Wasteless, an Israeli startup creating a real-time tracking solution to help fight food waste at the grocery store using machine learning, has raised a $400,000 seed round investment with accelerator VC SOSV, Food Angels, Jonathan Ofir, the CEO of cannabis grow system startup Leaf, and pre-seed tech investor Winston Ltd. The company has taken part in the latest cohort of Food-X which culminates in its demo day today.
Food waste and inventory inefficiency stand as two of the top challenges in retail, according to Wasteless.
In the US, supermarkets lose an average of $2,300 per store per day because of out-of-date food that ends up in the trash. This generates a $57 billion yearly loss for the US grocery industry, according to Wasteless.
Supermarkets also experience losses worth around $47 billion by not managing their inventories in real-time, resulting in over or understocking items.
“We started this because we learned that 40% of food produced [in the US] today ends up in the garbage and about half of that percentage comes from supermarket retailers,” Ben Biron, co-founder of Wasteless, tells AgFunderNews.
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That’s where Biron and the two other co-founders of Wasteless saw a real opportunity for technology—three different types of technology, to be exact. The new funding will be used to help finalize the startup’s technology and to create prototypes that can be used in field trials. Some of it will also be used to fuel R&D.
The startup’s technology combines RFID sensing, a dynamic pricing equation, and electronic shelf labeling technology.
First, the RFID sensing helps supermarkets capture a more accurate and real-time picture of their inventory, something that usually has to be done by a manual inventory accounting. Although some retailers like Walmart have considered using the technology, cost has been a limiting factor in the past, according to Biron.
“Barcodes were developed in the early 1970s and they don’t track products. Today, supermarkets don’t know how many products they have on the shelf unless someone does a manual check,” he says. “Once the supermarket knows how products are moving compared to supply and demand, we can identify the products that are most at risk of being thrown away.”
Second, the dynamic pricing creates an otherwise lacking incentive for shoppers to purchase products that are nearing or past their expiration dates. Wasteless’ formula relies on 43 factors, including expiration date, supply and demand, location, the day of the week, and holidays to create a dynamic and appealing product price.
“When we look at what happened to e-commerce sites that apply dynamic pricing, we have seen a 15% increase in sales just by tapping into different markets, selling complimentary products, and offering products to people who couldn’t afford them before,” he explains.
Many folks believe that food product dating reflects whether the product is safe to eat or not. In reality, the dates are merely used at the B2B level to share information about how long a retailer should display the product or when a shopper should consume it to experience optimum taste and freshness. Except for infant formula, food product dates are not legally required on product labels.
“Psychologically, as consumers, we tend to choose the product with the longest date even if we intend to consume it within a short time frame. There’s no incentive to choose the product with the shorter expiration date,” says Biron. “We thought it makes sense that groceries should be priced dynamically like flights, hotels, Amazon, and Uber rides. This creates an incentive for them to purchase products that will expire soon, preventing food waste and helping the supermarket capture that revenue.”
Finally, the electronic shelf labeling system replaces the dated paper labeling system, making the process of updating prices much quicker and more efficient to accomplish. Wasteless’ technology displays both the current price and the estimated price of the product at a future date and time. This allows consumers to decide whether they want to pay full price or come back at a later time to snag that item at a reduced cost.
“These are already somewhat common in the US,” explains Biron. “Kohl’s, Whole Foods 365, and a few other stores already use them. They will probably be the future of how we display price information.”
In addition to incentivizing consumers to purchase products nearing or passing their expiration dates, Wasteless’ technology has the capacity to recapture lost revenue opportunities like food waste cost and out-of-stock costs, creating new revenue opportunities by increasing the availability of products.
Several retailers are now running trials with Wasteless, including a major retailer in Tel Aviv. And the startup is in talks with a number of other major retailers, says Biron. This new dose of capital will help the company boost its field trial program.
This isn’t Biron’s first run in the startup world. Along with co-founders Oded Omer and Yossi Regev, he launched an analytic solutions startup for breweries and pub groups based in Tel Aviv called WeissBeerger that’s raised over $7 million. Biron also co-founded Alcohoot, a smartphone breathalyzer company that was backed by Techstars and acquired in 2014.
“Raising funding for Wasteless has been much easier than with other things because it has a green component to it; a financial justification. It also has the potential to help supermarkets and food retailers save money,” says Biron.
His experience pitching products to VCs probably served him well considering that the IoT for food products field is a bit crowded.
“There are some inventory management technologies out there — even hardware coming out to help with shelf auditing like robots that hang out in the aisle and track product levels,” he says. “But the biggest advantage we have that other companies don’t is that we offer dynamic pricing and inventory management—we do both.”
This has not been without its challenges, of course. Biron and the team worked tirelessly on developing the hardware and process for tagging each item with an RFID identifier.
“Three of our patents are involved with the tagging gun we created that makes the process very simple. Obviously, it’s not something you can apply by hand. We think the reason other companies or prior attempts to develop this technology were not successful has to do with the process of actually tagging the items.”
Considering that supermarket retail is a relatively low-tech industry, getting stores to integrate the technology seamlessly and efficiently also presents some hurdles.
As for the future, Wasteless is targeting supermarkets throughout the globe, including North America and Europe. Biron thinks the dynamic pricing and RFID tracking technology will be the future of supermarket retail.
“We call it the Internet of Groceries,” he says with a chuckle.