Syte snaps up $21.5M for its smartphone-based visual search engine for e-commerce
Visual search has become a key component for how people discover products when buying online: if a person don't know the exact name of what he or she wants, or what they want is not available, it can be an indispensable tool for connecting them with things they might want to buy.
Now, one of the companies building technology to do this has raised a round of funding to expand its business further into the US, and not just across digital platforms, but to tap further into the opportunities of bringing visual search into the world of physical commerce, too, by way of smart mirrors and apps for store assistants to better help customers.
Syte, a Tel Aviv startup that works with fashion retailers like Farfetch and River Island as well as those who sell a wider variety of goods like Argos, Sainsbury's and Kohl's, has raised $21.5 million in funding. The Series B was led by Viola Ventures, with participation also from Storm Ventures, Commerce Ventures, and Axess Ventures. Syte has now raised $32 million including a previous round in 2017; it's not disclosing its valuation but is projecting 300 percent revenue growth this year.
The use of visual search - using computer vision to "read" a picture, match it up with its metadata, and then find pictures of products that are similar to it - has become commonplace in e-commerce in recent years.
Among the many other companies that have this kind of tech - including visual search platforms like Pinterest and social media platforms themselves - Syte's approach is notable in how it engages shoppers in the process of the search. Users can snap pictures of items that they like the look of, which can then be used to on a retailer's site to find compatible lookalikes. Retailers, meanwhile, can quickly integrate Syte's technology into their own platforms by way of an API.
Lihi Pinto Fryman, Syte's CMO who co-founded the company in London with husband Ofer Fryman, Idan Pinto and Dr Helge Voss, said in an interview that the company spent about three years developing its technology - spurred initially by her own surprise, when she was working as an investment banker, at not being able to find a particular dress she spotted in a magazine - and only launched a product about 18 months ago. Since then, she says the company has seen "super hyper" growth because of the gap the company is filling.
The crux of the problem goes something like this: Retailers both online and offline have found that a new generation of shoppers are less interested in visiting their storefronts.
They are instead shopping by browsing social media platforms like Instagram and buying from there, which essentially opens those retailers to whole new set of competitors, and potentially at a great disadvantage, since they are not as well equipped to speak to that audience or anticipate what interests them to trigger sales.
"Young people are on Instagram for hours each day," Fryman said. Indeed, Instagram is one of the only big social networks that's seeing usage rise at the moment. "Retailers need to find a way to compete with that and remain in the market, and they can't just continue what they've always done."
On the other hand, while there are a number of visual search tools out in the market, not all of them are useful enough. "If you are searching for a ruffled floral yellow dress but you get a blouse, it just doesn't cut it," she noted. "And if it takes seven seconds to get an answer, that's also not good, because people will give up after 2 seconds. Millennials and Gen Z shoppers have a very short attention span, so you need to be accurate and fast."
The idea is that a product like Syte's addresses both of these issues, and then some. In addition to its camera-based search service, it provides a recommendation engine to retailers, plus tagging services for its back catalog to complete the service.
"Rarely do we find companies that have managed to solve a technological problem that tech giants have been working for years to solve without success," says Ronen Nir, General Partner at Viola Ventures, in a statement. "The feedback from the market is clear and swift and the rate of adoption of Syte's solution is unparalleled. We are excited to lead a significant funding round that would be able to take the company to the next level."
Syte's more recent foray into physical commerce is an interesting turn as well. Smart mirrors have been more of a wishlist item than something that has seen critical mass adoption so far in changing rooms.
If the idea does catch on, I wonder what kind of a digital divide it might create among retailers, since the cost of refurbishing changing rooms to include these, along with all the backend changes that would need to be made, will likely be only the kind of service that bigger or high-end boutiques will be able to shoulder. More interesting, perhaps, is the idea of app-based tools for assistants, many of whom already carry a smartphone and would likely be grateful for recommendations to help sell better to customers.
"We have a vision to transform product discovery, and thus the eCommerce experience, for both retailers and consumers." said Ofer Fryman in a statement. "That vision is what has led us since we founded Syte, and it is what continues to lead us as we enter this stage."