Israeli startup Trigo, which has developed a checkout-free store and works with the world's largest retail chain, has already raised $34 million. The company has also signed a cooperation agreement with Tesco, one of the world's largest retail food chains, and is competing directly with Amazon Go, a chain of automated stores developed by Amazon. All this happened only three years after Trigo was founded by brothers Michael and Daniel Gabay, veterans of the Talpiot IDF military intelligence unit, which develops artificial intelligence technologies.
"Trigo is in effect developing the ability to enter a store, take everything you want to from the shelves, and leave without standing in line or moving through a checkout counter, using cameras installed in the ceiling of the store. The technology makes it possible to begin monitoring the customers' movements in the store, and that means analytics products, inventory control, marketing, more efficient management of the store, and more," Michael Gabay says.
"The gap between the technologies that we dealt with in the army and retailing looks very big to me. I had some kind of idea to make a smart shopping cart with a camera in it, and everything put into the cart would be identified by the system, thereby producing a shopping list. I suggested it to Daniel, my brother, who is a technologist, and he loved the idea. We started making a prototype cart by ourselves in the living room. We took the cart to several big retailers, the first two of which we met were Shufersal and Tesco. They told us that it wasn't such a good idea, but they were very impressed with us.
"At this point, we realized that the idea wasn't so successful, so we changed direction. The idea of putting cameras on the ceiling came from the retailers, and we started to plan a demo camera on the ceiling. At the same time, at about the same stage, Amazon came up with the idea of Amazon Go, and created a video that announced the future opening of stores without checkout counters. Amazon was the first to succeed in bringing such a product to market, although there were companies that tried to develop similar technology and were unsuccessful."
"Globes": What is the next stage?
We developed a small demo store in which we displayed supermarket shelves and the ability to monitor the products. We raised $7 million in February 2018. We were 12 people in the company then, with employees who came from leading companies. From that time, we started developing the system, and three months later, the pilot with Tesco and Shufersal already began. We started installing cameras in their stores, and we still have good relationships with them, and also with other large retailers around the world."
"We're planning to develop more offices around the world"
Trigo has expanded in the two years since then, and now has 50 employees. In addition to its offices in Israel, Trigo opened its first overseas offices two months ago, including a headquarters in London. "There are now two employees setting up operations there, and we're planning to open offices in more places around the world," Michael Gabay reveals.
Trigo has raised $34 million to date. The company's investors include Tesco and Vertex Ventures, Red Dot Capital Partners, and Hetz Ventures. "What is special about Trigo is that we come to a conventional supermarket and convert it to an automated supermarket. The technology fits into the store's existing space. In contrast, Amazon Go's technology requires building an entire retail system assembled in new real estate space, hiring personnel, and in effect makes it necessary to build a company from scratch for the sake of the technology. This enables us to connect with existing retailers and do the deployment on the site for them," Michael Gabay says.
"The Wall Street Journal" recently reported that according to what Tesco told investors, Trigo's system costs a tenth of what the systems used by its competitors cost, among other things because it is based solely on cameras. Although Tesco did not say so explicitly, it was referring to Amazon Go's technology, which uses both cameras and sensors in order to monitor the consumers' choices, and also requires scanning of an OR code, which makes its cost much greater.
Michael Gabay says that another advantage of Trigo is the size of the stores in which it is capable of installing its technology. "What distinguishes us is that we can enter large centers with 300-500 square meters, which is in effect a neighborhood supermarket, and in the future, we'll also enter the big ones," he says. Amazon Go currently operates in much smaller stores with 180 square meters.
How does your business model work?
"Our business model is a service model. The retailer pays us a fixed quarterly or yearly amount, we install the system in the store, and the retailer operates the store and pays us a fixed amount for the software."
In effect, you are becoming the retailer's partners on the sales floor, so you are exposed to the sales figures.
"There are very tough privacy definitions that we observe about what information we are permitted to keep with us. The entire structure of our software is completely anonymous. The information is stored with Tesco or Shufersal. We don't gather private data." Asked whether Trigo will be able to use the data to which it is exposed in the future, Michael Gabay answers, "It's all backed by regular agreements. It varies a lot from one retailer to another in different pricing methods. At this stage, we're not dealing with it; it's information that's being accumulated. It's true that in the future, we'll be able to gather it and help improve access to the consumer, the supply chain to the consumer, and more accurate advertising."
What are the plans for the next year?
"In the coming year, we're planning to open the first stores in both Israel and London. In the following years, the challenge will be to reach hundreds and thousands of stores in the various chains. Where the number of employees is concerned, I estimate that we'll double our size in the coming year to almost 100 employees, and we'll enter more countries in the coming year. It's challenging to work with so many international companies simultaneously when we're a small company."
Will you expand to more chains in the local market?
"The connection with a local player, Shufersal, is one of our sources of strength. Right now, we're working with it only in Israel. Working with a local player is very important. They can provide valuable feedback quickly, which helps us to be more mature when we reach the international players."
Published by Globes, Israel business news - en.globes.co.il - on January 27, 2020
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