Artificial Intelligence
Computer vision technology in everyday life
If you look inside any large venture fund that invests in technologies, you would surely find AI companies. Artificial Intelligence has become a part of our life in all manners. AI is our healthcare, phones, vehicles, banks and now even in supermarkets. The trend for processing big data is growing exponentially, which pushes the development of AI technology even further.
Standard Cognition
StandardCognition technology uses artificial intelligence that identifies shoppers’ movements through the cameras without recognising their faces. Customers do not need to scan products and waste time paying for them at the checkout. This reduces retailers’ staffing costs, increases their business margins and improves customer service.
About the company
The company was founded in 2017 in San Francisco. Last January Standard Cognition raised $ 150 million from the Soft Bank Vision Fund, making it the largest startup in the autonomous check-out technology segment. The company holds 12 retail-related machine learning and artificial intelligence patents and additional 8 patents are currently pending.
In March 2021, Standard Cognition received the AI Excellence Award from the Business Intelligence Group. This success attracted large companies such as Circle K and Compass Group PLC (a British foodservice conglomerate) to use Standard Cognition technology.
Standard Cognition has chosen a simpler approach than Amazon Go: the company relies exclusively on cameras and avoids shelf sensors. Stores will be able to install this technology without costly upgrades. This makes small and medium-sized businesses the main target audience for the company.
Competitive Analysis
Standard Cognition came up with the idea of cashier-less stores a week before Amazon announced its Go stores.
But we had one business guy in this discussion group who said that this is actually the best thing that could happen. It validates the market, it’s a technological proof point, now investors are going to know this is possible, retailers are going to know this as possible.
Market Overview
According to Statista data for May 2019, the number of stores with offline checkouts in the USA will reach 10,000 by 2024. Retailers are adopting self-service systems to redeploy staff and devote more time to supporting other operations and serving customers more efficiently.
Giants such as Amazon, Walmart and Target are showing interest in cashless systems. Jeff Bezos’ company has already launched nearly 30 Amazon Go stores. According to Bloomberg calculations, with the introduction of the technology in all stores of the corporation, the total sales can reach $ 4.5 billion per year. Amazon’s initiative to open 3,000 cashless stores in the US has pushed the largest chains to invest in the technology.
Financial Performanace
According to analysts, Standard Cognition’s estimated annual income is $ 17.3 million per year.
- After raising $ 150 million, Standart Cognition set a goal to implement its system in 50,000 stores over the next 5 years.
- The company has partnered with one of the largest sellers of medicines, cosmetics and essential products in Japan — Paltac ($ 9.6 billion in revenue in 2020).
- The company’s CEO said the takeover of Italian startup Checkout Technologies in May 2020 resulted in partnerships with 150 of the country’s largest retailers.
- Given the development strategy of Standard Cognition, the company is likely to acquire additional companies to enter additional international markets.
Risks
The e-commerce trend fueled by the pandemic could slow the growth of physical stores around the world. While the company is strongly dependant on the financial wellbeing of physical stores.
Moreover, the competition with big players like Amazon and Walmart could prevent the company from expanding its network of partners. And the competitors might invest in R&D to reduce costs of alternative technologies for cashless payments: shelf sensors, recognition using radio waves, etc.
Founders and Management
The company was founded by 7 entrepreneurs with experience in video games development, machine learning and 3D modelling. Two of the founders worked for the US Securities and Exchange Commission (SEC) in the quantitative analysis department.
Moreover, the board of directors also includes three partners from the funds that have invested in the company: SoftBank Group, CRV and EQT ventures.
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