SmoothSpan Blog

For Executives, Entrepreneurs, and other Digerati who need to know about SaaS and Web 2.0.

Software for Retaillers: Interesting New SaaS Niche?

Posted by Bob Warfield on August 10, 2007

Isabel Wang mentioned something in passing that got me to thinking.  She wondered if there was software that automatically optimizes the inventory at a retailler.  The thought was sparked by a conversation about DayJet, a jet airplane taxi service whose main claim to fame is an extremely sophisticated plane scheduling algorithm.  There was also the mention of Amazon.com’s auto-recommendation technology accounting for 35% of their sales.

Both of these technologies are here today and have been for some time, though they are often closely guarded secrets and competitive weapons.

I worked with Louis Borders once upon a time and can tell you that Borders Books got its start using just such a piece of software. Books are extremely expensive to ship, so you want to make sure that whatever you get will sell.  This is compounded by having a superstore format with even more titles on display.  The Borders software would analyze everything from the shape of a best seller’s curve over time to regional interests to determine which books to send where.  This is how Louis Borders (ne Webvan) got into the tech world from having been a bookseller.

My last startup, iMiner/PriceRadar performed the Amazon auto-recommendation trick for eBay.  They wound up buying the software from us, but we never could convince them to use it for that purpose.  I wish I’d had the statistic on Amazon at the time! 

Wallmart and the other mega-stores have similar technology by this point.  What I haven’t seen is such technology packaged in a SaaS form factor and offered to small and medium businesses. 

Could retail optimization for small and medium stores that don’t have proprietary solutions be the next killer SaaS business plan?

Better yet, someone needs to create the “Wholesale Amazon” that will offer to do sophisticated inventory planning and other big-retailler software services for free if only you buy your merchandise from them.

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4 Responses to “Software for Retaillers: Interesting New SaaS Niche?”

  1. isabelwang said

    Hi Bob,

    Here are a few companies that offer personalization/auto-recommendation software:

    http://www.aggregateknowledge.com
    http://www.choicestream.com/
    http://www.loomia.com/
    http://www.wunderloop.com/en/

    In particular, Aggregate Knowledge supposedly increased OverStock.com’s 2006 holiday sales by $100 million.

    Also, Amazon already does sort of offer Wholesale Amazon. It’s called Amazon Webstore (http://www.amazonservices.com/webstore/) and costs $59 per month plus 7%, I think. It gives you Amazon’s auto-recommendation and review features, plus the option (which you’re not required to use) to add Amazon products to your store.

  2. smoothspan said

    It’s good to know the auto-recommendation/merchandising is available. I know its powerful stuff for web merchants. Inventory and pricing optimization are also going to be key. My old startup, iMiner/PriceRadar did some very interesting work to optimize retail for search engines as well, since eBay is just a search engine of a peculiar kind in the end of the day.

    I don’t see why bricks-and-mortar retaillers shouldn’t be able to benefit from some killer SaaS applications as well as the online retailers. That has to be a huge market.

    Thanks for the comment, Isabel!

  3. […] « Why Don’t Search Startups Share Data? (aka Open Source Style Web Crawling) Software for Retaillers: Interesting New SaaS Niche? […]

  4. mike1144 said

    i think both of technologies are good and work i think parallel….
    auto-recommendation/merchandising is really powerful, and give good benefit to merchants.

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