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Punchh-ing For Retailers

Brick-and-mortar retailers are increasingly worried that ecommerce (AKA Amazon) will take their customers and leave them bankrupt. And, they’re not wrong to fear this outcome with so many retailers, like Toys’R’us, Sears, RadioShack, Payless, etc., going bankrupt. Paradoxically, Amazon recently made its largest acquisition when it acquired Whole Foods, a brick-and-mortar grocery store, and it is also opening retail stores across the country. Why the sudden interest in brick-and-mortar? Amazon knows that 90% of worldwide retail spending is still in brick-and-mortar stores, and will likely stay that way, because online shopping can never provide the same experience as a retail store where customers can touch and feel the goods they are looking to purchase.

Brick-and-mortar retailers are much more worried about this latest development from Amazon, since it has the chance to change and dominate brick-and-mortar retail by tailoring the retail experience for each customer through automation and data-mining technologies from its ecommerce business. To compete, traditional retailers need a friend on their side who can provide them with the same automation and data-mining technologies for in-store customer experience that Amazon has built and refined in ecommerce.

Today, we are excited to announce our investment in Punchh (“Company”), which enables brick-and-mortar retailers to acquire and retain customers while increasing the total amount that a customer is spending with that retailer. The Company’s AI and machine-learning driven products allow retailers to analyze, communicate and grow relationships with customers by incorporating and acting on the right data at the right time. Punchh has built its enterprise-grade products on a cloud-based platform that works for both retailers with nascent IT capabilities and the ones with deep IT capabilities. By tapping into Punchh’s comprehensive out-of-the-box functionality and significant customizability, retailers can roll out bespoke solutions in just weeks — in other words, compete at the “speed of Amazon”.

Gartner estimates that only one-quarter of retailers have a consistent, unified view of customer information across the organization. Punchh not only unifies all the customer information data into one “system of record” but also enables retailers to build behavioral loyalty with their customers by understanding who their best customers are, how they behave, and identifying ways to tap into and stay attuned to their evolving needs.

The world of brick-and-mortar retailers is moving towards an era where stores will be check-out free — cameras and sensors will track what shoppers remove from the shelves and what they put back. Cash registers and checkout lines will become superfluous — customers will be billed after leaving the store using credit cards on file. Attracting the customer to the store, stocking the right type of goods for these customers and being able to upsell these customers with impulse purchases while in the store all become tantamount to success. The Punchh product roadmap over the next several years is specifically designed to help retailers on this journey.

The founding team at Punchh built their business without the luxury of raising mega rounds, and battled against bigger and more well-financed competitors, all of whom have since fallen by the wayside. This frugal beginning has allowed the Punchh founders to truly understand how it feels to be the underdog, empathize with the brick-and-mortar retailers it sells to, and build a very efficient business model.

In the past, we at Sapphire Ventures have helped businesses with efficient business models i.e. high net revenue retention rates and very efficient sales models, scale into global category leaders. We are excited to help the Punchh team scale and expand internationally on their journey to become the savior of brick-and-mortar retailers in their fight to stay relevant.