E-commerce infrastructure startup Nacelle closes $18M Series A

Consumer online shopping habits have led to a windfall of revenues for these web storefronts, but COVID-era trends have also breathed new life into the market for developer tools that help e-commerce sites operate more smoothly for shoppers.

LA-based Nacelle is one of many e-commerce infrastructure startups to earn attention from investors amid COVID.

The web services company helps streamline the backends of e-commerce websites with a so-called “headless” platform that shifts how the front end of websites interact with content in the back end. The startup claims its tech can boost performance, promote better scalability, cut down on hosting costs and offer developers a more streamlined experience.

Nacelle has closed an $18 million Series A led by Inovia with participation from Accomplice, Index Ventures, High Alpha, Silas Capital and Lerer Hippeau. The company just closed a $4.8 million seed round in mid-2020, the speedy pace of their Series A’s close seems to speak to the investor enthusiasm that has deepened around companies operating in the e-commerce world.

“It’s not secret that commerce has done well during COVID,” CEO Brian Anderson tells TechCrunch. “Not only did we get this subtle structural change with COVID that I believe is long-lasting, but merchants have been focusing more on performance.”

One of the startup’s central points of focus has been ensuring that they can bring customers onboard its platform without causing undue headaches. It can be “very painful to migrate data” with other services, Anderson says. The company’s service is “anti-rip-and-replace,” meaning potential customers can integrate “without having to be rebuild their stores.”

The firm’s customer base is largely made up of small- to medium-sized e-commerce sites. Nacelle works closely with agencies for customer referrals, also tapping on Anderson’s past contacts from his days running a Shopify Plus agency.

This past August, data from IBM’s U.S. Retail Index suggested that pandemic trends had accelerated the consumer shift from primarily visiting to physical stores to shopping on e-commerce storefronts by roughly five years.

MadeiraMadeira, Brazil’s answer to Wayfair and Ikea, is now worth over $1 billion

MadeiraMadeira, the Brazilian answer to Wayfair or Ikea, is now worth $1 billion after raising $190 million in late stage financing from investors led by SoftBank’s Latin American investment fund and the Brazilian public and private investment firm, Dynamo.

An online marketplace specializing in home products, MadeiraMadeira offers roughly 300,000 products so customers can build furnish, renovate and decorate their homes.

Founded in 2009 by Daniel Scandian, Marcelo Scandian and Robson Privado, the company has seen huge tailwinds come from the shift to online shopping in Brazil as a result of the global COVID-19 pandemic.

With stores closed, online shopping in Brazil surged. As Daniel Scandian noted, before the pandemic ecommerce penetration in Brazil was at roughly 7%, that number ballooned to 17% at the height of the pandemic in Brazil and has now stabilized at around 10%.

Combining third party sales with private labeled goods and its own shipping and logistics facilities has meant that MadeiraMadeira can take the best practices from several online retailers and home furnishing stores, Scandian said.

There are more than 10,000 sellers on the MadeiraMadeira platform and roughly 2.5 million stock keeping units. In recent years the company has added showrooms to its mix of retail facilities, where customers can check out merchandise, but complete their orders online.

“That’s the way we can tackle the offline market with a digital mindset,” Scandian said. 

Money from the most recent financing will be used to invest in expanding its logistics capabilities with the addition of new warehouse facilities to expand on its existing ten locations. The company also intends to add same day delivery and the expansion of its private label services.

The new capital, likely the last round before a potential public offering, included previous investors like Flybridge and Monashees along with public-focused investment firms Velt, Brasil Capital and Lakewood.

Early investors like Monashees, Kaszek, Fundo Avila, Endeavour Catalyst and angel backers like Niraj Shah, the founder of Wayfair, and Build.com founder Christian Friedland were instrumental to MadeiraMadeira’s early success, Scandian said.

Based in Curitiba, MadeiraMadeira has over 1300 employees, with the majority of them focused on technology, logistics and product development.

“With this new investment, we are raising our commitment to MadeiraMadeira’s long-term value creation vision as the company consolidates its position as the leader in Latin America’s home goods market. Since our initial investment, MadeiraMadeira’s management team has delivered everything they’ve promised, and our faith in them continues to grow,” said Paulo Passoni, Managing Investment Partner to SoftBank Latin America fund.

Walmart to pilot test live-streamed video shopping on TikTok

Walmart and TikTok announced this morning they will be partnering on the first pilot test of a new shoppable product experience on TikTok’s social video app. Walmart, as you may recall, had planned to invest in TikTok when the app was being threatened with a ban from the U.S. market unless it sold its U.S. operations to an American company, per a Trump administration executive order —  a ban that’s now on pause after multiple legal challenges. Walmart’s interest in TikTok, however, has not waned. The retailer, though seemingly an odd fit for a social network, had seen the potential to attract a younger online consumer through video and, in particular, live streamed video.

This is what the new test on TikTok will involve, as well.

During a Walmart live stream, TikTok users will be able to shop from Walmart’s fashion items without having to leave the TikTok app, in a pilot of TikTok’s new “shoppable product.” The fashion items themselves will be featured in content from ten TikTok creators, led by host Michael Le, whose TikTok dances have earned him 43+ million fans. Other creators will be more up-and-coming stars, like Devan Anderson, Taylor Hage, and Zahra Hashimee.

All will be participating in a special event hosted on TikTok called the “Holiday Shop-Along Spectacular,” which will take place on Friday, Dec. 18 at 8 PM ET on Walmart’s TikTok profile.

Image Credits: Walmart

During this special, the creators will show off their favorite Walmart fashion finds in their own unique ways. For some, that will mean giving fans a peek inside their closet. Others may do a living room runway or even a fashionable “dance off,” Walmart says.

There are two ways TikTok users can shop for the fashion items featured.

As products are shown on screen, pins will pop-up which users can tap to add the item to their cart. They’re then directed to a mobile checkout experience. Alternately, customers can choose to tap on a shopping cart pin at the end of the event to look through all the items featured and select what they’d like to purchase.

And for anyone who misses the event, they’ll still be able to shop the items from Walmart’s TikTok profile when the Shop-Along event is over.

“We’re constantly looking for ways to innovate the shopping experience for our customers,” said Walmart’s U.S. Chief Marketing Officer, William White, in an announcement. “We’re moving faster than ever to find new and improved ways to better serve our customers and meet them where they are. We created this event for, about, and by our community, reflecting the lives, passions and styles of a diverse set of creators so everyone watching will feel represented, no matter who they are or how they outfit their closet,” he added.

Walmart said the idea to partner on mobile shopping didn’t emerge as a result of the recent deal talks, as it’s been an active brand on the platform for over a year. (In fact, it’s even tasked its employees with making TikTok videos, a recent report from ModernRetail detailed.)

The retailer also told TechCrunch there’s not a revenue share with TikTok on the sales it makes through the app, nor any fees, as this is considered a joint test.

Image Credits: Walmart’s profile on TikTok

This is not TikTok’s first foray into shoppable video.

The company has been exploring this space for some time, including with last year’s launch of the Hashtag Challenge Plus which added a shoppable component to a hashtag, directing video viewers to shop a site from within TikTok. This year, brands like Levi’s leveraged TikTok’s “Shop Now” buttons that allowed consumers to make purchases through links posted on TikTok. And in a significant deal just this fall, TikTok formally partnered with Shopify on social commerce by allowing Shopify merchants to create, run and optimize their TikTok marketing campaigns directly from the Shopify dashboard.

Live-streamed shopping is also a fast-growing and lucrative market, as younger users are turning to influencers and online video to both be entertained and to shop.

All the major tech companies have invested in this space as well, to varying degrees, including not only Facebook (in an aggressive push across Facebook and Instagram), but also Google through its R&D arm, Amazon through its QVC-like Amazon Live, Alibaba through AliExpress, JD.com, Pinduoduo, WeChat, and even TikTok’s Chinese sister app, Douyin.

The trend is also fueling startups, like Bambuser and Popshop Live, which have raised new rounds in 2020 for their own live-streamed shopping products.

For TikTok, however, is more of a natural evolution of its product where influencers are already showing off their favorite items, their fashion and style.

“At TikTok, we’re constantly exploring new ways to inspire creativity, bring joy and add value for our community,” said Blake Chandlee, Vice President, Global Business Solutions at TikTok. “Creators and brands have found a creative outlet to connect with audiences through TikTok Live, and we’re excited to further innovate on this interactive experience to enable our community to discover and engage with the brands they love,” he continued.

“Brands have had an incredible impact on the community throughout this year, and we’re thrilled to see Walmart embrace the creativity of TikTok and this first-of-a-kind experience to meaningfully engage with their community,” Chandlee said.

 

 

 

 

Despite limitations, 3D and AR are creating new realities in retail

In North America, shoppers are increasingly turning to online orders to buy their products.

National postal services have seen a significant uptick in parcel volumes; so many that the number matches those sent during the Christmas surge — minus the wrapping paper. But although the pandemic has acted as a catalyst for online shopping, it’s part of a continuing trend.

The online sector has slowly been eating up the percentage of sales from retail stores. Virtual shopping’s total share of the global market has doubled between 2015 and 2019, with the U.S. Department of Commerce reporting that online retail sales overtook general merchandise stores in the country for the first time in February 2019.

As customers have turned to their web browsers, shop vacancies are on the rise around the world, with big brands deserting even New York’s Fifth Avenue.

“Within the next five years, I think we’re going to see that having AR and 3D on your dot-com and beyond will be mandatory.”

The high street has been forced into a period of transformation. Now, forward-thinking companies are finding ways to adapt.

New realities in retail

In 2019, Charles Bergh, the CEO of Levi’s, proclaimed that stock sizes for clothes would be gone within a decade. Body scanning and made-to-order items would replace the letters and numbers found on the labels of clothes, and products would no longer be found by scrolling through images or browsing shop floors. Instead, customers would select their products — a pair of shoes, a new coffee table, a snapback hat — and customize it to their own specifications. These clothes or items would be tried on or placed within a virtual scan of their room, all without leaving the couch.

Using 3D modeling and augmented reality (AR) — a technology that places computer-generated images onto the real world — Bergh’s vision is already possible.

One of the first sectors to take advantage of the nascent technology was the furniture industry. Leading retailers like Wayfair and IKEA invested early into 3D and AR, allowing customers to physically visualize their products inside their spaces. For Shrenik Sadalgi, the director of Research and Development at Wayfair Next — the arm of the furniture giant that uses technology to make shopping more seamless — adding the two technologies to its sales arsenal was an obvious choice for the company.

Wayfair’s customers can take advantage of two AR experiences. The first, View in Room 3D, lets users place an accurately sized piece of furniture into their room, twist and move it in the space, and even walk around it in real time. Room Planner 3D goes further, allowing customers to visualize the piece of furniture in their home even when they’re on the go.

“We’re letting customers capture the space first,” Sadalgi says of Room Planner 3D. “So you take a photo, and that photo is a very piece of rich information about your room. At a later point in time — maybe you’re on the subway, or maybe you’re at a friend’s house or whatever — you can pull up your room, and then you can add furniture as if you were there. So you don’t have to actually be in the space to plan your space.”

It’s not just homeware companies that have embraced the digital option. Augmented reality has found a natural fit in the beauty industry, and like major furniture retailers, bigger brands have been using the tech for several years. The experiences they offer continue to be refined as the technology improves. Leading players like L’Oréal, Sephora, Procter & Gamble, and more have been honing their version of the AR over time, offering customers a more interactive shopping experience.

For Lynda Pak, senior vice president at beauty powerhouse Estée Lauder, AR lets shoppers gain a familiarity with many of the products within its portfolio of 29 brands.

“AR is becoming a way for a consumer to be able to engage with a beauty advisor or makeup artist,” she says. “It may be tied in with, let’s say, a digital consultation. But if the consumer wants no live consultation whatsoever, [they] can just try the various shades on their own as well.

“The AR experiences that we have right now are really around virtual try-on for makeup,” she continues. “That encompasses eye, it encompasses foundation, it encompasses lip, and we also have skin diagnostic capabilities. The calibration that we’ve done is able to note if you’ve got some dry patches or red flares, or if you’re looking a little tired — it will highlight some of those skin concerns. When we go into haircare, we’re able to view the scalp and the condition of the hair close to the scalp, as well as further down to the ends. You’re able to see what you look like as a blonde, of what you may look like with an ombre. It’s a great way to get a sense of what the shade will look like.”

In both of these industries, as well as a number of others that rely on customization or fit, consumers are beginning to shop differently. Companies like Facebook have invested heavily in online transactions, encouraging more purchases in the digital realm.

Instagram now boasts its Shopping and Checkout options to allow businesses to advertise and complete transactions through the app, offering an alternative to website- or brand app-based shopping platforms — all with a potential customer base of over a billion. As buyers continue to explore new ways to make their shopping decisions, brands are increasingly focusing on how they present their products digitally.

Making the digital feel physical

Changes in retail have always been tied to developments in technology. The advent of the postal service inspired mail-order catalogs. Televisions created shopping channels. The internet ushered in the possibility of online shopping, and mobile phones — with their cameras — have been the launchpad for AR and 3D. Each leap creates more opportunity for shoppers to see the product how it really is — as if it was already on their body or in their homes.

As several marketplace unicorns prepare IPOs, a VC digs into the data

The end of 2020 will be marked by a series of high-profile consumer technology IPOs. Among the companies on file are several marketplace businesses including home rental giant Airbnb, food delivery service DoorDash, grocery delivery company Instacart and the online shopping platform Wish.

Poshmark, a social commerce platform in which Menlo Ventures invested early, has also filed to go public. While the public market will soon assign value to these marketplace businesses, the dominance of these businesses underscores the strength of the marketplace business model. It’s interesting then, to dig into the numbers to understand the state of marketplace businesses today.

What to make of 2020?

Typically, we’d spend most of our time analyzing the most recent data. But, it will surprise no one that 2020 is an outlier. Thankfully, we don’t need to throw the data out. There are some interesting insights. The pandemic impacted businesses broadly, some boomed while others went bust. How the marketplace category fared varied from business to business, depending on the category.

The large public marketplaces continued to perform. If we look at the top 20 publicly traded marketplaces, we see that their combined market cap increased ~63% in 2020. This growth rate is lower than the ~99% growth of the 20 public SaaS leaders.

Not surprisingly companies like the video meeting platform Zoom and Shopify, a commerce platform that allows anyone to set up an online store and sell their products, benefitted from new dynamics introduced by the pandemic.

If we look at the top 20 publicly traded marketplaces, we see that their combined market cap increased ~63% in 2020.

Similarly, some of the largest public marketplaces, like Amazon, Etsy and Delivery Hero were boosted by changes in consumer behavior including spikes in online shopping and delivery.

Acquisition efficiencies increased with increased demand from consumers and merchants that resulted in favorable growth plus EBITDA pairing.

Take Etsy as an example: In the last quarter, it grew at a whopping 128% YoY compared to 32% the year before with EBITDA margin of 30% versus 15% from the year before.

But where some marketplace categories were propelled by COVID-19 tailwinds, categories like travel and fitness struggled against the headwinds created by the pandemic. This is where we saw some exciting innovation from startups — which tend to be more nimble than their public counterparts — adapted to the new normal. Take Classpass, which was originally conceived as a platform to connect gym goers with the right studio/fitness classes.

Chicago’s ShoppingGives gets served a seed round from Serena Williams’ VC firm, Serena Ventures

ShoppingGives, a Chicago-based startup pitching retailers a service that can integrate non-profit donations into their sales and shopping platforms, has raised an undisclosed amount from Serena Williams’ venture capital firm, Serena Ventures, the company said. 

ShoppingGives allows retailers to offer a donation on behalf of a shopper to any of over 1.5 million nonprofits that are on its list — all without leaving the retailer’s website.

The company said that retailers can use the donation data to create a more authentic and personalized engagement with customers based on the causes they support.

“ShoppingGives aligned with my values of investing in businesses and entrepreneurs who are making a difference. By creating opportunities to grow social impact with a seamless approach for retailers and brands, ShoppingGives is charting the course for all businesses to stand forth as agents of change in our society,”said Williams in a statement. 

The company’s technology helps retailers manage and report donations and is already recommended by Shopify as one of a collection of apps for merchants setting up their online stores. Its service integrates with ecommerce content management systems and is already a partner for the PayPal giving fund.

ShoppingGives has already donated to over 6,000 non-profit organizations selected by customers, according to the company. Brands like Kenneth Cole, Natori, White + Warren, Margaux, Solstice Sunglasses, Tomboyx, Fresh Clean Tees, Blind Barber, Huron, and Neighborhood Goods use the service already. 

Image Credit: ShoppingGives

Florida-based logistics provider ShipMonk raises $290 million on the back of rising eCommerce demand

Jan Bednar started ShipMonk with $70,000 in winnings from a string of student business plan competitions and launched the business that just closed on $290 million in new funding from a small warehouse with no air conditioning in the middle of Florida.

While Bednar’s new offices are still inside the warehouse his company operates, they now have air conditioning… and a $290 million financing round from Summit Partners to grow its business.

The Ft. Lauderdale, Fla.-based ShipMonk provides a slew of shipping and logistics services for small to medium-sized eCommerce businesses and right now — given the continuing COVID-19 pandemic — business is good.

We help SMBs and mid-market direct to consumer companies manage their supply chains. Help get their products from suppliers to facilities and connect with all of their sales channels including B2B … order management, transportation management, reverse logistics,” said Bednar. 

The company’s largest customers can book anywhere from $150 million to $250 million in revenue, but most of ShipMonk’s customers are actually small businesses pulling in between $1 million and $10 million on average.

It’s for these businesses that ShipMonk will fill its warehouses in Pennsylvania, California and Florida with 60,000 stock keeping units — managing around 50 different items for each customer it serves.

Bednar said ShipMonk would use the new cash to continue to upgrade its automation services and increase its staffing while also looking to expand internationally.

Profitable from the outset, ShipMonk just came off one of its best years, taking in upwards of $140 million in revenue. 

Bednar began the business alone, but quickly brought on co-founders Kevin Seitz, who handles marketing for the business, and Bosch Jares, a fellow native of the Czech Republic (like Bednar) who serves as the company’s chief technology officer.

The story of how Jares joined the business is indicative of the type of hustle that’s allowed Bednar to grow a booming tech and logistics business from the Ft. Lauderdale beaches.

It was the Florida weather that sold Jares, a college student from one of the Czech Republic’s top technical institutions, on the move to ShipMonk. Bednar had posted an internship opportunity to work (unpaid, but offering room and board) at his company on a college job board in the middle of January. The applications came pouring in, but it was Jares, a programmer who had been working with computers since age 14 who took the slot.

The rest… is ShipMonk history. Jares built the bulk of the backend for the company’s initial services spending nearly 20 hours a day coding.

 The thriftiness and hard work has won ShipMonk a booming business that has grown from 15,000 square feet of warehousing space into nearly 1 million square feet of storage space and a logistics service that spans the U.S. 

Timing for the new round couldn’t be better, as National Retail Federation estimates are banking on a 20% bump in new online sales — which could reach $202 billion this year. 

Black Friday alone raked in $9 billion in online purchases, according to data from Adobe Analytics provided by the company, and consumer spending is only going to continue to move online as the pandemic continues to threaten the health and safety of American consumers.  

ShipMonk’s technology integrates with shopping cart and marketplace platforms like Shopify to import orders across sales channels, which are then processed at the company’s warehouse locations. Customers can save up to 50% on their operational costs, according to the company.

“We believe ShipMonk truly demonstrates the power of a bootstrapped, durable growth mindset. Jan identified a significant gap in the market and, together with the ShipMonk team, has scaled the business in a deliberate and capital efficient manner to address that need. The results have been impressive,” said Christopher Dean, a Managing Director at Summit Partners who is taking a seat on the company’s board. 

 

Black Friday on track for $8.9B+ in online sales as shoppers stay away from brick-and-mortar stores

Black Friday — the day that launched 1,000 other shopping holidays — may have lost its place as the “start” of the Christmas shopping season by now (it gets bigger and earlier with each passing year). But the day after Thanksgiving still pulls in a crowd of buyers looking for a bargain and remains a major bellwether for tracking how sales will progress in what is the most important period for the retail and commerce sector.

Because of the Covid-19 pandemic, this year was definitely slimmer when it came to actual, in-person crowds — kind of a refreshing break from those times when you feel like it’s the worst of humanity when people are breaking out into fights over TVs at a local Walmart — but online it seems that sales did not disappoint.

Figures from Adobe, which is following online sales in real-time at 80 of the top 100 retailers in the U.S., covering some 100 million SKUs, said that we are “on track” for a new sales record for the day, with between $8.9 billion and $9.6 billion expected in sales online for Black Friday, a jump of 20%-29% on last year.

For some context, in 2019, Adobe tracked $7.4 billion in online sales, and yesterday it said that shoppers spent $5.1 billion on Thanksgiving, with more than $3 billion spent online each day in the week leading up to Thursday.

Adobe was still tallying the final numbers for the day as of this morning European time, so we’ll update this post with the final numbers as and when we get them.

Its analysts say that the evening tends to be big for online shopping — which makes sense since people might have been either going out in person during the day, or just doing something else on a day off.

Not all are in agreement that night time is the right time, however. Figures from Shopify — which analyses activity from the 1 million-plus merchants that use its e-commerce platform — said that the peak shopping hour on its platform was actually 9am Eastern, when there were as many as $3 million in sales per minute. The average cart size for US shoppers was $95.60, it added.

Interestingly, Shopify’s per-minute sales number underscores how the long tail of merchants are still quite a ways behind the very biggest: Adobe noted that its figures, across the sites that it tracks (which have at least $1 billion in annual sales) tally to $6.2 million spent per minute on Black Friday.

In either case, smartphones continue to be a major driver of how sales get made. Adobe said that as of 4pm Eastern some 41.5% of all sales were on handsets, a bit lower than the day before but 7% higher than in 2019. And just as was the case yesterday, it seems that smaller retailers are attracting more shoppers on mobile: Shopify said that some 70% of its sales are being made via smartphones.

We’ll see how all of that plays out later today also with the initial figures from “Small Business Saturday”, which is the latest of the shopping designations added to the holiday weekend, this one trying to hone focus more squarely away from major chains and big box merchants.

One big takeaway from the bigger weekend figures will be that offering items — electronics, tech, toys and sports goods being the most popular categories — at the right price will help retailers continue to bring in sales, in what has proven to be an especially strong year for online shopping after many have opted to stay away from crowded places due to the pandemic, but also a critical year for retailers because of the drag that the pandemic has had on the wider economy.

Cyber Monday is likely to continue to be the biggest of them all, expected to bring in between $11.2 billion and $13 billion in e-commerce transactions, up 19%-38% year-on-year.

Perhaps because of the shift to more online shopping, and the concern over flagging sales, it’s interesting that “holiday season” has also been extended and now comes earlier. Adobe said a survey of consumers found that 41% said they would start shopping earlier this year than previous years due to much earlier discounts. Recall too that Amazon’s Prime Day was delayed to start in October this year, an ‘event’ that many treated as a moment to get a jump start on holiday shopping.

“Black Friday is headed for record-breaking levels as consumers flock online to shop for both holiday gifts and necessities,” said Taylor Schreiner, director, Adobe Digital Insights. “Concurrently, it’s also worth noting that this year, we’re seeing strong online sales momentum across not only the major shopping days like Thanksgiving weekend, but throughout the holiday season as consumers spread out their shopping across several weeks in reaction to continued, heavy discounting from retailers.”

Xesto is a foot scanning app that simplifies shoe gifting

You wait ages for foot scanning startups to help with the tricky fit issue that troubles online shoe shopping and then two come along at once: Launching today in time for Black Friday sprees is Xesto — which like Neatsy, which we wrote about earlier today, also makes use of the iPhone’s TrueDepth camera to generate individual 3D foot models for shoe size recommendations.

The Canadian startup hasn’t always been focused on feet. It has a long-standing research collaboration with the University of Toronto, alma mater of its CEO and co-founder Sophie Howe (its other co-founder and chief scientist, Afiny Akdemir, is also pursuing a Math PhD there) — and was actually founded back in 2015 to explore business ideas in human computer interaction.

But Howe tells us it moved into mobile sizing shortly after the 2017 launch of the iPhone X — which added a 3D depth camera to Apple’s smartphone. Since then Apple has added the sensor to additional iPhone models, pushing it within reach of a larger swathe of iOS users. So you can see why startups are spying a virtual fit opportunity here.

“This summer I had an aha! moment when my boyfriend saw a pair of fancy shoes on a deep discount online and thought they would be a great gift. He couldn’t remember my foot length at the time, and knew I didn’t own that brand so he couldn’t have gone through my closet to find my size,” says Howe. “I realized in that moment shoes as gifts are uncommon because they’re so hard to get correct because of size, and no one likes returning and exchanging gifts. When I’ve bought shoes for him in the past, I’ve had to ruin the surprise by calling him – and I’m not the only one. I realized in talking with friends this was a feature they all wanted without even knowing it… Shoes have such a cult status in wardrobes and it is time to unlock their gifting potential!”

Howe slid into this TechCrunch writer’s DMs with the eye-catching claim that Xesto’s foot-scanning technology is more accurate than Neatsy’s — sending a Xesto scan of her foot compared to Neatsy’s measure of it to back up the boast. (Aka: “We are under 1.5 mm accuracy. We compared against Neatsy right now and they are about 1.5 cm off of the true size of the app,” as she put it.)

Another big difference is Xesto isn’t selling any shoes itself. Nor is it interested in just sneakers; its shoe-type agnostic. If you can put it on your feet it wants to help you find the right fit, is the idea.

Right now the app is focused on the foot scanning process and the resulting 3D foot models — showing shoppers their feet in a 3D point cloud view, another photorealistic view as well as providing granular foot measurements.

There’s also a neat feature that lets you share your foot scans so, for example, a person who doesn’t have their own depth sensing iPhone could ask to borrow a friend’s to capture and takeaway scans of their own feet.

Helping people who want to be bought (correctly fitting) shoes as gifts is the main reason they’ve added foot scan sharing, per Howe — who notes shoppers can create and store multiple foot profiles on an account “for ease of group shopping”.

“Xesto is solving two problems: Buying shoes [online] for yourself, and buying shoes for someone else,” she tells TechCrunch. “Problem 1: When you buy shoes online, you might be unfamiliar with your size in the brand or model. If you’ve never bought from a brand before, it is very risky to make a purchase because there is very limited context in selecting your size. With many brands you translate your size yourself.

“Problem 2: People don’t only buy shoes for themselves. We enable gift and family purchasing (within a household or remote!) by sharing profiles.”

Xesto is doing its size predictions based on comparing a user’s (<1.5mm accurate) foot measurements to brands’ official sizing guidelines — with more than 150 shoe brands currently supported.

Howe says it plans to incorporate customer feedback into these predictions — including by analyzing online reviews where people tend to specify if a particular shoe sizes larger or smaller than expected. So it’s hoping to be able to keep honing the model’s accuracy.

“What we do is remove the uncertainty of finding your size by taking your 3D foot dimensions and correlate that to the brands sizes (or shoe model, if we have them),” she says. “We use the brands size guides and customer feedback to make the size recommendations. We have over 150 brands currently supported and are continuously adding more brands and models. We also recommend if you have extra wide feet you read reviews to see if you need to size up (until we have all that data robustly gathered).”

Asked about the competitive landscape, given all this foot scanning action, Howe admits there’s a number of approaches trying to help with virtual shoe fit — such as comparative brand sizing recommendations or even foot scanning with pieces of paper. But she argues Xesto has an edge because of the high level of detail of its 3D scans — and on account of its social sharing feature. Aka this is an app to make foot scans you can send your bestie for shopping keepsies.

“What we do that is unique is only use 3D depth data and computer vision to create a 3D scan of the foot with under 1.5mm accuracy (unmatched as far as we’ve seen) in only a few minutes,” she argues. “We don’t ask you any information about your feet, or to use a reference object. We make size recommendations based on your feet alone, then let you share them seamlessly with loved ones. Size sharing is a unique feature we haven’t seen in the sizing space that we’re incredibly excited about (not only because we will get more shoes as gifts :D).”

Xesto’s iOS app is free for shoppers to download. It’s also entirely free to create and share your foot scan in glorious 3D point cloud — and will remain so according to Howe. The team’s monetization plan is focused on building out partnerships with retailers, which is on the slate for 2021.

“Right now we’re not taking any revenue but next year we will be announcing partnerships where we work directly within brands ecosystems,” she says, adding: “[We wanted to offer] the app to customers in time for Black Friday and the holiday shopping season. In 2021, we are launching some exciting initiatives in partnership with brands. But the app will always be free for shoppers!”

Since being founded around five years ago, Howe says Xesto has raised a pre-seed round from angel investors and secured national advanced research grants, as well as taking in some revenue over its lifetime. The team has one patent granted and one pending for their technologies, she adds.

CVS becomes first national retailer to offer support for PayPal and Venmo QR codes at checkout

PayPal announced this morning that its customers can now use either PayPal or Venmo QR codes when checking out at over 8,200 CVS retail stores across the U.S. This is the first national retailer to integrate PayPal’s QR code checkout technology at point-of-sale, the company noted. The additional checkout option will also expand the number of ways customers can pay “touch-free” at CVS — a way to transact that’s become increasingly popular as the coronavirus outbreak continues to spread across the country.

CVS and PayPal announced their plans to cooperate on a point-of-sale solution back in July. At the time, they pegged the timeframe for the rollout as sometime in Q4 2020.

The QR code checkout process itself will pull the funds needed for the purchase from the customer’s existing PayPal or Venmo account balance, bank account, or from a debit or credit card, just as it would if the transaction was taking place online. Venmo users will additionally have the option to utilize their Venmo Rewards.

Image Credits: PayPal

The transaction does not include any fees, PayPal says. Plus, CVS’ ExtraCare Rewards Program members will still be able to redeem and apply savings using their ExtraCare account when using PayPal’s QR code checkout.

The entire transaction can be touch-free, as it involves QR code scanning as opposed to using a card that has to be swiped or inserted into a terminal or numbers punched into a keypad.

The new option arrives at a time when CVS says it’s seeing increased demand for contactless payments.

Since January, CVS has seen a 43% increase in touch-free transactions, according to data from Forrester. In addition, 11% of the U.S. population says they’re now using a digital payment method for the first time as a result of the pandemic, PayPal noted. The company’s own research also indicated that 57% of consumers said merchants’ digital payment offerings impacted their decisions to shop in their stores.

To use the new QR code checkout option, customers will first launch either their PayPal or Venmo app, click the “Scan” button, then select the “show to pay” option.

The new checkout experience was made possible through PayPal’s partnership with payments technology provider InComm, which distributed the PayPal QR code technology through its cloud-based software updates to make the feature available at point-of-sale.

While CVS is the first national retailer to rollout PayPal’s QR code checkout, PayPal said it has 10 other major retailers signed up for a similar rollout, including Nike, Tumi, Bed Bath & Beyond, and Samsonite, among others. It’s in discussions with well over 100 large retailers about the technology, as well.

“The launch of PayPal and Venmo QR codes in CVS Pharmacy stores will not only provide health-conscious customers with a touch-free way to pay at checkout, but also brings the safety and security of PayPal and Venmo transactions into the store with shoppers,” said Jeremy Jonker, PayPal Senior Vice President Head of Consumer In-Store and Digital Commerce, in a statement. “We are thrilled that PayPal and Venmo QR codes will help to maintain the safety of CVS customers and employees, especially in the essential pharmacy retail environment as we go into the winter months.”

In addition to the CVS news, PayPal today also noted that its recently announced “Pay in 4” option for splitting purchases across four installments is now fully live across millions of retailers.