We have been seeing a global phenomenon of retail innovations driven by shifts in consumer behaviors which in return created new consumer behaviors. Today 79% Americans are shopping online, comparing to 22% back in 2000. There is a lot that technology can do to enable new ways for consumer to interact with brands, make purchase decisions, and receive the goods they purchase. There is a tremendous potential for new retail and a company that I found really interesting is Lumi, a startup that supplies and designs customized packaging for direct-to-consumer e-commerce companies.
New retail is In the U.S. we have new retail innovations in multiple fronts: Giants like Amazon are using various technologies to enable cloud, online retail, and logistics in many ways and created human-less retail such as Amazon Go; startups adopt vertical commerce subscription model like Dollar Shave Club, direct to consumer model such as Casper, food and grocery delivery such as Doordash and Instacart, meal kit delivery such as Blue Apron, and discovery-based mobile-app-only model such as Wish. These innovators create new categories and encourage more consumers to try new and more convenient ways to make purchases.
In China, new retail is enhanced by the mature mobile payment infrastructure. With majority of the population making purchases with payment apps on mobile phone, Alibaba can achieve online to offline and back to online with their mobile payment tool Alipay and dominating ecommerce platforms Taobao and Tmall. For example, if a user views an item on Taobao and later purchases offline with Alipay, Alibaba can now take credit of that purchase because it has visibility into user’s entire decision loop — data online and offline is now linked to a single identity. Moreover, Alibaba is providing their technology to the 6 million convenient stores in China in the form of data analytics and logistics management software as a service. That’s 40x of number of 711 and gas stations in the U.S. and this effort will enable all the traditional brick and mortar shops to manage their inventories in a much more efficient way. Having these retail stores adopt Alibaba’s technology in turns enables Alibaba’s other services such as grocery delivery, logistics, and credit rating among others.
Net retail is really about making the connection across payment, delivery, logistics, purchase, financing, online and offline and using the data to optimize the efficiency of the retail industry. I believe with these new business models and advancement in machine learning, we will be able to create tremendous value in this space in the next 10–15 years.
A company that I think is really interesting in the new retail space is Lumi. Instead of building just another new retail brand, Lumi is building the infrastructure to solve all shipping packaging problems for all new retail startups. They have a great position to disrupt the $36.4 billion market for corrugated and paperboard boxes in the U.S. which is only growing faster and faster as more consumers purchase from online retailers.
The shipping packaging market is very interesting as more and more e-commerce companies sell direct-to-consumer via shipping. For these companies, the shipping box is the first physical interaction that customers have with their brands and their products, thus the unboxing experience has become very meaningful for the brand story. Lumi helps all of these e-commerce startups to focus on their core products and customer experience.
Lumi also provides flexibility and scalability on packaging supply chain by creating the Lumi Dashboard. Traditional packaging supply chain is designed for companies that grow slowly and regionally, which can be very inefficient for startups who try to grow fast and want their physical supplier to behave like digital infrastructures such as AWS. Lumi Dashboard solves this problem by centralizing many individual suppliers. Each item is abstracted into specifications and the best factory for each job is picked based on criteria for cost, quality and lead time — the Dashboard can locate manufacturing within 50 miles of almost any distribution center in the United States. It also provides flexibility to re-locate fulfillment to other regions of country.
Lumi has a great team, Jesse Genet and Stephan Ango, who have strong history of working together. They previously founded and worked on Incodye together for 5 years. Incodye developed sunlight-activated fabric dye, raised over $270k on two Kickstarters, and sold the product into 1500+ retail stores around the world to generate 7 digit revenue.
Lumi also already has strong traction. They have many customers including WSJ, Field Co, and Parachute. They have created a platform that enables creativity in packaging, and their YouTube channel has become must-watch content for any e-commerce startup. They raised their $9M Series A in February 2018, led by top investors including Spark Capital, Forerunner Ventures and Homebrew.
I believe the new retail space is very interesting with countless innovations enabling a new generation of infrastructure for everyone’s better living. Lumi has a great angle to tackle a very interesting segment of the new retail space, and I am very excited for both the new retail space and Lumi as a company.
