Why did we invest in Veeve?
In recent years, there have been two high-profile bets on the future of physical retail:
First, there is the “Amazon Go” model that uses a system of AI-equipped cameras, scales and other sensors to create a semi-magical experience where consumers just walk into a store, put whatever they want to in their basket, and then walk out of the store without having to check out. The reality of this model– so far, anyway– is less than magical. The items are very limited, and shelf placement is extremely rigid. It’s a bit like being inside of a vending machine.
Then, there is the self-checkout model that most of us are already familiar with. It’s certainly not as magical as what “Amazon Go” type of solutions are trying for (and, for those of us who are constantly getting error messages because of issues with the scale, the scanner, or our own human errors, sometimes not magical at all). This technology, at least, has caught on: customers like that the lines are shorter, and stores like the ability to cut down on cashiers while increasing throughput.
A potentially smarter model has been pursued by companies like Caper and Veeve, where the core intelligence is built into the cart itself. It tries to marry the magic “just walk out the door” Amazon Go experience with the practicality and scalability of the self-checkout system. And, it provides benefits that neither model can achieve: since intelligence is built into the cart, the cart can plot the optimal route through the store based on a shopping list, or it can offer timely coupons, or it can ring for customer assistance.
Caper was recently bought by Instacart for $350M. We believe that Veeve is onto something much bigger: beyond just being a smart shopping cart company, its mission is to reunite the entire retail ecosystem and make everyone in the ecosystem happier.
So, what did we like about their approach?
Consumers will be happier. Veeve will not only provide them with a more integrated shopping experience by allowing them to skip the line and check out faster, but also personalize their shopping experience by allowing them to create shopping lists (imagine you will never forget an item again), collect timely in-store coupons, order online, and many more. A check-in experience is far more powerful than a checkout experience. Veeve customers can scan their club card or enter phone numbers to earn rewards, and redeem coupons that they previously clipped via retailers’ apps. Soon Veeve will launch a personalized shopping experience that integrates with shoppers’ shopping list and recommend products based on their past orders.
Retail employees will be happier. Veeve will help them develop new skills, such as high-tech customer service via Veeve’s Associate App and real-time customer upsell, to expand and grow in their role within the store. Gig workers will also be able to make more money by helping customers with online order picking.
Retailers will be happier. At the core, Veeve will increase shoppers’ average basket size by making them happier with a superior shopping experience that’s faster, better, and smoother. On top of that, Veeve will empower retailers to better manage operations through business intelligence and big data analytics using customer shopping behavior data collected through the platform, which will help retailers bridge the customer identity gap between online and in-store environments. This should help retailers lower “shrinkage” / theft with better intelligence.
Last but not least, CPG brands will be happier. They (and retailers) will have access to unmatched real-time product and consumer data, previously unavailable for in-store customers, which will allow them to curate and personalize store merchandising and advertise directly to store customers in real time.
The above four pillars constitute the retail ecosystem, and Shariq Siddiqui, Co-Founder and CEO of Veeve, was seen as “someone who really understands the retail ecosystem” by the CEO of one of his major customers that we interviewed. We agreed, and we believe Shariq and his team are more than just that. The founding team highly complements each other, with exceptional engineering leadership and successful entrepreneurial experiences, and every time we met with the founding team, the sense of mutual attraction only became stronger. What impressed us the most was how resilient the team was in this non-ideal financial market, how quickly they were able to adapt and solve problems collectively as a team, and how hungry they were to make this business successful.
We also believe that it’s the right thing to do at the right time. After the pandemic, Several important trends are happening in the retail industry. First things first, no, physical stores are not going away. In fact, they remain as a vital way for retailers to form long-lasting customer relationships, and retailers who can enable differentiated in-store customer experiences will win. Second, post pandemic, to be successful, retailers will need to apply an omni-channel strategy to manage both online and in-store experience while optimizing costs. Another trend is that as ads saturated online marketplaces, traditional retailers are seeking ways to develop their in-store advertising solutions that mimic customer’s online shopping experience. Veeve is on a clear path to be the right solution to solve these pain points.
What about the risks?
However, we admitted that Veeve will not be the only solution, and the market won’t be a “winner-take-all” market. Different customers will choose different ways to check out, and retailers have to meet where they are to make their customers happy. The following map includes major competitors in this market (other types of competitors also exist but not included in the map, such as delivery apps and mobile checkout apps):
There are clearly a lot of competitors targeting to solve similar problems, with big players like Amazon Dash Cart and incumbents like Standard Cognition. However, as a case study, when choosing who to partner with, Albertsons compared against eight different solutions across multiple continents, and decided to go with Veeve. In the following, we looked at Veeve’s advantages and disadvantages compared with these competitors, and analyzed why Veeve could be one of the winners in this market.
Compared with other smart cart competitors, Veeve’s differentiators are:
- Integrated shopping experience: Veeve’s integrated smart carts that include the scale, sensors, cameras, and payment processing system can provide a better shopping experience for shoppers, which is much favored by medium to large stores that highly value customer experience (such as Kroger, Albertsons).
- Independence: Most importantly, Veeve’s mission is to let retailers run their own retail media network (RMN) on Veeve’s cart which makes it far more attractive for retailers to adopt Veeve as opposed to Instacart/Caper or Amazon who may want to control RMN themselves.
Compared with the walk-out shopping competitors, Veeve’s advantages are:
- Better real-time engagement: Veeve carts can create real-time customer engagement features to help with product discovery, promotions, store navigation, search, etc.
- Easier deployment: Due to its Cart-as-a-Service (CaaS) model, the low upfront cost and ease of deployment can accelerate adoption than other solutions that require significant upfront CapEx.
- Controllable costs: For walk-out shopping solutions, the complexity and cost of computing can increase exponentially as the size of the store increases.
Compared with the self-checkout competitors, Veeve’s advantages are:
- Better real-time engagement: Veeve carts can create real-time customer engagement features to help with product discovery, promotions, store navigation, search, etc.
- Outperformance: Veeve carts outperformed self-checkout stations and were proven to increase average basket size by a significant margin.
On the flip side, Veeve also has a lot of disadvantages compared to competitors:
- Hard technology: It might take a long while for the technology to be able to live “in the wild” without much labor involvement.
- Competitive market: Cheaper solutions (such as scan and go using mobile apps) might take up market share (although they have had a very hard time confronting shrinkage).
- High costs: The smart carts will require high initial CapEx and future maintenance costs, which might result in a less attractive business case. One of the things that we have liked about the Veeve team is their ability to deliver a compelling product with very low BOM.
- Lacking certain inventory management capabilities: Amazon Go type of solutions can provide things that Veeve cannot, such as shelf monitoring.
- Second mover in product: Veeve’s product is currently one generation behind its competitors like Caper and Amazon Dash Cart, which already implemented some of the desired features such as shopping list and digitized ads.
In addition to these disadvantages, the №1 risk for Veeve’s business model is adoption and deployment risk. Veeve is working with Albertsons to roll out its Gen 2 carts, but risks still exist that things might go wrong in the process despite the team’s confidence in their execution capabilities. Another non-trivial risk factor is related to the hardware component of the business, including supply chain challenges, inflation risks, and future maintenance.
Where do we go from here?
The above concerns and challenges are very real.
As early stage investors, we are always working with companies who face a range of daunting problems to solve, from technology and product breakthroughs to customer adoption.
The next steps are clear, though: Veeve will take this round of financing, and will significantly expand their existing pilots, and roll out their next generation of carts. There is a huge backlog of retail customers that are eager to also roll out their own versions of the Veeve experience. If the experience of consumers in the expanded pilot matches or exceeds the experience in the earlier 8 store pilot, it will be very encouraging, and will set Veeve up for rapid scaling beyond grocery.
The Veeve team has been notable for their pace and efficiency of execution. CEO Shariq Siddiqui spent 8 years at Amazon, which famously emphasizes leadership principles throughout the organization. When we look at Shariq, several of them really stand out:
- Customer obsession
- Ownership
- Invent and Simplify
- Insist on the highest standards
- Think Big
- Bias for action
- Frugality
There are other “Amazon Leadership Principles” that we’re sure we’ll experience with the Veeve team as we get to know them better, but at the moment, this bloodline will serve them well as they enter the next chapter.
Shariq Siddiqui (Founder / CEO): Shariq is a serial entrepreneur, technology leader and inventor with 3 awarded patents. Prior to founding Veeve, he spent 9 years at Amazon as Head of Product Management leading several high-profile initiatives including Amazon’s Alexa Platform, Amazon Payments, AWS Identity and Amazon Home Services. Prior to Amazon, he founded NYCWAY — a hyperlocal app which was funded by Michael Bloomberg and later acquired by BMW Interactive.
