Insite AI, a platform for consumer packaged goods companies that use AI to make recommendations on how to price, distribute and promote their products in brick-and-mortar stores, launched today secretly with $19 million in Series A capital from NewRoad Capital and M12, Microsoft’s corporate enterprise arm. Co-founder Shaveer Mirpuri says the funding will be spent on customer onboarding, building a team of industry experts to shape product initiatives, and a comprehensive feature set.
Mirpuri and Jonathan Reid co-launched Insite with the belief that there was a large addressable market for physical software to manage revenue growth. It is true that retailers – and by extension brands – face significant challenges in this area, especially as the economy takes an abrupt turn. According to to NPD, more than 80% of U.S. consumers in May said they would cut product spending within the next three to six months. Major retailers such as Walmart and Target have reduced their sales and earnings guidance in response, as a result of the struggle to move inventory out of warehouses.
“Brands have a fundamental business need to achieve stronger influence, collaboration and execution with their major retailers. They are always looking for ways to cost-effectively and quickly arrive at vital answers — well in advance — about scenario performance in strategic portfolio design, budget planning, assortment, space, pricing and trading fund strategies,” said Mirpuri. the need for even greater clarity in decision-making due to constant changes and volatility in shopping behavior and production.”
That’s where Insite comes in. Hosted in a customer’s cloud environment, the platform aims to help brands make product and inventory assortment and pricing decisions across all stores, using data derived from various retailers, sales, supply chains and market segments. Insite synthesizes the data to create simulations for optimized assortment and trade promotion plans, attempting to predict performance for each product, store, and day of the week and provide explanations for factors affecting demand and price elasticity.
Different startups approach the same problem from different angles, such as Hivery, which sells software that optimizes product placement on store shelves. Cosmose’s software analyzes foot traffic to help retailers set up marketing campaigns. There’s also Lucky, which provides insight into real-time inventory distribution and detection.
But Mirpuri sees consulting firms as Insite’s main competitor – a competitor he believes falls short in several respects.
“Consulting firms advising consumer brands tend to execute one-off assignments that are slow and costly. Existing category and revenue growth management tools from data providers are retrofitted add-ons and lack predictive capabilities,” said Mirpuri. “In addition, these solutions are not adaptable to the complexity of each brand’s planning and retail-driven execution needs and are limited in working with inputs needed to deliver truly powerful insights and decisions…”
Whether that is the case depends on the respective consultancy and their client. But beyond the merits of Mirpuri’s sales pitch, it was enough to bring in more than two dozen customers, he says, including 10 of the world’s top 30 consumer brands.
Mirpuri refused to share sales figures. But he said Insite plans to double its workforce over the next 12 months as it prepares to open a new office in Bentonville, Arkansas, where the company’s headquarters are located.
“As consumer buying habits, economic uncertainty and post-pandemic supply chain challenges create new challenges for brands on a daily basis, the need for a fast, comprehensive category management solution is more important than ever,” said Mirpuri. “We are seen as [the] solution of your choice.”
One headwind that Insite may have to overcome is funding uncertainty that will continue well into next year. Global investment in retail technology fell 11% to $23.8 billion in the first quarter of 2022, compared to $26.6 billion in the fourth quarter of 2021. according to CB Insights. While store management technology saw a surge in funding, rising 10% to $2.3 billion quarter-on-quarter, it remains to be seen if it’s a lasting trend.
For example, M12 partner Abhi Kumar believes Insite is in a strong position. He notes that the company currently manages more than $80 billion in revenue for its customers and makes decisions on nearly 20 billion units of products.
“Insite AI is the ‘magic’ that algorithmically shapes commerce between the world’s most bought products and the world’s most shopped retailers,” said Insite AI board member and M12 partner Abhi Kumar. “At M12, we invest in disruptors in the industry, and we firmly believe that Insite AI is the leading innovator using AI and data to help consumer brands win by enriching collaboration across their retail channels. Insite AI has changed the concept of category and revenue growth management in consumer brands.”