Problems with Big Data in Grocery

It is clear that Big Data is hot these days, so hot that it may even be passé - generally a good sign that a trend has made it main stream.  

There hasn't been a lot of good studies on the implications of this trend for the grocery industry, but the infographic below comes from one them.  The study, titled Moving Forward with Big Data: The future of retail analytics was put together and can be downloaded from the team at bricksmeetclicks.com.  

The infographic below shows some of the highlights from the study (you can click the image for a high resolution version).  We thought it worthwhile posting as there were some interesting talking points.

Although most respondents of the study indentified the need or desire to leverage Big Data tools, and even 65% of respondents said they were involved in a Big Data project, what really intersted us were the perceived barriers to entry.  

The top three concerns with implementing Big Data strategies were:

1. Concern about not using data already available (58%)

2. Lack of capability to implement insights (57%)

3. Not enough specialized expertise

These three concerns are top of the list not so much because they are necessarily real justified concerns, but more so because they are a response to the type of Big Data solutions that grocery retailers are being pitched or sold.  Grocery retailing is particular, with particular needs, and particular data sets and value pools.  Big Data solutions that work in other industries do not directly relate.

With the aim of exploring this further, I will detail some examples of why we believe that these top three responses are more a response to the Big Data solutions in the market, rather than Big Data as a strategy.

Concern about not using data already available:

This concern comes not only from the fact that grocery retailers are not using existing data sets to generate insights, but that they are getting pitched to use Big Data strategies on new data sets that are irrelevant for their needs.  The thing with Big Data strategies is that it's about extrapolating some kind of insight from vast amounts of data that don't necessarily have a lot of value individually or in small volumes.   The problem is that grocery doesn't always have the volume of relevant data needed - take sentiment analysis from social data.

We have seen grocery retailers pitched (and sold) on leveraging Big Data strategies on their social data to measure sentiment of their customers.  The problem with this is that the large majority of grocery retailers have very little social data to mine.  In the very brief table below i've researched the Twitter mentions for 4 random retailers (below) and you can see that with the exception of Walmart most retailers don't have anything close to a deep enough data set to be reflective of their customer set.

Twitter mentions:

Walmart - 8mm mentions, Meijer - 208k mentions, Schnucks - 22k mentions, Shoprite - 87k mentions

Lack of capability to implement insights:

Many of the big data solutions that we've seen in the grocery industry promise a bevy of insight on customer behavior, sentiment analysis, inventory analysis, marketing trends; but very few of them tie directly in to practical ways to implement the insights.  A large part of the reason for this is because it's not easy to implement these insights in grocery due to the complexity of the path to purchase (or more importantly the multiple paths to purchase).

By definition, the path of purchase to BestBuy to purchase a single item is less complex than the multiple decisions being made at each grocery trip.  Grocery Retailers need simple insights with direct practical and flexible applications; such as being able to customize shelf tags, customizing direct emails, delivering custom content online or via mobile.  

There are few Big Data solutions in the grocery market that are tied to a holistic path of implmentation and this is another reason why the industry is weary of the "Big Data" tag.

Not enough specialized expertise:

At face value this is an understandable concern related to implementing Big Data solutions in grocery, but again, upon closer inspection we suspect that this too is a reaction to the "black box" magic of Big Data as it is often sold in the market. 

The number of times we have seen Big Data solutions sold as a "Black Box" Solution - plug this in to our black box and watch as the result comes out the other side - is too many to count.  It seems to be a basic axiom of Big Data strategies - and a great promise at that.  The problem  is that if anyone is going to take the risk of championing a Big Data solution, they need to be able to have some basic logical understanding of the process before they can put their support behind it.

We would argue that a reason for concern about not having enough specialized expertise is the uncertainty associated with "Black Box" solutions. 

In truth there can be a need for some specialized guidance, but it is more important for grocers to be firm on the questions THEY want answered and they should instead demand that the providers of Big Data solutions gain specialized expertise in their concerns.

And, it is with this last point that we will sign off on from this post. 

If there is one thing we have learnt in all our dealings with data and our clients, it is that THE single most important thing is to ensure that the clients QUESTIONS are clearly outlined and detailed before any work can proceed. 

Insight from data analysis is only ever as powerful as the questions that are asked - this is where competitive advantage will be found in the future.

FoodEssentials now qualified to land several planes at once !!

In October 2012 we launched our data platform as a solution for retailers.  It was essentially a live beta test to prove that there was demand by retailers for an up-to-date and accurate product database augmented with detailed product attributes. Our aim was to close a deal with at least 1 retailer, launch a pilot, and effectively execute against the requirements - all while we were building our own in house team, launching LabelAPI, and continuing our progress with our FDA project.

To say that we've been busy is an understatement.  If the analogy of a start-up is to learn to fly a plane while constructing it... we were not only trying to fly 3 planes but land them all at once...at night...in a storm... without brakes!!  Thankfully, we're on the other side of flight school and although we can't say we got through unscathed (we all have many more grey hairs than we did 6 months ago) we perservered AND the experiment turned out to be incredibly successful to boot.

In the last 6 months with the help of our channel partner we have signed 7 retailers up for the program, truly proving the demand.  We have launched, executed, iterated, improved, and spent time honing the technology so that we can now attack scaling!  Our data is being displayed in over 2000 stores nation wide, at our estimates that is approximately, 20 million shopper visits being influenced every week*.  Now admittedly, our data is not displayed on every product in a store, but on average about 70% of products will have an attribute - so there's a fairly high probability that most visits would at some point come across our data.

If you add this to our increasing LabelAPI traffic, now at over 5 million calls a month we are getting up to over a 100 million views a month on our data.  Of course these are all vanity metrics and don't mean a thing, except that, well...we're heading in the right direction and we're doing a great job.  

Most of our core operating metrics right now are, by design, there to show us what's going wrong and how best to solve the challenges that we face - be more effective, more efficient, faster, leaner, better.  So every now and then it's nice to be able to draw up some back of napkin metrics that show we're heading in the right direction.  Vanity metrics or not, we're making a difference in people's lives.  It's incredibly hard work, and it'll probably get even harder, but for the time being at least we can pause, pat ourselves on the back and say, "You know what, we've achieved a lot in the last 6 months - imagine where we'll be in 6 months time".

We have a really strong young team that works well together.  Our performance as a professional outfit is considerably greater than the sum of our individual parts.  We learn from our mistakes, we support each other, and everyone is learning to become an entrepreneur in his or her own right - problem solving with the best of them.  We've still got a long way to go and a growing list of exciting (read challenging) opportunities ahead, a few of which could be game changers.  We're quietly confident.  

The continual challenge with start-ups these days is being sure to take the time to see the forest from the trees.  It's the one time where I think vanity metrics can actually provide a lot of value.  

And with that, we have to get back to it.  See you in 6 months time with another vanity check!!

*based on 10,000 shopper visits per store per week - average sales per store per week / average sales per transaction  

Btw for more info on the problems with vanity metrics check this out - Lessons Learned: Why vanity metrics are dangerous (Eric Ries)

Saint Louis representing strong at InvestMidWest

It was not long ago that we closed our last round and now we're back in the saddle opening our next round which we aim to close in the 3rd or 4th quarter of this year.  The great news for us this time round is that we're raising purely to accelerate growth - not to stay alive. 

Being new to STL and Missouri, we weren't familiar with what the best forums would be beyond our world in T-Rex.  Fortunately we were contacted by Chris Walsh of InvestMidWest who educated us about this start-up institution. 

For those who may not be aware, InvestMidWest is the premier venture conference in the mid-west.  This year was the 14th edition and would include over 50+ companies in 3 tracks (Technology, Lifesciences, Food and Ag and Biotech) and would be attended by over 300+ attendees from the top venture capital firms in the mid-west and nationally.

And so we headed down to Kansas City this last week excited to announce the opening of our round and talk about our progress as a company.  It was a great event and fantastic to see how strong the STL presence was.  There were mature startup companies like Bonfyre, Coolfire as well as younger companies like ourselves, click with me now, and Benson Hill Biosystems. 

We were very happy with the response to our pitch and suprised by the willingness for investors to want to connect and learn more - the event format really puts the startups in among the investors.  The camaraderie within the STL startups and community leaders (Cultivation Capital, ITEN, mentors and business leaders) was also a pleasant surprise and helped to keep the nerves in check.  The event was well organized and well attended - a testament to the hard work of Chris Walsh and her team.  We look forward to being involved again in the future and hearing of all the funding annoucements that will, no doubt, be a result of the event. 

If you're a startup in the midwest or an investor looking to hear exciting new ideas InvestMidwest is the place to go.

incidentally, for what it's worth, my favorite (non STL) startups from the event were: Red Clay (product design platform), Georama (one stop travel planning), and Proviera Biotech (green leather tanning).

Cultivation Capital invests $500,000 in FoodEssentials

SAINT LOUIS (MO) March 8, 2013 – Cultivation Capital announced today that it is investing $500,000 in FoodEssentials, a leading food label database with analytic tools. FoodEssentials allows users to easily search and find the nutrition, ingredient and allergy information for hundreds of thousands of packaged foods. The food data platform is being used by the United States Food and Drug Administration (FDA), grocery retailers, brands, and numerous technology application companies.

"The market validation FoodEssentials has received from the FDA, retailers, and technology partners has given them significant positive momentum, and we believe FoodEssentials will continue to lead the way in the food information space", said Peter Esparrago, General Partner at Cultivation Capital. Esparrago will also join the FoodEssentials board.

"The addition of Cultivation Capital to our list of strategic partners is helping accelerate our network of connections in the industry, and the support we have received here in St. Louis has been like nothing we have received elsewhere", states Anton Xavier, CEO of FoodEssentials. Anton added,"We've been able to focus on our strengths, knowing we have a whole community in St. Louis at our reach when needed.

In September 2012, FoodEssentials launched LabelAPI, the public version of the food data, to developers and now generates over 4 million calls a month. FoodEssentials also launched theirservices with grocery retailers who use their data to provide shoppers with more clarity in the food choice process. In 2013, FoodEssentials is expanding their offering to grocery retailers and brands with the aim of leveraging product analytics and big data techniques to provide business intelligence to the industry.

FoodEssentials relocated to St. Louis, Missouri in June 2012 after being awarded a St. Louis Arch Grant. It was then accepted into St. Louis Capital Innovators tech incubator.

About FoodEssentials

FoodEssentials helps grocery retailers and brands leverage the power of product label data to better communicate with shoppers and to measure purchase intent. For more information, visit www.foodessentials.com.

About Cultivation Capital

Cultivation Capital is a St. Louis-based early stage Venture Capital firm investing in high potential technology companies throughout the Midwest. Cultivation Capital is managed by a team of experienced entrepreneurs, who have started numerous companies, raised more than $200 Million dollars and had several successful exits. For more information, visit www.cultivationcapital.com.

FoodEssentials launching Personal Product Score at SXSW

This year FoodEssentials will be making our debut appearance at SXSW.  As a B2B organisation in the grocery industry we've not had a lot of reason to be there, but with the launch and traction of LabelAPI (world's most powerful food product api) that has changed and we're excited to be joining the furore down south.

As platinum partners with Mashery, our api management and promotion partner, we will be 1 of 9 companies with a presence in the Circus Mashimus tent - one of the hotest destinations at SXSW interactive.  

Launching the Personal Product Score

At SXSW we will be launching our Personal Product Score (PPS) to our 250 Labelapi developers and the public at large.  The Personalized Product score provides developers with the ability to build sophisticated applications that deliver a custom score based on any persons indivudal needs.  

In this first iteration users are able to personalize their profile to include any nutrient, allergen, and additive properties and receive a score of between 0 and 100 it also includes negative scores down to -100 of a product contains things like an allergen you are trying to avoid.

We received a lot of feedback from our community asking for this type of functionality and are therefore excited to be launching it and even more excited to see the innovation that takes place on top of it.  

As a starting point we've put together a little app that demonstrates the base functionality of the Personalized Product Score - we've affectionately called it Fooddood. You can check the app out in the below links (please remember that we are data guys - first and foremost). 

If any of you would like the code for the apps we are happy to make it available.

Fooddood (Fun demo app for Personalized Product Score)

About Circus Mashimus

Circus Mashimus is Hosted by Mashery, and is the place to network, nosh, charge up or just hang out. Drop by and find out why Jason Cranfordteague of Wired said in 2011, "Whether you are looking for food, drink or even clothes, there's no better place to hang out than the Circus Mashimus."

Throughout the day, you can see demos of the most innovative and transformative mashups from ACTIVE Network, CarePass, Edmunds.com, ESPN, FoodEssentials, PeerIndex, SurveyMonkey, TMS and Whitl.li.

The Circus opens on Friday at 1:00 pm, and Saturday — Monday at 9:00am with coffee and pastries. At 4:00 pm we tap the kegs, open the wine and other beverages, and serve up chips and guacamole while cranking up the music for our daily Happy Hour.

Our annual favorite features are all back: free wifi, all-you-can-eat popcorn, phone charging stations, and comfy sofas.

Circus Mashimus is located at the Austin Convention Center in Room 3 near the main entrance on Trinity Street.