a tagging system which is attached to individual goods, as well as a network of radio nodes (via Bluetooth beacons) which can be installed in a store to pick up the movement of the item and how an item may be moved to at the same time as another. These tags can either be incorporated into a garment tag at the point of manufacture, or a retailer can attach them by means of a sticker after that point. They’re no bigger than “washing instruction labels,” Shakedd said. The beacons can transmit their data up to 10 meters, but more typically seven meters – a distance the company is working to extend in order to use even fewer nodes.
As Shakedd described it to me, the system looks a bit like a more versatile and functional RFID; RFID on steroids, in a way. Tags not only track where an item is in real time, but where it has moved over time and what it has been moved with (for example, if someone chooses a top to try on with a certain pair of pants). Beacon data is processed in the cloud, which makes the beacons themselves efficient in terms of energy consumption: they are powered by radio waves coming from the beacons.
And because the system is based on existing radio standards, they also work with the barriers that retailers already have in place to track when someone takes an item out of the store without the radio tag being removed (for example in the case of shoplifting or an error at checkout); this means they also potentially replace those clumsier radio beacons.
This also means that tags can be used in a contactless “just walk out” type of shopping flow. One of the advantages that the use of these beacons would have in a contactless payment environment compared to other technologies under development is that Nexite beacons do not rely on any camera technology: this makes them not only cheaper to implement, but more functional, since the camera “just the ‘walk out’ technology could not be used to, for example, track how clothes can be tried on.
Then, after the sale of an item, the idea is that the tag can continue to “live” in the form of an application in which a customer can register, to obtain more information on this article, d ‘other related items that the retailer or brand is selling and other related information. This, too, potentially becomes another source of after-sales data for retailers, information to which they had almost no access before.
There are some potential hiccups in Nexite to get his business off the ground. If the ideal is to integrate tags into manufacturing, it means that many other stakeholders buy into the idea and prove to all of them that it is worth their time and investment to introduce this additional step in the process. There’s also the issue of those perhaps overpowering tags: Shakedd pointed out that people need to opt in to continue getting tag data after a purchase, but some will inevitably see this as big brother-style tracking, when all they really hope in buying in person is to get away from this massive data spectrum.
And finally, there’s a big question of how and if retailers have the infrastructure in place to work with all the data they’re amassing: real-time is only effective if you have teams in place, and IT in place, to analyze and read that. data and action. Digital transformation has definitely become a catchphrase of the day, but that doesn’t mean every business is ready to take it on or will succeed in implementing it.
Either way, there are also plenty of opportunities to apply the technology Nexite has built to a much wider range of IoT and other use cases – all scenarios where it’s now considered useful to be able to track the movement and workings of previously “unconnected” things.
“We went to retail first because they already tag everything, with 90% of items in categories like clothing already using security tags, so we didn’t need to educate them as much,” said said Shakedd. “In addition, our overall solution is less expensive for their current needs than other solutions.” Pricing for the Nexite system is based on full beacon deployment and the data platform that runs it, with more or less beacons around that almost negligible factor, she said.
“The continuous flow of data from goods is reinventing physical retail into live digital solutions. Nexite’s advanced technology is gaining traction in the market,” said Isaac Hillel, Managing Partner of Pitango Growth, in a statement. “It’s clear that Nexite is creating a much-needed new category, and we’re excited to continue our initial investment with Pitango First through this final round.”
“The continuous flow of commodity data and resulting analytics is transforming retailers around the world,” added Barak Pridor, Managing Partner at Saban Ventures. “Nexite’s industry-leading solution is driving significant business results that have never been achieved before in this space. We are very proud to join this amazing team on their journey.