This 1001 startup Idea from YoStartups is to build a platform using IoT Devices to Automate Checkout In Retail Stores for retailers to enable
quicker payments and enhanced customer satisfaction. This startup idea is about taking the self-checkout to a new level using IOT. Customer adoption will be easy as self –service is not a new concept, it was introduced in 1916 by Clarence Saunders in their shop Piggly Wiggly where customers could pick up items in their shopping baskets without assistance, This is now the baseline standard in offline stores.
Online shopping is growing in popularity due to the convenience of shopping at will, easy returns, and simplified checkout. This has build pressure on offline retailers too; they are under pressure to reinvent the way traditional brick and mortar business is done.
Market definition for this startup idea for 1001 Startup Ideas | Using IoT Devices to Automate Checkout In Retail Stores
The size of the offline retail business is about $22 trillion globally. Scanning of items cost about 0.4% of sales revenue (as per a report by Digimarc survey of 120 supermarket chains globally), which totals to $88 billion, this spend can be optimized by using technology. In addition to this, there are other benefits to retailers like reduced workforce, reduction in checkout queue times and freeing up time for other critical work areas.
The consulting major Mckinsey’s study further validates the market size; it estimates that automated checkouts can offer up to $380b in value for the global retail industry annually. The overall industry is currently moving towards self-checkout, it grew by 25%in 2013, and it is estimated that the global self-checkout terminals will rise to 325,000 by 2019.
Competitor analysis for this startup idea for 1001 Startup Ideas | Using IoT Devices to Automate Checkout In Retail Stores
There are quite a few firms globally in this space, however considering the market size and that the retail is a very local industry, there is room and space for other players too.
RADAR is a fully integrated hardware and software RFID solution enhanced by computer vision. It has inbuilt location accuracy and is currently the fastest RFID scanner available, because of its speed and accuracy it can perform in the busiest retail environments with an autonomous checkout with item level analytics.
Scandit Barcode Scanner SDK can transform smartphones, tablets and wearable devices into enterprise‐grade barcode scanning tools for consumers. The scanner enables the customer to check-in, add items to the cart, make any changes before making payments by scanning a QR code at a kiosk before moving out.
Pain point and target audience for this startup idea for 1001 Startup Ideas | Using IoT Devices to Automate Checkout In Retail Stores
Checkout time has remained one of the most frustrating areas of a customer’s retail shopping experience, as they have to wait in long queues and undergo multiple scanning transactions before the final payment.
An e-marketer survey among the Internet users showed that 30% of the customers would go back to retail stores if a better and smoother self-checkout option existed. Additional Data from a Harris Poll echoes the similar sentiment, it found that 88% of the customers wanted their retail checkout experience improved for faster transactions.
The market is also responding to customer needs; a VDC service revealed that 85% of the retailers are upgrading their POS scanning systems to provide seamless and better checkout experience. However, the current self-checkout systems are stuck in between card-cash front-end transaction process through the POS, this is where integration of IoTs into the existing systems can create an entirely automated checkout system by looping in customer’s mobile phone, which will be charged at the exit gate to complete the sale.
Value proposition for this startup idea for 1001 Startup Ideas | Using IoT Devices to Automate Checkout In Retail Stores
McKinsey estimates that the automated checkouts can reduce cashier requirements by up to 75%, saving $150 billion to $380 billion a year for retailer’s, by the year 2025. It could also lead to 40 to 80 percent reduction in queue times, which could add up to $30 billion to $ 135 billion in time saved. The retailers would be able to shore up margins in this low margin industry. The customers will be happy too, as automated self-checkouts will save time, offer enhanced privacy, easy returns because as proof of purchase is in their mobile app.
Business model for this startup idea for 1001 Startup Ideas | Using IoT Devices to Automate Checkout In Retail Stores
The proposed business model for this startup idea by YoStartups is to charge the retailers a one-time onboarding fee for setting up the entire system, updating inventory and integrating payment gateway. The start-up can then either charge a fraction of savings generated by the new systems or charge them a fixed scanning fee per item. The retailers can be billed on a monthly basis for all the services rendered to them.
Way to market for this startup idea for 1001 Startup Ideas | Using IoT Devices to Automate Checkout In Retail Stores
The proposed start-up will have to develop web and mobile-based barcode scanners with a cloud back-end. The start-up will have to ensure that the existing barcodes formats like UPC, EAN, and other popular formats can be read by the mobile phones application.
The startup will have to tie up with one of the supermarkets or hypermarkets for a use case and run a pilot of its software. The start-up will have to ensure that it can build APIs, which can transmit and receive information from the existing billing and inventory software. Once the inventory billing and payment gateways are integrated into the current software set up, the startup can deploy beacons at various point of entry-exit for an automated self-checkout.
Key milestones for this startup idea for 1001 Startup Ideas | Using IoT Devices to Automate Checkout In Retail Stores
Within the first quarter of launching the startup, the online platform that can scan all the popular barcode formats like UPC, EAN, etc., SDK and APIs should be completed. In the next two quarters, the startup should aim to do a pilot project with the Supermarket/hypermarkets to collect data and refine the platform.
Ideally, the fourth quarter should be spent on integrating inventory, pricing, and data for products on sale. The fifth quarter should be utilized for beta testing; it should test the interactions and interface with the existing POS systems, payment gateways, inventory management systems, and aim to remove any bugs before the final launch
Investment needed for Prototyping this startup idea for 1001 Startup Ideas | Using IoT Devices to Automate Checkout In Retail Stores
The proposed startup can raise up to 100k from accelerators like TechStars retail accelerator (Metro and Target) Revtech and TrueStart. All the funds raised should be used to develop cloud-based CMS, SDK that has to be tested for hardware compatibility, OS compatibility, and web operability. No funds should be apportioned to salary or office rentals.
Team capability for this startup idea for 1001 Startup Ideas | Using IoT Devices to Automate Checkout In Retail Stores
The team will need a full stack engineer with experience in modern C, C++ and scripting languages like Python or Ruby on Rails, along with a background of integrating Cloud-based APIs with Android and ioS.
It will also need hardware engineers with experience in working with real-time operating systems, embedded technologies and a basic working knowledge of wireless technologies like BLE, radio, and NFC. Team members with expertise in AI subdomains like NLP, Machine learning, and Image processing will be a big plus for this startup idea.
The team will also require retail domain specialist to build and maintain working relationships with the retail industry and add domain expertise in the product development.
Investors/Expert take on this startup idea for 1001 Startup Ideas | Using IoT Devices to Automate Checkout In Retail Stores
Automated checkout has come a long way from 1916, from being just shopping without assistance to a full fledge no –human interface now.
Modern retailers are offering customer offerings, where customers can choose between best of both worlds; cashier-assisted lanes or 100% self-checkout. Retailers can convert them based on the traffic density in the stores.
High-speed RFID scanning or a scanning portal, which uses high-velocity imaging for goods moving on a conveyor belt to automate checkout completely, are some of the new technologies that are driving the industry in this direction. However regulatory concerns regarding the use of RFID tags remain because of their radiations, they might have limited use with food products unless proven otherwise.
The retail industry employs one in four people directly or indirectly in the USA, so the loss of jobs due to automation remains a concern, but traditionally it’s been proven that new technologies have always created jobs and not eliminated them. So it is up to the start-up to identify the right model and make the best use of this opportunity.
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*Any information given in the article does not constitute any warranty of marketability or fitness for a particular business idea for any market or industry segment. It is the readers’ sole responsibility to further research and assess the market opportunity.