Is 2020 the year of Technology for Better Commerce?
At Interlace Ventures, we tend to say that we look at innovation in Technology for the Commerce World from a granular perspective, i.e., we see hundreds of companies every month which gives us a sense of where the commerce and retail world is heading.
As we wrote about in 2018 about sustainability in the Fashion World, we continue to see sustainability making a trend toward the venture world and are excited to see what 2020 has in store.
If you are an entrepreneur, professional or expert working on any of these topics, I would love to hear from you at joseph@interlacevc.com 😊.
1. Re-commerce for the B2B world
The evolution of the sustainability trend has been fascinating to follow over the past 4 years.
A recent Gallup study shows that 69% of 18 to 29 year olds in the US are concerned believers i.e. highly worried about global warming and think it will pose a serious threat in their lifetime.
As governments are static about incentivizing industries to invest in being more focused on their environmental impact, the new generation of consumers have slowly been the ones demanding change by directing their purchasing towards brands with a real impact.
We get to follow this trend first hand with our historical investment in ForDays, the first circular fashion brand.
As such, some of the largest companies have understood that to economically survive in the long run, they need to focus their efforts on becoming more sustainable / test new business models.
This has driven a whole new set of companies to appear which help existing brands become more circular from a product, material or packaging level. Companies like Yerdle, Caastle, ZeroShop, Mlkmn are re-investing these new models.
Stay tuned in February for the publication of our research on Re-Commerce.
2. New Last Mile Models
With delivery forecasted to account for $75.9Bn in gross sales volume by 2022 and with the advent of circularity — which I like to say equals to 100% returns — new models are gearing up to tackle this massive influx of products.
As our friends Lisa and Brian from Refashiond have put it so eloquently, “Innovation in supply chain is the foundation for all other sustainable innovation.”
One of the largest problems when it comes to E-Commerce is the last mile piece, from the last warehouse to the consumer. Not only is this segment the least efficient economically, it is also one of the most impactful for our environment; from the actual delivery to the packaging used.
From nano-warehousing to new delivery locations like connected cars or simple / business oriented robotics, we are expecting some interesting developments on that front in 2020.
3. AI infiltrates the Supply World
Another trend we’re seeing unfold firsthand is that AI will finally become business for supply chain and planning.
As retailers are becoming more implementation ready for innovation — they were just testing, testing and testing and not buying — projects are now ready to be implemented in some of the largest companies.
In addition, highly funded D2C brands will be looking for more productivity in 2020. As they are more technology savvy, there will be a big push for enterprise grade AI enabled software within their supply chains for large gains.
We are also convinced that environmental impact will significantly drive the purchase of such products for better planning (reduce waste in inventory) or be more efficient logistics (better routing).
4. Computer Vision becomes mature for Retail
For anybody that walked the NRF innovation section, the number of companies leveraging Computer Vision to deliver value in store or in a warehouse dominated the innovation area.
Our conviction is that 2020 is when we will see the use in more mainstream of computer vision inside the store. Automated checkout with the support of companies like Aifi or Standard Cognition will start scaling alongside AmazonGo. Robots for inventory management in-store will also scale although don’t expect to see them during store opening hours.
This was confirmed by Thomas Sineau at CBInsights in his recent study about store trends in 2020:
Our portfolio company b8ta has been using computer vision to better cater to its customers as they visit the stores and its brands to leverage that data for better content and product feedback loops.
While this model is powerful, we think its success will be determined by how it impacts the consumer experience.
5. Rethinking the E-Commerce Stack
Finally, perhaps one of the longer term bets, we believe that the E-Commerce infrastructure will start to be redesigned to favor developers.
There is an opportunity to bring “next-generation” stack to E-Commerce as major players — Shopify/WooCommerce/Magento/etc — have not kept up with web technologies in the last decade.
We do not believe that Shopify can service the whole spectrum of E-Commerce platform. Best for starting out and for small scale projects, it is not adapted for large scale and fast growing companies. In addition, large software like Demandware will start to be put in question because of their lack of flexibility.
As everyone becomes a developer, this landscape will change.
Future will probably prove us wrong on direction or timing but we enjoy seeing new trends through our dealflow.
We look forward to meeting more outstanding entrepreneurs in the commerce space.
Interlace Ventures is an early stage stage venture capital fund focused on investing in technology companies transforming Commerce for Better Consumption.
