In-Store Shopping Getting the AI Touch – San Diego Business Journal

ENCINITAS – Victor Chan, co-founder and CEO of local startup Machyna, Inc., wants to help brick-and-mortar grocery stores stay competitive with online shopping, and says his company’s “smart carts” and “smart baskets” will do just that.

Machyna’s carts and baskets use computer vision, sensors and Artificial Intelligence to identify bar codes on items placed inside and allow people to purchase products and skip the checkout line. Machyna’s products are less costly than competitors’ carts and are focused on making data capturing a breeze for supermarket personnel.

“The shopping cart has largely been the same since its invention more than 80 years ago and is prime for disruption with the convergence of data, IOT and AI,” Chan said. “Data brings useful product information to the physical shopping experience and IOT provides battery-powered helpful services to shoppers while they are actively shopping.”

Chan said that while data is widely recognized as “the gold mine of the digital age,” and well-monetized by companies like Amazon (Nasdaq: AMZN), Meta (Nasdaq: META) and Google (Alphabet Inc., Nasdaq: GOOGL), “the in-store data, specifically the customer behavioral data inside a store, is currently not captured or utilized.”

Co-founder Raylen Li said he and Chan especially believe that “the democratization of AI is especially key to unlocking its full potential, enabling us to solve even the most niche problems for everyone, everywhere.”

Machyna, which is derived from the Latin phrase “‘deus ex machina,’ which literally means ‘god out of the machine,’” Chan said, has kept its initial focus on supermarket chains, but is looking toward expanding to other retail stores as well.

Machyna will be bringing its prototype to a grocery chain the northeast part of the United States later this month.

Smart Cart Industry Expanding Quickly

Studies by Research and Markets said that the smart shopping cart market size has grown exponentially in the last few years and reports the industry will grow from $1.33 billion in 2023 to $1.72 billion in 2024 at a compound annual growth rate of 28.7%. The smart shopping cart market size is expected to grow to $4.32 billion in 2028.

Amazon was one of the early leaders in smart carts, with its Dash Carts available starting in 2020 at some Whole Foods markets, Amazon Fresh stores as well as some third-party grocery stores. Dash Carts replaced the company’s “Just Walk Out” technology, which it launched in 2018 for its Amazon Fresh grocery stores.

Instacart’s (Nasdaq: CART) Caper is also a major player in the smart cart world, as are Veeve and Cust2mate from A2Z Smart Technologies (Nasdaq: AZ)

Chan said that Amazon is able to generate 34% of their online sales through cross-sales, “yet only a meager 1% cross-sales are currently generated by supermarkets.”

“This is because currently there is little to no ability to engage a shopper interactively while they are shopping in the store,” he said. “With SmartCarts and SmartBaskets we will be able to engage customers at the very beginning and throughout their in-store shopping journey.”

Machyna has developed its lower-cost SmartCarts using smaller batteries and less expensive components that can compete with Dash Carts as well as other competitors like Caper, and Chan said it is the first to offer hand-held SmartBaskets that capture and leverage in-store data.

“Most AI solutions that capture the public’s imagination today is server or cloud-based,” he said. “However, there is actually a just as big, if not even bigger market in the low-power AI, where the value-add of AI can be massively deployed in small battery-powered devices running highly customized low-power AI algorithms. That’s Machyna’s industry.”

Li said Machyna’s approach to self-checkout capitalizes on the company’s “clever use of low-power machine learning algorithms and readily available technology to revolutionize the shopping experience.”

Machyna’s streamlined design and usage of the cart as well as the backend integration and onboarding process for new retailers set it apart, Li said.

“Modular software systems and commoditized hardware make it easy to deploy and maintain globally – even in fast environments where products vary wildly and change constantly,” Li said.

Early Funding and Recent Praise

Machyna has been financed through “angels from family members,” Chan said, who invested under $100,000 at the inception of the company. He said the company is currently financed through an engineering contact with a Fortune 500 company.

Machyna is currently raising a Seed Round of $3.5 million and has developed two working prototypes “that have a CapEx ROI that is twice as quick as our closest competitor,” Chan said.

“We will be using the new capital to scale the team for GTM and for productization,” said Chan, who plans to grow to the equivalent of 10 full-time employees with the Seed Round funding.

The company is currently getting its prototypes productized and is in talks with a supermarket chain for trial and has “solution importers in Asia and South America ready to place orders once tour solutions are productized,” Chan said.

When Machyna showcased its first SmartCart prototype at National Retail Foundation’s annual Big Show in 2023 in New York, Chan said personnel “from one of the largest U.S. supermarket chains came by and spent about 20 minutes with the SmartCart.”

“After examining it, they were so impressed that they exclaimed, ‘You guys are definitely in the Top 5 (amongst SmartCart vendors),’” Chan said. “That was a big affirmation that we belong. Frankly, I think we now have amongst the top two to three best solutions in the market.”

Li acknowledged that Machyna’s biggest challenge seems to be its small size.

“We’re the classic small fish in a big pond where every other fish is an order of magnitude bigger than yourself,” he said. “However, we try to use that challenge in our favor. While our competitors are able to make big strides and invest heavily into their decisions, we try to stay quick on our feet and use our flexibility to our advantage.

“As new advancements in technology and AI arise, we are able to quickly adjust our tactics and use them to our advantage. This is where I think our company has really put its best foot forward. We have continually refined our product according to the latest technological trends and have adapted to become a formidable foe in the face of the giants.”

Machyna, Inc.
FOUNDED: 2021
CO-FOUNDER AND CEO: Victor Chan
CO-FOUNDER: Raylen Li
HEADQUARTERS: Encinitas
BUSINESS: B2B
REVENUE: Pre-seed
EMPLOYEES: 2 FT and several PT
WEBSITE: machyna.com
CONTACT: info@machyna.com
SOCIAL IMPACT: Implicit goal is to help brick and mortar businesses compete with online physi-cal retailers can continue to play a vital role in society by offering added value.
NOTABLE: CEO Chan started Qualcomm Research’s Machine Learning team in 2007 and led it for a decade. He has more than 30 U.S. issued patents and while at Qualcomm, helped commercialize the industry’s first CV-sensor.