AI startup sees opportunity forecasting pandemic-era consumer demand3 min read . Updated: 13 Jan 2021, 09:52 AM IST
- New York-based Centricity, which uses AI algorithms to analyze consumer behavior, is aiming to raise $10 million in venture-capital money
Centricity Inc., a startup that uses artificial intelligence to help companies predict consumer demand for specific products in particular communities, is expected to raise $10 million in new venture-capital money this year.
The New York City-based company, one of many enterprise technology startups that have gained traction during the pandemic, uses AI algorithms to analyze some 2.5 billion data points’ worth of internet traffic a day to predict demand for products so that retailers can stock their shelves accordingly.
About 10 undisclosed companies in Europe, Canada and the U.S. are using Centricity’s software platform in sectors such as grocery, nonfood retail, apparel and consumer electronics, said Chief Executive Michael Brackett, who founded the company in late 2019.
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Centricity employs about 50, up from less than 10 last April, and its planned fundraise could bring total venture-capital investment to $12.5 million.
Startups such as Centricity, which build software and services aimed directly at large enterprise customers, have been capitalizing on the increased demand for their services during the coronavirus pandemic, as companies have been forced to accelerate their digital initiatives to remain competitive.
Companies use Centricity’s AI-based insights to help predict what customers will want to buy in around one to three months, depending on the client, so they can stock their shelves accordingly.
Its technology can also be used by research and development divisions at companies interested in launching new products.
Mr. Brackett founded Centricity after spending more than 20 years working in the grocery sector, including managing a $600 million dairy portfolio for Netherlands-based grocery retailer Koninklijke Ahold Delhaize NV.
Planning inventory based on future consumer demand is tricky. Retailers attempt to do it by using data from sources that track consumer spending, said Brandon Purcell, a principal analyst at research company Forrester Research Inc.
Traditional players include global data analytics company Nielsen Holdings PLC and market research firm IRI, which say they use high-quality, timely consumer spending data to give enterprise clients critical information that allows them to plan inventory, promotions and pricing.
The pandemic laid bare the challenges of stocking inventory to meet consumer demand in the moment. As a result, there is likely to be growth in new startups attempting to use AI to forecast demand in real time for specific products, Mr. Purcell said.
Centricity intends to file one or more patents for its main technology, a “pulse system" that uses AI to help predict how likely a group of people are to purchase a specific product, such as yeast for bread, in any particular area. The insights can be as granular as 1 kilometer, Mr. Brackett said.
The system, which uses a set of AI-based algorithms, currently analyzes about 2.5 billion points of internet traffic daily and 75 billion website page views a month, with the capacity to grow beyond that number, said Jason Nichols, Centricity’s chief technology officer.
Mr. Nichols was formerly director of AI for Walmart Inc.’s Intelligent Retail Lab, where he worked on understanding customer behavior and inventory management using technologies such as computer vision.
The AI system can analyze billions of data points’ worth of raw internet traffic in part because of partnerships between Centricity and online publishers, advertising agencies, content marketers and demand-side providers, which sell software to buyers of digital ads.
Data include information about the location of the user, the websites they’re visiting, search terms they’re using and specific pages they’re clicking on within the website. The algorithms analyze the data to locate the precise areas where groups of people are interested in a particular product, delivering a probability for that group of people buying the product, in a certain area.
Human analysts at Centricity also work with customers’ data science teams to put the AI model’s recommendations into context within each customer’s target market, Mr. Nichols said.
Mr. Brackett said he initially expected to sell the product to executives overseeing category management and merchandising, but realized the right buyers were chief information officers and chief technology officers.
Centricity is one of the fastest-growing startups in Bowery Capital’s portfolio of over 50 companies, said Michael Brown, the early-stage venture capital firm’s co-founder and managing partner. Mr. Brown said Bowery Capital expects to also invest in its Series A round, for which Centricity is targeting $10 million in venture funding.
The New York-based firm led a $2.5 million seed funding round in Centricity in August 2019, in part because of its potential to displace incumbents, Mr. Brown said.
This story has been published from a wire agency feed without modifications to the text.