Visibility and inventory management of retail shelves are essential for every retailer to drive sales. With that in mind, Israeli Joel Bar-El and Swiss-Israeli Dror Feldheim co-founded Trax, a Singapore-based platform created in 2010 to digitize the physical world of retail through image recognition technology.
According to a study from IHL Group, commissioned by OrderDynamics, overstocks are liable for 3.2% in lost revenue for the average retailer, while out-of-stocks (OOS) account for 4.1%. Improving on-shelf availability (OSA) and OOS has long been the retail industry’s main goals, and is also one of Trax’s ambitions, said the company in its whitepaper “Retail Digital Transformation Starts at Shelf.”
The company uses its computer vision technology to give retailers insights into what’s happening on their store shelves, by measuring in-store conditions and keeping track of what’s on the racks. Its platform also promises to deliver all these insights, inventory management, and analytics, to the sales representatives and store managers within minutes.
“With the technology, we can provide full visibility for brands and retailers of the shelf placement in the store at any given moment in time,” said Bar-El, co-founder and CEO, to KrASIA.
The application of Trax technology can free brick-and-mortar stores’ employees from manually auditing stock for inventory and product promotions, and can also help retailers make better product placement decisions by presenting an image of what goods could be shifted to a better place. There are other use cases too.
Trax offers its retail clients multiple methods of outfitting the store with digital technology. Its recommended approach is a hybrid of different technologies such as fixed cameras and robots capable of capturing images at pre-set intervals, depending on the client’s needs and the type of brick-and-mortar store involved.
Bar-El said that Trax’s biggest market is the United States, which contributes more than 50% of the company’s revenue, while European and Asian markets account for the rest.
“The growth for Trax is coming from two directions. The first one comes from a new solution for retailers called Trax Retail Watch, which was launched last year. This is a huge growth opportunity for Trax to leverage the technology and help retailers in their in-store execution,” said Bar-El.
The Trax Retail Watch is a store monitoring and intelligence platform that helps retailers discover what’s happening in the aisles, and can quickly alert the store staff for required in-store action.
“We also see growth coming from additional products and verticals where we can enhance the operations of brands,” he said.
When asked who does Trax see as a competitor, Bar-El said that its company is the undisputed market leader, bigger than its rivals in the same sector.
Trax, per startup database Crunchbase, has raised a total of USD 386.9 million in funding, a whopping figure when compared to that of its major competitors, such as GoSpotCheck (USD 47.5 million), YOOBIC (USD 30.3 million) and Vispera (USD 1.9 million).
Bar-El did note there are a few startups and small companies trying to emerge in China, Russia and other parts of the world.
“Potentially, other big giants could try to enter this space but this remains to be seen,” he added.
Bar-El also said that any global brands that one can think of in any segment—food, non-food, beverages, alcoholic beverages, household products, personal care, perfumes, skincare, pharmaceutical—are most likely Trax’s clients, but declined to provide specific names. Reportedly, big-name firms such as Coca-Cola and Nestle are already using the service.
Cherry-picking each acquisition to ensure it adds value to the company
Trax, after raising in July a USD 125 million Series E round led by Chinese investor Boyu Capital, has made a series of acquisitions in 2019, among them are Chinese retail artificial intelligence and big data service platform Lenztech, US shopping rewards app Shopkick, and European retail merchandising image recognition service provider Planorama.
“Each acquisition has a strategic value. We carefully cherry-pick whatever companies we like to acquire based on those merits,” Bar-El said.
The acquisition of LenzTech, which also has an R&D center in China, gives Trax a stronger grip in the Chinese market, Bar-El disclosed.
Besides, the acquisition of Planorama will allow Trax to reach new markets and expand its product offering, said Bar-El. “By combining our innovative cultures, we see an incredible opportunity to leverage the best of both companies’ leading technologies, product offerings, delivery expertise, and talent,” he added.
Furthermore, the addition of US shopping rewards app Shopkick, according to Bar-El, is the stepping stone for Trax to move into servicing consumers. “Bringing together shelf and shopper data will deliver new and powerful insights to consumer packaged goods (CPG) brands and retailers,” he said.
IPO plans
Trax’s CEO also anticipated the company’s plan to go public in the next 18 to 25 months, though didn’t specify a date. He added that the firm is planning a US IPO due to the fact that the company’s biggest shareholder, private equity firm Warburg Pincus, and most of Trax’s clients, are based in the United States. “We believe it is the right place for us,” he said.
Good decisions that contributed to Trax’s success
One of the most important decisions that have propelled Trax to success was the founders’ insistence to have a multinational client as a first customer, rather than going for smaller clients, Bar-El stated.
“Trax was established at the end of 2010. Our first recurring client only happened in mid-2013. So, we paid a price for that decision but I think that ultimately it was the right decision, starting from the top, going down rather than the other way around,” Bar-El said, adding that Trax’s first client was Coca-Cola.
Another good decision he mentioned was to separate Trax’s offices in two countries: its headquarters is in Singapore, and its R&D center is in Tel Aviv. “We basically went where the talent is. We decided that for computer vision, the best place to develop it is where the knowledge exists, and in this case, Tel Aviv is one of the global leading ecosystems,” he added.
Bar-El also recalled another essential decision that Trax made: accepting initial funding only from family offices and high net worth individuals. “Skipping the VCs in the early stages have served us well in the long run, because I think the terms that come with VCs’ investments are harsher than private individuals. I also think that VCs are geared for short-term returns, while Trax was built for a longer-term play,” he said.
This article is part of KrASIA’s “Startup Stories” series, where the writers of KrASIA speak with founders of tech companies in South and Southeast Asia.
