According to startup BetterBasket, grocers are leaving hundreds of millions of dollars on the table including 5% in sales and 10% in margins by not pricing analytically – a challenge that the young company says it can help overcome with the help of AI to map product price changes by competitors as well as shifting costs.
“We saw just how difficult it is for grocers to price precisely and quickly. The reason this is, is because there are so many different things that can impact a grocer’s price and what it should be. There is a lot of competition, the costs can change overnight and your shopper sensitivities might also be shifting,” said Leon Zhang, co-founder and CEO, Better Basket.
He explained that BetterBasket can help “mediate the imbalance on prices and different items” by mapping products to each other across competitors and compare them based on additional data from the Internet, including prices and key attributes.
As a result, BetterBasket can help track at a store, category and basket level the impact of when a competitor changes its price.
How BetterBasket works
This is possible thanks to BetterBasket’s AI-based entity recognition system that it says is trained on millions of product data points for grocery, such as product names and descriptions, which are then scored using cosine similarity and Jaccard similarity algorithms to determine product alignment. Product attributes also are weighted for “adaptable matching strategies across different categories.”
Take eggs as an example. BetterBasket breaks down common attributes like size, color, carton-count and attributes like cage-free or organic to better compare like-for-like and avoid misaligning the price of large brown eggs and medium white organic eggs.
BetterBasket argues the cost savings and sales its technology generates will more than pay for its services.
The impact
The startup strives for 10% revenue gains from its services by leveraging competitive data and seamless execution, Zhang said.
He pointed to an example of an independent grocer in Puerto Rico that BetterBasket helped reach 8% revenue gains on some of its items by helping it compete against Walmart.
Over the next year, the startup plans to build out its services and business and is actively looking for retail partners.
