M.Video-Eldorado: we are looking for startups with ready to market products
In the first year of Retail Innovation Tech Alliance (RITA), M.Video-Eldorado group has selected more than 20 Russian and foreign startups with which cooperation is possible in the near future. In a conversation with Eugenia Barchenko, Co-founder and COO of GoTech Innovation consulting company, Sergey Semenchenko, Senior innovation manager M.Video-Eldorado, revealed the aspects of the group's work with startups and shared his vision of promising areas in the search for technological solutions.
What criteria turned out to be the most important when choosing projects within the framework of RITA during the first year of the alliance's work? How did the pandemic and related processes affect this?
Before starting RITA scouting, our innovation management team, together with business functions, formulated three main directions for the selection of start-up solutions: improving customer experience both online and in retail stores, increasing operational efficiency through automation and avoiding manual operations, as well as any unique solutions that can become a competitive advantage of our brands.
Having entered the Alliance, M.Video-Eldorado focused on finding solutions that would meet the strategic goals of the company. The key focus for us is the development of the OneRetail technology platform, which integrates websites, seller and buyer applications into a single mobile platform. It allows customers to receive a personalized service based on technology and seamlessly move from online to offline and back again. Today, our priority technologies are digital products, which provide customers with a better experience and access to all our products and services via a smartphone, whether the person is in a physical store, at home or on the road. We are also interested in cases related to process automation and decision making based on deep analytics. This group includes various data processing services, recommendation systems, and personalization tools.
When selecting startups, we first looked at the correspondence of their projects to our business needs. It is important here that developers and entrepreneurs not only love their product and present it with enthusiasm but can also very clearly articulate its benefits for the corporation, describe the essence of the solution and evaluate its applicability in a specific industry.
In addition, we paid attention to the maturity of solutions, cases of implemented implementations and the experience of the team, including in working with large businesses.
How did your priorities change during the year in collaboration with startups?
The focus and priorities of M.Video-Eldorado have not changed during this time, although the pandemic has certainly accelerated the further merger of sales channels, the spread of mobile technologies and increased emphasis on the development of online shopping.
Businesses are ready to test hypotheses and quickly launch projects that drive sales. For example, there is still interest in solutions that can create an immersive online shopping experience, “trying on” a product using AR / VR technologies.
Is it important for you that a startup that potentially claims to cooperate with M.Video-Eldorado should be at the stage of a working business? Are you considering earlier solutions?
We did not make the availability of a ready-made and tested product a prerequisite - we understand that each industry, each company has its own specifics and processes. As a leader in our segment, we are ready to share knowledge and experience; nevertheless, a quick result is important to us.
Ideally, the business is looking for mature solutions that can have a positive impact in the short term. For earlier developments, we evaluate the relevance of the product, the resources that the startup team allocates for improvement, and the speed of reaching the pilot. Retail is a very dynamic business, speed is critical, so we strive to spend as little time as possible on lengthy iterations of improvements.
Were there startups that, within the framework of RITA, returned with a repeated application and were selected during the year?
We didn’t have this experience with RITA. Most projects, especially those that require integration with M.Video-Eldorado's internal systems, need customization and revision. Therefore, when deciding on cooperation, we, together with a startup, adapt its product to the specifics and objectives of our business. This is not a boxed solution, but the product that best meets current processes. The startup, in turn, increases its expertise in retail, opening new prospects for its work.
What are the main mistakes you can note, due to which you had to immediately reject projects?
Basically, startups, whose projects were irrelevant for the members of the Alliance, did not withstand the selection. Of course, launching spaceships is incredibly interesting, however, for now, we are ready to invest in something that helps improve our core business. It is advisable to do a minimum of homework before pitching. In our case, for example, go to the store, study the website and the mobile application, see how the processes work and how they can be improved, look for which of our competitors is implementing or developing something similar, whether there are analogues and how much they cost on the market. And the main thing is to first answer the question for yourself, why does the corporation need this decision? If the answer is obvious to you, we will be happy to talk to you.
The second reason why we could refuse a startup to continue the dialogue is obviously a crude product. Promises to complete and adapt everything after the start of cooperation sound quite often, but I repeat, changes in retail happen very quickly, we need to instantly catch market trends and respond to them. There is very little time to build up, and internal resources are occupied by a complete backlog of our own IT development. Therefore, we would like to see the most formed solutions.
And what are top 3/5 facts about startups that immediately hooked you and you took them onboard?
A huge plus for us was the expertise of some startups in retail and especially in e-commerce. This allowed us not to waste time on explaining the specifics and helped startups to highlight the main and meaningful things for us within the framework of the demo. For example, we noted the deep development of the modular platform of the British startup Yoobic https://yoobic.com/, which invites retailers to provide digital workplaces for retail store employees to optimize communication between field staff and managers, manage tasks and simplify day-to-day processes. And the international team of the Parcellab startup https://parcellab.com/ impressed with their expertise in the delivery service, enabling retailers to close the gap in post-sales customer service: automated communication ensures active work with customers, from updates of delivery status to confirmation of receipt and returns.
An advantage was also the availability of a finished product with completed cases and digitized results, but the cherry on the cake is the experience of team interaction with big business and with players relevant to our market.
Of course, we also pay attention to unique technological solutions, which, for example, will allow us to create a new experience for our clients. For example, we were very interested in the Finnish team Indooratlas https://www.indooratlas.com/, which managed to make a navigation solution for premises based on the Earth's magnetic field. Also, we could not pass by the Hexa startup 3D visualization platform https://www.hexa3d.io/. Producing 3D or AR content is still quite expensive and time consuming, but Hexa's cloud-based solution handles the site itself and transforms existing images and product information into immersive 3D / AR / VR content.
What points during piloting should be especially taken into account by startups working with M.Video-Eldorado?
Solutions that require integration with M.Video-Eldorado's IT systems are embedded in already agreed product teams backlogs. Since all development in the company is based on agile principles, it is necessary to wait until the end of the next sprint and free up resources for integration.
In addition, given our scale, we attach great importance to information security issues: both from the point of view of control over the protection of critical data and compliance with the law. But, as a rule, if the level of maturity of the external team is high enough, then the fulfillment of all the requirements is not an obstacle to the continuation of interaction.
How have startups benefitted over the past year when working with M.Video-Eldorado within the framework of RITA? What was their benefit? And what is yours - have there already been implementations, or how many of them may be in the near future?
Based on the results of the first year of RITA's work, we have selected and tested several projects. The most successful is the pilot with the Sweetcard company. The guys interested us with their uniqueness. It is the only company on the market that aggregates a huge array of data on the operations of more than 20 largest banks. With their help, we tried to attract new customers and return those who have not made purchases in our networks for more than a year. Sweetcard selected the required audience based on transaction history, and it was these clients who were highlighted in their banking applications with a special offer from M.Video. We excluded members of our loyalty program from this targeted audience and, as a result, we exceeded the KPI of the stock in terms of turnover seven times.
The second interesting case is live streams. Last summer we noticed an incredible boom in live streams (hello, “shop on the couch”) in Asia. At the same time, as part of RITA scouting, startups with their platforms for live streams began to appear in the funnel. Having selected five such solutions from Sweden, Germany, and Russia, we held an internal demo day, collected commercial offers, studied technical information about the platforms and chose the Russian startup Streamerce. The marketing team has successfully piloted this solution in Eldorado and is now discussing scaling scenarios.
In addition, we are currently communicating with almost two dozen startups that RITA scouting brought us: demo meetings are scheduled with someone, someone is in the stage of confirming the hypothesis, and the details of piloting are already being discussed with someone. We also had a week of HR-tech to search for pre-boarding and on-boarding solutions - out of 10 presented Russian startups, more than half were shortlisted, and came out for pilot approval. For the team of recommendation systems, we launched a series of meetings with startups to explore the "recommendation" services of the Western market.
For startups themselves, the undeniable advantage of cooperation with RITA is that the members of the Alliance closely communicate with each other, exchanging findings, insights, and pilot results. A case study in one company can launch a chain of implementations in others. There is an example from practice: we were interested in “smart” shelves, which allowed us to track the availability of goods, price tags, compliance with the description, etc., but during interaction with the team, it became clear that the project was more suitable for food retail. Then we referred the guys to colleagues.
What technological solutions will be of particular interest to you in the next year or two? What will you stake on when looking for startups?
Leadership in technology is one of the key competitive advantages of M.Video-Eldorado. We create the best customer experience based on the OneRetail technology platform, ensuring customer loyalty and high business efficiency. We are constantly introducing innovative products using a wide range of technologies: video and speech analytics, biometrics, machine learning algorithms, etc.
Before the launch of the new season of RITA, we will hold a series of meetings with business functions to update the needs, but we do not expect significant changes in focus. Among the main priorities are still: bringing online experience to offline and vice versa, personalization of the service, high speed of fulfillment and implementation of online order tracking tools, automation of routine operations and decision-making based on data analysis.
The group is carrying out a large-scale digital transformation, rebuilding the corporate culture, IT architecture and approaches to software development. Technological development affects all key and supporting functions, so we are ready to actively work with the external IT community to find the most effective and innovative solutions. Selecting innovations both the Russian and Western markets brings additional value - the ability to track trends and apply new and non-standard approaches to solving our problems.
The M.Video-Eldorado group is already the second member of RITA, who summed up the results of the first year of the Alliance's work. Interviews with representatives of the X5 Group are available here.
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