Amazon made a name for itself offering discounted prices, and that reputation endures today across its increasingly varied inventory. Other ecommerce companies are similarly regarded as the way to go when you want cheaper prices for just about everything. But a new app called Basket, armed with consumer-collected pricing data, aims to debunk the theory that ecommerce is necessarily the least expensive option by surfacing all of the discounts that can be found in nearby grocery stories.
Unlike other grocery disruptors that focus on speedy delivery and POS technology, Basket has no transactional element; its value lies purely in the information it surfaces — comparing the prices of specific items at a variety of stories near the user’s current location.
Street Fight recently caught up with Basket co-founder (and Waze vet) Andy Ellwood to discuss the company’s plans for profitability and partnerships.
Tell me a little about how your past career experiences informed the way Basket came into being.
The previous company I was working with was Waze, the traffic and navigation app. I helped them open their New York office and was with them all the way through the acquisition by Google in 2013. The narrative of what’s possible when you use collective knowledge, to allow a crowd to contribute information, was one of the key takeaways from Waze. Review sites like Yelp or TripAdvisor give very selective information — though it’s crowdsourced, it requires people to go outside of their normal actions to contribute the data informing that service. What Waze is doing, what Basket is doing, is allowing people to do what they were already going to do. In the case of Waze, it’s driving; in the case of Basket, it’s shopping.
What’s Basket’s business model? How can the app be profitable?
We’ve been fortunate over the past couple of years that, as we’ve been testing and building, we’ve done pilots with a handful of different organizations. The first piece of the business that has been really exciting for our industry partners has been that we’re capturing consumer intent. While someone’s building their shopping list with Basket, they’re building a shopping list tied to a product catalog. We have over a million different CPG goods in our database, so we can actually look at local demand because of people’s shopping lists. We’re able to say, for example, today there are 1,400 people in Brooklyn looking for paper towels. Or there are 1,000 people in Austin looking for baby formula. We’re able to share that information back with our CPG manufacturing partners — Coca-Cola, Anheuser-Busch — and with retailers we’ve partnered with: local businesses, small mom-and-pop grocery stores, and places as large as Kroger. We look into how their prices compare, and how people can pick their store over another.
The other really interesting piece is the data. We have information that is currently stuck somewhere in the POS at local stores, and there’s not a great way for it to be shared. Groups like Nielsen and IRI have contracts with all the major CPG companies and other retailers to share data that they pay other retailers to collect — pricing information, sales information. But we have that information just by the virtue of someone shopping and sharing the prices on the items that they’re putting in Basket. It gives us an even more real-time way of working with our partners.
And we’ve tested and had conversations about partnering with local delivery companies and online retailers. If somebody doesn’t have time to run to the store themselves, we can let them know: “hey, if you need somebody to deliver this, push a button here.” We can be the place where that delivery originates. That’s further down the road, but it’s something we’ve already had great conversations with partners about.
Why do you think all of the data Basket collects about offline local grocery prices hasn’t been exposed to consumers before?
We ask ourselves that same question. It was a personal problem for my business partner Neil Kataria, a father of three — he checked his most recent diapers.com receipt and thought, this seems like the correct price, but what would it have cost if I had gone to a store and bought it? He was at a loss for how he would even begin to search for that information online, so he went to the store himself, took a notepad, and wrote down all of the prices for those same products. Then he went to other stores to see if the prices were consistent.
What he found was that online prices were a little bit more expensive, because of the luxury of it coming directly to him, but what he didn’t expect was the 30-40 percent difference in price between one offline store and another in his neighborhood in northern Virginia. He thought that maybe it was because his neighborhood is so close to D.C., so he spread this search further and further and found it was pretty consistent. The difference in prices between stores in a five-mile radius can be as much as 50 percent, based on in-store unadvertised specials, advertised specials, and variance in list price.
We started to realize that what people have done in the past in trying to capture sales price information is only taking published sales prices. If you look at a Safeway in the D.C. area, they’ll have anywhere from 2,000-4,000 on products on sale every week, and they carry 40,000-50,000 products. A good chunk of what they have in stock is on sale, but if you look at their weekly circular, they only have 200-300 of those products displayed. We’ve learned how that process works and how scattered the information is. We built a massive database on the back end that allows us to display that information back to the consumers.
You recently announced a partnership with Amazon Alexa. How do you see Basket fitting into this new guard of smart home technology?
We’ve been really excited about the open-source nature of Alexa, and we’d love work with Cortana and Microsoft, Siri and Apple. We’ve toyed around with everything from how your refrigerator can speak to your shopping list, to a smart trashcan letting you know that you’re now out of something when you throw it away. The barcode on that smart trashcan would automatically add the product to your shopping list. The way in which people are using and building their Basket lists is something we’re incredibly intrigued by. [With Alexa], we’ve done everything from voice to text, to searching for products within our database, to scanning a barcode and adding something directly to your list. Any way that people want to be adding things to their Basket, we’re going to be exploring.
Where do you see the app evolving from here?
The next release is showcasing both online and offline prices for some of the major online retailers. It’s the first step toward ultimate optimization of your shopping list. In the very near future, we’ll be able to show you the seven products you should go to your local store to purchase, and the four products you should buy online.
Being the place where people begin their shopping experience is what we’re building toward. Waze does not care which roads you take; there’s no incentive for Waze to steer you one way or the other. Very similarly, if you give us your shopping list, Basket is, in effect, Switzerland. We have all the information, but we don’t care where you choose to finish your transaction. We just want you to have the information you need, because we don’t want anyone to overpay.
Lots of people are shopping blind. They’re being price gouged just based on the stores that are close by to them. The same products might be available for 30 percent less a couple of blocks away. If you have the time, and saving money is important to you, make that decision. If you’re in a hurry, and need something delivered, make that decision. We just want to be the place where people take a look and make an informed decision that’s best for them.
Annie Melton is Street Fight’s news editor. This interview has been edited for length and clarity.