We’ve all heard the stats and have seen articles that mention how brick-and-mortar stores are coming to an end, but is that actually true? According to PERCH, the experiential marketing platform that uses patented, cutting-edge technology to give items a life of their own, the retail apocalypse is just talk. That’s because in the last six months this marketing company’s average deal size has doubled and it is growing 100% QoQ. Furthermore, PERCH collects data with every interaction and uses it to optimize the brand experience and impact.
AlleyWatch spoke with CEO Trevor Sumner to discuss how building this patented marketing platform that’s being used by brands like Jo Malone, Kate Spade, Delta, Reebok, and Neiman Marcus is revolutionizing the in-retail shopping experience.
Who were your investors and how much did you raise?
PERCH raised $1.7M in Seed Funding, with investors from The Visuality Corporation, Corigin Ventures, and leading angel investors.
Tell us about the product or service that PERCH offers.
PERCH is an open, cloud-based retail marketing platform for delivering physical and digital marketing experiences in-store. The platform utilizes 3D sensing technology to detect when shoppers touch or pick up products, triggering delightful and informative experiences at that critical moment when they consider a purchase. These product-centered experiences oftentimes include product details, technical specifications, related products, brand stories, user reviews, and even how-to videos.
Now more than ever, it’s time to re-imagine the in-store experience. Brands and retailers can use PERCH to take the best of interactive digital content and marry it with the advantages that brick and mortar stores bring with them. There is so much rich content and applications that you can bring in to enhance the store experience. Johnson & Johnson uses Perch to cross-sell products such as Neosporin when you pick up a bandaid. Jo Malone uses Perch to create stunning, Clio-award winning visualization experiences. Sephora and Bourjois use our augmented reality tie-ins for customers to virtually try on makeup. Kate Spade New York’s innovative line of Make it Mine bags uses Perch to help customers personalize their bags and even order them online. Digital can be used to overcome frictions in the shopper journey or make it magical.
PERCH’s omnichannel solution can also harness data insights gleaned in-store and help brands learn more about their customers, even if customers do complete the final purchase online. For the first time, brands can see the top of the buying funnel in-store and what products customers are touching and interacting with, through this information brands can understand disconnects with sales correlation that might indicate problems in pricing, merchandising, or packaging.
What inspired you to start PERCH?
Jared Schiffman (founder and CTO) recognized that overlaying digital onto the brick-and-mortar consumer shopping experience created interesting and engaging interactions. Jared spent his career reimagining the merging of physical and digital interactions, and in 2012 he founded PERCH. Since PERCH’s inception, our sole focus has been on the development of technologies that sense customer’s direct interactions with products and respond with dynamic digital media.
We began with projector-based technology and advanced to embedding interactive LCD displays into retail shelving, cabinets, and cases, using computer vision and sensing technology that detects which products customers are picking up and putting down. Ever since then the business has taken off. Our technology is deployed in over 20 countries across 5 continents, with clients that include Neiman Marcus, Sunglass Hut, Jo Malone, Sephora, Kate Spade, Bayer, Pernod Ricard, and many others.
How is PERCH different?
We have the patent for this type of mixed reality retail marketing platform that can detect which products customers are touching, picking up, or putting down and respond with dynamic digital content. For the first time, you can message every single product on the shelf in retail. PERCH’s embedded IoT technology unites digital content with physical products, delivering highly personalized product messaging that drives 5-10x customer engagement, 30-80% product sales lift and 200-400% ROIs. PERCH collects data with every interaction, and it uses this to optimize the brand experience and impact.
What market does PERCH target and how big is it?
PERCH partners with a variety of leading brands and retailers that span across a
variety of industries in the home goods, food & beverage, fashion, health & beauty, and electronics sectors, such as Lenovo, Sephora, Neiman Marcus, and Kate Spade New York. PERCH currently has deployments in over 20 countries across 5 continents. In-store retail is a $4T market. In-store advertising is $20B, digital signage is $20B, and experiential marketing is so large it’s measured in the hundreds of billions.
What’s your business model?
We offer software and technology on a SaaS basis, with monthly fees to access our suite of cloud-based software. The devices similarly are a subscription model for software, IoT management, support, and warranty.
What was the funding process like?
We received early commitment from our existing investors to lead the round, which always makes fundraising easier. Their deepening commitment to PERCH as it grows is a symbol of the immense potential of the business. From that point, it was a matter of reaching out to the angel networks and beginning to network with funds that can set up for a successful A round.
What are the biggest challenges that you faced while raising capital?
Many venture firms were interested based on the financials, technology, and growth story, but they were hesitant about in-store retail as a target segment. It’s hard to invest in a sector that you don’t fully understand, especially with all the swirling clickbait stories of a “retail apocalypse.” But, retail’s insiders better understand the opportunity. Direct to consumer brands like Warby Parker have to open stores. In fact, Warby Parker sells more in-store than online. With the increasing number of success stories in retail and retail technology, I think the VC industry will come around and recognize the immense potential in the enabling technologies underlying this retail transformation.
What factors about your business led your investors to write the check?
We have a solid, proven product that drives 30-80% sales lift and real ROIs. We have brand name clients that are expanding out their deployments. Our average deal size has doubled in the last 6 months and we are growing 100% QoQ. We opened up new markets like CPG and Big Box and we have global deployments. Moreover, we have a proven ability to execute and a seasoned executive team with successful ventures.
What are the milestones you plan to achieve in the next six months?
We are pretty excited about the next 6 months and you are going to hear about some large customer deployments in the fall. Our goal is to continue to grow the team, hire a VP of Sales, continue to increase revenues 30-40% QoQ , and drive subscription revenue mix towards 60-70%. We will also expand to the West Coast.
What advice can you offer companies in New York that do not have a fresh injection of capital in the bank?
Keep fighting. Startups are a war of attrition. Ben Horowitz argues there is always a path forward, it just may be painful. He says that startups don’t die, they commit suicide by not taking that hard path. Keep fighting. Get to profitability as fast as you can to control your destiny. As Paul Graham said, better to be default alive than default dead.
Where do you see the company going now over the near term?
PERCH aims to expand into the CPG, beauty, medical health, and beverage space. With this funding, PERCH can rapidly expand its computer vision libraries and shopper applications for retailers and brands. You will also see some partnerships throughout the retail marketing industry from digital signage to POP display provider, agencies, print vendors, and more. There is so much money being spent right now that getting a wider footprint will be key to our success.
What’s your favorite restaurant in the city?
Il Mulino. I have been going there since I was 6 and it is simply the best Italian food in a city so well known for great Italian food. I am a huge foodie. Trust me.