Technology

YC Grad RetailReady Raises $3.3 Million for AI-Powered Warehouse App That Hopes to Save Billions for Brands

RetailReady, a six-month-old startup founded by recent YC winter 2024 cohort graduates Elle Smyth and Sarah Hamer, has identified an overlooked area of the warehouse/shipping industry that costs retail brands a staggering $40 billion annually. The founders have developed a tablet app that replaces paper warehouse manuals, which document packing instructions, to help reduce compliance losses incurred by shippers.

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A Problem Waiting to be Solved

Smyth and Hamer’s journey began while working together at supply chain unicorn startup Stord. They bonded over their shared passion for the supply chain industry, often referred to as an "engineer’s playground" due to its complex problems waiting to be solved. After getting accepted into Y Combinator, they left Stord to work on their startup idea in earnest.

"We met each other and bonded over our love for the supply chain industry," Smyth told TechCrunch. "We call it an engineer’s playground. There is no lack of problems to be solved there."

The Unseen Opportunity

RetailReady’s tablet application targets the $40 billion compliance market, where retail brands incur significant losses due to incorrectly shipped packages. The company uses a double batch of AI technology, including large language models and computer vision, to help reduce improperly shipped items.

Large Language Models: These AI-powered models ingest shipping requirements manuals, providing detailed instructions for warehouse workers.
Computer Vision: This technology validates compliance by analyzing the packing process in real-time.

The supply chain and logistics industry is a massive market, with numerous legacy and startup companies competing for a share of it. However, RetailReady has identified a niche opportunity by replacing paper warehouse manuals with a digital version that provides workers with directed workflows on how to pack orders correctly.

A Niche Opportunity

Warehouse workers currently rely on "phone book-sized" manuals containing information such as:

How to compliantly pack orders
Folding apparel in a specific way
Placing RFID tags and labels depending on product category

If shipping/warehouse workers don’t follow these instructions correctly, retailers charge brands fees, known as chargebacks. On average, brands lose 3% of their invoice due to non-compliance.

A Digital Solution

RetailReady’s tablet application replaces these manual processes with a digital version that guides workers through the packing process. The app is currently in development and will soon feature computer vision capabilities to validate compliance in real-time.

"We’re really excited about continuing from the product side, including our computer vision module where we will begin photo capturing the workers’ process so we can actually validate whether or not they did it correctly," Smyth said.

Growth and Funding

Although Smyth was tight-lipped about growth figures, she revealed that six months after launching RetailReady, the company has onboarded six customers. The startup works with brands, warehouses, and retailers.

To further accelerate growth, RetailReady raised $3.3 million in seed funding from investors such as Wischoff Ventures, Y Combinator, 640 Oxford, Lombardstreet Ventures, Duke Capital Partners, and a group of angel investors.