Instacart acquires Caper AI to deepen push into physical retail tech
Instacart became known for letting consumers avoid grocery stores by ordering goods online and having them delivered home, and the business grew strongly during the coronavirus pandemic. However, brick-and-mortar stores are still gaining ground in the grocery world, so the company decided not to fall behind.
Instacart announced the acquisition of Caper AI, a startup that builds an intelligent cart and a checkout-free technology that uses computer vision and other methods to detect items and send messages to shoppers. The company confirmed it is buying the startup for $350 million in cash and stock.
The acquisition is part of Instacart's expanding B2B2C retail technology strategy. Alongside its core online ordering and grocery delivery service, the company is building a set of products and technologies for stores that they can use to offer new services to their customers.
Instacart's CEO told TechCrunch that the acquisition matches what retailers want and need to do. Amid fierce competition from companies like Amazon, which has its own checkout-free technology and is becoming more aggressive with its physical store strategy, retailers are chasing a customer base that increasingly expects and wants to use more modern digital services.
“We are opening up what comes next to our retail partners. We meet the growing needs of customers online or offline. Retailers want to develop unified offers that break down fragmentation. We see ourselves as a company that provides opportunities for retail. We already have an extensive platform to support commerce services covering both delivery and pickup, which already unites all the lines”
The plan is to continue Caper's business as it stands today: the company has already signed smart cart technology deals with Kroger and Wakefern in the US, Sobeys in Canada, and Auchan in France and Spain. Instacart will sell Caper's technology to its broader network of existing retail partners.
“I am incredibly proud of the business we have built and the technological leap our products represent for the entire grocery space. The powerful technology we created is intuitive for customers, simple to deploy for retailers of any size, and creates a physical retail ecosystem that did not exist before. We share Instacart's vision of enabling grocery retailers to offer new innovations that bring step-change improvements to their business, and we are proud to now join forces with Instacart to develop even more solutions that help unite online and offline services for retailers”
In addition, the company plans to integrate Caper's technology into the Instacart app: people who open their shopping lists in the app can then use Caper's technology to automatically pick up items as they appear in stores. Instacart plans to focus on Caper's existing products so that the technology is absolutely perfect and is applied worldwide.
With this acquisition, Instacart will be able to compete with Amazon's Just Walk Out technology, as well as Trigo, Shopic and Imagr, and gain the opportunity to become a supplier of this technology to retailers. Many checkout-free technologies are still in their infancy, and their concepts are too expensive. Caper AI's approach is simple and cheaper to implement than systems that involve retrofitting entire stores with special cameras, large computing systems for processing information, and delivering new physical carts.
The "smart cart" instantly and automatically detects products using four computer vision cameras. Items are added to the digital shopping list automatically. Shoppers can put goods in the cart naturally, without needing to scan barcodes.
Using a modern computer vision database with more than 20 million images and advanced deep learning algorithms, Caper can easily improve the shopping process from day one without needing to collect images of items. The screen mounted on the cart serves as a portal for interacting with shoppers in the store. Shoppers can see recommendations based on their purchases, nearby offers, and other interactive digital features.
Instacart has been interested in the "smart cart" from the start, a form factor retailers already understand and that does not require large investments. On the other side of the equation is the labor situation. Such solutions will inevitably raise questions about the impact on people who have traditionally worked as cashiers.
As for Instacart, it is notable that the company is buying technology that removes people from the order-checkout equation while also facing backlash over its own working practices. These problems are unlikely to be resolved with or without this particular acquisition, but there are questions and options that Instacart, grocery stores and consumers should consider over the longer term.
