Consumer retail could be permanently changed by the pandemic. In recent months, people around the world have used web portals and apps to order everything between groceries and items to pass the time at home. More importantly, we are now more willing to buy things online. A recent joint report by Facebook and consulting firm Bain & Company suggests that this habit may persist even after restrictions on movement and careful social distancing are a thing of the past.
But that doesn’t mean brick-and-mortar retail is closed. In-person shopping isn’t going away anytime soon, but the experience may be changing. We see cashless and contactless transactions becoming more common, and that means many retail businesses need to upgrade their stores with new hardware and software.
Enter Yi Tunnel, a company founded in 2016 by a group of Tsinghua University alumni with extensive experience working for tech companies.
The company’s CEO, Yili Wu, has worked in sales at Oracle and IBM for eight years. He once identified that brick-and-mortar operations would offer a better shopping experience if they underwent a digital transformation.
“They lack a lot of information and have a lot of pain points,” said Sandstar chief marketing officer Andrea Wang. CASIA In a recent interview.
Most retailers don’t have any information about their customers’ preferences and behavior, which means it’s impossible to make data-driven decisions. And for the consumers themselves, personalized shopping experiences were rare.
The company plans to address these shortcomings by using artificial intelligence computer vision solutions. SandStar’s products include smart kiosks, data analytics, and automatic grab-and-go in-store devices.
Four years after the start-up, its products are used in 12 countries. 70 percent of its customers are located overseas, spread across the United States, Japan, Thailand, the United Arab Emirates and France. Its nearly 2,000 smart kiosk machines are used by global giants such as Coca-Cola.
Read this: Southeast Asian convenience stores play catch-up with China on digitalization
Starting with an international perspective
From its inception, SandStar had plans to go global. Countries like the US and Japan have high demand for automated and contactless marketing. “They are willing to pay more for this technology,” Wang said.
This vision has shaped SandStar’s operations. The company established a second headquarters in Charlotte, North Carolina to complement its Beijing headquarters. The rebranding from Y Tunnel to SandStar made the name easier to pronounce and remember for customers.
Wu’s previous line of work gave him many clients, but SandStar’s clients often come from two channels. The first, according to Wang, was the innovation programs SandStar joined in its early years. The company is registered with the Microsoft Accelerator Beijing 11th Group and the Baidu Accelerator, giving them the opportunity to work with the tech giants’ existing partners.
To build on that momentum, SandStar has participated in international trade shows, such as the 2018 US-based National Retail Federation’s Retail Trade Show. “That year we were the only ones using AI for retail. The show was a big success for us, we got a lot of inquiries, Wang said, adding that there was a lot of media. Later exposure to the company.
SandStar’s dual headquarters supported its business strategy: top-down. SandStar chose to go directly upstream rather than demonstrate their systems at local offices. They visited shooters at headquarters, primarily in Europe or the US, and then branched out to regional offices. “It’s not like starting in China, then going global, it’s the other way around,” Wang said.
The strategy has already paid off, as evidenced by SandStar’s deal with Coca-Cola. In the year In 2018, Wu and his team went to the soft drink giant’s headquarters in Atlanta, Georgia, United States, and demonstrated the contactless and automated smart kiosks at a conference the company organized for chief innovation officers. SandStar was then commissioned to supply smart soft drinks in the US, Europe, Japan and China.
But SandStar hasn’t lost sight of its potential business in China. It offers smart kiosks in Wanda Group shopping malls, CFS supermarkets, as well as Sinopec Group gas stations.
Read this: Tencent boosts overseas smart retail presence with investment in Australian payments firm Afterpay
Technological advantages over competitors
Smart retail has not yet expanded to malls, supermarkets and other places where we spend money, but there are a few players who are defining operations in this space. For example, Tencent-backed cashier-free convenience store chain Bianlifeng has seen rapid growth in the past year. And in the US, Amazon Go operates more than 20 stores in Chicago, New York, San Francisco and Seattle.
Wang says Sunstar has an edge over the competition. “The technology is different. They use radio frequency identification (RFID), which in our experience is not the best way to do it,” she says. The system usually requires a small chip embedded in a tag or tag to scan. They charge 40 cents (in USD), which adds up to a high cost. Second, it’s very easy to skip. “In real terms, people can cheat by removing stickers or switching labels on cheap items,” she explains.
Sandstar deploys dynamic computer vision for object detection, with an accuracy rate that the company claims is 99%. After all customer items are scanned at the smart kiosk, the bill amount is deducted directly from the mobile wallet or bank account.
The startup can fold a store’s existing infrastructure into an analytics suite, connecting security cameras to servers to generate customer profiles, identify hot zones and assess operational efficiency at checkout locations. All this information is displayed on a dashboard accessible by store management staff, and the system sends alerts to restore items. SandStar has developed smart ad machines, which are screens typically used to promote checkpoints.
“Customers can get a more personalized and customized shopping experience. So, for example, if the person is a young woman, the ad might be yogurt or healthy products,” Wang explained, “but for a 30-35 man, the ad might show more shaving products or coffee.” Like Amazon knows what you like, only this time it’s offline.
Importance of data
The future of retail may be automated. But Wang emphasized that the key to taking smart retail to the next level is consumer data. “It’s very valuable and increases business,” she said, adding that stores implementing SandStar’s technology have seen at least a 30 percent increase in sales.
In Thailand, where SandStar works with local conglomerate CP Group, the case of a convenience store near an elementary school shows how this can make a difference. The store initially stocked snacks and drinks for kids, but sales were slow.
“We see that people touch the products a lot, but the sales are not good, the conversion rate is very small. There may be something wrong,” Wang said. They touch the product a lot without buying because those products aren’t targeted at them.
The shop is then stocked with drinks and snacks for adults. Sales increased by around 30 percent in the same month. Restocking costs are reduced by 40%, because the analysis set shows how many items need to be sent to pack the shelves.
With a recent Series B+ investment from True Digital Group, a partner of CP Group, SandStar is looking to expand into Southeast Asia, Japan, South Korea, Europe, America and the Middle East in the next two years.
“They feel that contactless retail is very well received by customers and they want to have these automated products,” Wang said.
This article is part of KrASIA’s “Startup Stories” series, where KrASIA writers talk to founders of tech companies in South and Southeast Asia.