Amazon has challenged traditional retail business phenomenally with its home delivery and ability to combine technology solutions with efficient in-house processes. The retail space has shrunk in size partly owing to their laggardness in adopting new technology to enhance customer experiences. Relex, a retail technology company based in Finland has raised $200 million from TCV, a VC giant.
Relex helps retail businesses and e-commerce companies other than Amazon to compete better with the e-commerce giant. The company uses AI and machine learning tools to help brick-and-mortar companies to make forecasts about which products may sell and based on that guides them to decide what stock of goods should be raised or lowered. The investment came from TCV venture capital firm which has previously backed Splunk, Spotify, Airbnb, Netflix, and Facebook. The firm recently announced a $3 billion fund to invest in IT infrastructure and services and consumer internet.
Relex has been very capital efficient which has raised between $20 -$30 million from Summit Partners. The company has not revealed its total valuation; however, the new round of investment being a minority shareholding only, would value the company between $400 million to $500 million.
The company has quietly grown to attract customers such as supermarkets UK’s Morrisons and Albertsons in the USA. Relex which was cofounded by Michael Falck, Johanna Smaros and CEO Mikko Karkkainen, has not made it to the news owing to the earlier small VC investment. Mr. Karkkainen said that the company’s sales have been growing by 50% every year from some time which they are planning to accelerate with the new investment.
Mr. Karkkainen said although its current competition includes management systems form Oracle, JDA and SAP, they are far behind what Relex offers as the former are legacy services which has not yet taken advantage of AI and machine learning. In contrast to these, Relex uses cloud computing and AI to provide better retail solutions to customers.
The CEO described his company as an ‘’antidote to Amazon’’. Amazon emerged as the biggest player in e-commerce due to its investment in technology. Other retailers lagged behind as they are no tech companies. The company’s main customers are brick-and-mortar stores as they are facing the challenge of managing real estate and shelf space costs. The company is also working with some e-commerce companies who are also facing the same challenge of competing with Amazon.
The funding will help Relex to expand in US where the demand for retail technology solutions is the largest at the moment.