Inventory Data from Retailigence Helps Mobile Users Buy Locally

10/15/12Follow @wroush

You’re standing on a hot street, feeling thirsty, and a bus goes buy with an electronic sign advertising your favorite sports drink. Normally, that would just make you even thirstier. But this sign contains some actionable information: the drink is in stock at the 7-Eleven one block away. The chances that the store will soon be selling you a cold beverage just went way up.

That may sound like a scene out of Blade Runner, but it’s not science fiction. It’s an actual ad campaign being planned for New York City by Vitaminwater, using local product inventory data provided by Redwood City, CA-based Retailigence.

One of the many real-world frustrations that Web and mobile technologies haven’t quite solved is what you might call the “last mile” problem in shopping: when you know you want something, and it’s not the kind of product you’re going to order online, but you don’t know which nearby bricks-and-mortar store has it in stock, and you don’t want to drive all over town looking for it.

A mobile advertisement—whether it’s on the side of a bus, or, more likely, on a Web page that you’re browsing on your smartphone—would be the logical place to convey this missing information. But before that can happen, somebody needs to collect real-time data on product availability, break it down by location, and get the data out to people’s mobile devices based on their latitude and longitude.

That’s exactly what Retailigence does. And though the startup is only three years old, it’s emerging as the leading middleman in the area of geographic ad targeting.

“There are tons of companies trying to make ads more local,” says founder and CEO Jeremy Geiger. “There’s nobody that has access to this data that we have that allows us to show local product availability.”

Backed by $4.3 million in venture funding from DFJ, Quest Venture Partners, and angel investor Dave McClure (among others), Retailigence is a pioneer in what might turn out to be the most important form of “online-to-offline” or O2O commerce. Here at Xconomy, we mounted a whole event on O2O commerce back in August—but the focus was on San Francisco-based Eventbrite and the work they’re doing to connect people with information about events going on in the real world. Ultimately, retailing could prove to be an even bigger arena for O2O.

According to data from research firm Forrester, nearly 50 percent of all in-store purchases are preceded by some kind of online search. And giants like Walmart and Apple are earning hundreds of millions of dollars each year on online purchases followed by in-store pickup. “The thing people don’t realize,” Geiger says, “is that O2O commerce is literally seven times bigger than e-commerce, and growing just as fast.”

Geiger is a former management consultant who spent more than 15 years at PricewaterhouseCoopers and KPMG helping firms fix their supply chain problems. In the consumer packaged goods business, he says, you can’t achieve the just-in-time ideal in supply chain management without access to inventory data from local retailers. So he got really good at helping retailers integrate the myriad databases they used to track manufacturing, shipping, inventory, and pricing.

Around 2009, Geiger got interested in the first generation of barcode scanning apps for smartphones, from companies like RedLaser. Using these apps, consumers could scan the barcodes on products in stores and get online data about the same products. But back then, he says, “you might have been able to find the product on Amazon, or maybe a used one on eBay, and that was it. What would be really useful to the consumer, and drive value to retailers too, would be to see that the product is also available across the street.”

Geiger validated this idea with the co-founder of RedLaser himself, Jeffrey Powers. “He said the number one complaint about RedLaser had nothing to do with the product—it was that there was no local data,” Geiger says. “People wanted to buy locally but they were only seeing Amazon data.” (eBay bought RedLaser in 2010.)

Geiger saw an opening to build a company. But despite his experience helping companies build supply chain management operations, he didn’t know much about starting a venture-backed startup. So he moved to Silicon Valley and joined Founder Institute, the multi-city startup incubator started by Adeo Ressi.

“It seemed like a great way to get introduced to VCs, and it worked out just like that,” Geiger says. After spending nine months funding the company out of his own pocket and growing to six employees, Geiger met 500 Startups founder Dave McClure, who invested after a three-sentence pitch.

The company’s first product, called AppNet, was designed as the fabric linking retailers with developers of mobile product search apps. Retailigence taps into retailers’ point-of-sale and enterprise resource planning systems and … Next Page »

Wade Roush is a contributing editor at Xconomy. Follow @wroush

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