Target taps start-ups for technology to compete with Amazon, Walmart

The company has built a product to allow customers to walk through a virtual house

To offer a differentiated buying experience compared to rivals Walmart and Amazon, the United States (US) retail giant Target has built a product to allow customers to walk through a virtual house and pick any decor or furniture product they see in it.

While several retailers have begun working on ways to help customers experience products such as furniture, which people want to touch and feel before making a purchase, virtually, Target's efforts in this were aided by a tiny company based in Bengaluru.

House of Blue Beans, a 3D visualisation start-up, that was part of Target India's accelerator programme, has now become an integral partner in helping the retail giant develop its computer generated imaging (CGI) capabilities. For now, customers can walk through virtual rooms on their desktops, but soon the tool will evolve to include Augmented Reality (AR) and Virtual Reality (VR).

"We worked with them as a part of our cohort, we saw their potential, then they became our strategic partner and now we continue to work with them. Fundamentally, what they brought offered a differentiating product for our home category. That's a case that was a huge win," said Rakesh Mishra, vice-president of Marketing at Target.

Like with House of Blue Beans, Target is working with another startup Discover Dollar which analyses bills and helps retailers save money by capturing overpayments. Discover Dollar too was part of Target's accelerator programme, which recently announced the fifth batch of startups it's going to be working with.

So far the US firm has seen 22 start-ups graduate from its programme, many of which it has worked with and continues to work with. Mishra, who heads the accelerator in India, says by being focused solely on solutions that help improve existing retail models or innovate in the space, the accelerator has had a high hit rate.

Two more start-ups — Story Express and Find Me a Shoe — that participated in its accelerator in India are now part of Target's global TechStars accelerator in Minneapolis. While Target has participated in funding rounds of some of the start-ups it helped, it says funding isn't a focus and all the investments that were made were quite small.

"What differentiates us from other accelerators is that at Target we are extremely focused on our customers. So when we see startups in the ecosystem, the first thing we look at is what capabilities will they bring to improve the experience for our guests, aka consumers," adds Mishra.

For its fifth batch of start-ups, Target has picked Hyperworks that uses deep vision technology to identify products, potentially eliminating barcode scanners at store checkouts; Moonraft, which is building a virtual design consultant that can help customers pick the right clothes in trial rooms; and Jumper.ai that will enable shopping on social networks through the use of hashtags.

Target has selected eight start-ups for its latest accelerator batch, with a few companies focusing on natural language processing that will enable customers to search for products online using voice and even help visually challenged customers to use its platform. The company says it picks start-ups that can help it improve the experience of shopping both online and offline.

"The work these start-ups are doing has to complement or supplement what we're already working on at Target. Sometimes the solutions they build end up leading our efforts, at other times they support what we've built internally. The end result is that it's always integrated to where we want to go," said Mishra.