StockUp Presents the Latest Take on the Local Inventory Dilemma | Street Fight

StockUp Presents the Latest Take on the Local Inventory Dilemma

StockUp Presents the Latest Take on the Local Inventory Dilemma

10366224_592041707578841_5605779140216901172_nLocal markets are laden with pricing inefficiencies. In a city such as New York, three or four stores may sell the exact same product for two very different prices in the same neighborhood. Some stores may attribute the price difference to a pricier location or better experience, but the imbalance is built on a simple information problem: consumers have no way of knowing.

Basic economic theory says that in a state of perfect information, in which a consumer knows all, the variations in prices would eventually reduce to near zero. We’ve already seen technology help solve the information problem in some parts of the local marketplace. Business search from companies such as Yelp and Google help us find, discover and evaluate business in more efficient ways than ever before.

But local inventory — who sells what and for how much — largely remains a black box for local shoppers. A big part of the problem is that the entities that have the pricing data (the retailers themselves) have little incentive to share the data with developers, and risk exposing their brands to the tumultuous impact that search has already had on businesses such as media.

A five month-old startup called StockUp thinks it can sidestep the brands altogether. The company has spent a year in stealth building a community around an app that allows users to scan barcodes and add product and pricing information manually to its database. Andy Ellwood, a former Gowalla and Waze executive who joined as chief revenue officer in January, says the company now has information about over half a million products in its database.

Ellwood pitches the project as an extension of his work at Gowalla and Waze. The two companies both developed systems for users to access the collective knowledge of consumers — something that Ellwood believes StockUp can do with pricing. Now, consumers are more and more willing to share what they buy with others.

The big difference for StockUp is that pricing information, unlike traffic or consumer activity data, already exists. The retailers who control the data hold it tight, and they have rebuffed the company’s attempts to access thar information. (Ellwood says that one of the largest retailers “doesn’t like [the company].”) The play, says Ellwood, is to generate enough traffic through its crowdsourced dataset that the retailers feel the pressure to ensure that the data is correct by sharing their own internal data with the company.

“When it’s all said and done, there’s going to be a race to equilibrium where price will become even more of a commodity than it already is,” says Ellwood. “Retailers will need to compete on something else besides price. They’ll compete on experience, they’ll compete on selection, they’ll compete on what else happened while being at the store.”

Admittedly, that future is far off. In addition to urging smaller retailers to contribute data, the company relies heavily on gamification tactics to drive users to record product information. Users receive points for contributing information about products, but the app still lacks the ease of contributing to Waze, which is done passively, or checking-in on Gowalla, which offered users a chance to communicate with friends.

But Ellwood may have found an ally in the consumer packaged goods brands who sell through the retailers. During the summer, the company partnered with Coca-Cola to help drive shoppers to find their bottles with their names as part of its share a coke campaign. The company created a “mission” in which users would receive double points for tagging a Coke in its database.

In many ways, the company plays at the natural tension between CPG companies and retailers. Retailers are a necessary evil for CPG companies — a way to get their product to market in a cost effective way. However, a searchable database of local inventory would put products in front of stores in the consumer path to purchase. A consumer could start with a search for a product or CPG brand, and then simply use retailers as a fulfillment center for that brand.

“Where this is all going is that we want to build a shopping list to tell you where to shop,” said Ellwood. “Just like Waze was a guide to tell you how to avoid traffic, our shopping list will say ‘hey, if you’re running short on time, here’s where you should go.’”

The reality for Ellwood is that the models that worked for Waze and Gowalla will likely fall short with StockUp. Whereas Gowalla aimed to build a useful dataset around the relatively static 20-30 million brick-and-mortar businesses in the US, inventory can change daily and can include tens or even hundreds of SKUs for each business. Humans simply cannot keep up.

The other option is to replicate Waze’s model by collecting data passively from consumers. But, the one consumer data source that might be helpful — credit card payments — is extremely difficult to access. Payment companies do not include itemized lists in transaction records (outside of certain corporate accounts,) which means that passively tracking spending is nearly impossible.

Even new projects like Apple Pay, for instance, still lack the ability to collect an itemized list of a consumer’s purchase. Apple would need to integrate with retailers or point-of-sale providers directly in order to access that data, and it’s unclear whether either party would pursue an integration beyond the transaction.

Unfortunately, the future may remain in the hands of a reticent — albeit, incrementally more advanced — retail community. The success of buy online pickup in store programs has led many larger retailers to adopt more advanced inventory systems. And the explosion of cloud-based point-of-sale systems has brought small business on a level footing.

Steven Jacobs is Street Fight’s deputy editor.

1 thought on “StockUp Presents the Latest Take on the Local Inventory Dilemma

  1. This company is a scam. I won their sweepstakes multiple times, yet only received one payment. The will never respond to your emails. They’ll be sued soon enough.

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1 thought on “StockUp Presents the Latest Take on the Local Inventory Dilemma

  1. This company is a scam. I won their sweepstakes multiple times, yet only received one payment. The will never respond to your emails. They’ll be sued soon enough.

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