Amazon, the world’s largest online retailer, has a huge advantage over its brick-and-mortar counterparts: data. When customers head to Amazon’s site, the company already knows tons about them, from their purchase history to their interests to their wish lists and so forth. “They use this understanding to give customers a really personalized experience–it’s allowed them to be really disruptive,” says Jonathan Wall, the former tech lead of Google Wallet. “We looked at this and said, ‘Don’t offline retailers need this as well?'”
Toward that end, today, Wall and cofounder Marc Freed-Finnegan, another veteran of the Google Wallet team, announced they had secured $7 million in series A funding to get their new startup, called Index, off the ground. The pair wants to bring the personalized, data-driven shopping experience of the web to the offline world of physical retail using Index’s software solution, which the company aims to integrate with a number of traditional point-of-sale (POS) systems. The round was led by Eric Schmidt’s Innovation Endeavors, with Vinod Khosla joining in the round as well.
According to Wall and Freed-Finnegan, the key to Index is its agnostic approach. Whereas other high-tech companies in the retail space tend to focus on payments or hardware like PayPal or Square, Index is designed to integrate with the POS systems that physical retailers are already using. Merchants can integrate its software-only solution with their current systems, as antiquated as they may be. “When Square walks into most retailers, they say, ‘Use our app; use our register; use our e-commerce; use our processing,'” Freed-Finnegan says. “We take a loosely federated approach to the same problem: When we talk to Target, we’re not expecting them to swap out their point-of-sale system; we integrate with it. We’re not expecting them to get rid of their mobile app and start promoting ours; we integrate with their mobile app. The same goes for their website.”
From there, Index is focused on what Wall refers to as the “universal pain points” that merchants face, namely how to acquire new customers and retain them. Index taps into the customer credit and debit card data that retailers are already collecting but not taking advantage of. Using its analytics, the company says it will enable merchants to offer a more personalized experience to customers, much in the same way Amazon does online. For example, if a customer opts in to receive email receipts from a merchant, Index says the retailer would be able to use its data to offer deal incentives and up-selling opportunities tailored to that customer’s tastes. They can use Index to measure a deal’s effectiveness and manage customer relations. “Did you acquire new customers? Was it key to increasing sales?” Freed-Finnegan says.
Longer term, the company imagines going from a B2B solution to a B2C one. The Index team envisions a time when in-store associates will be able to bring up consumer purchase data on iPads and smartphones when customers walk into the store, to better serve them. “What if when women walked into Sephora, the sales associates were able to see their past purchases, their online orders, their wish lists, their skin type, and what brand of make-up they like? It’d make it so much easier for those in-store associates to be helpful,” says Wall.
Of course, for now, that’s just wishful thinking. We’ve heard of similar visions for the future from a range of startups in the space, including PayPal, Foursquare, and GroupOn. It’s still early though, especially for Index, which doesn’t have anywhere near the level of adoption of a company like Square or NCR at present. The company will also have to deal with other common headaches of the retail space, such as accurate inventory tracking and consumer privacy issues.
But Index’s cofounders say the startup’s unique DNA will give it a leg-up over the competition. Indeed, if anything, Index right now isn’t so much selling its product as it is the company’s composition, which includes a slew of ex-Googlers, as well as “business leadership” from Apple and Oracle and “retail advisers” from Whole Foods and J.Crew.