SUNDAY, MARCH 26, 2017 Startup is off to good start at Wal-Mart
Retailer’s 2014 acquisition has checkouts going mobile
Berk Atikoglu admits he didn’t think of Wal-Mart Stores Inc. as a technology company when the world’s largest retailer came calling nearly three years ago.
Atikoglu, who had partnered with fellow Stanford graduate Eytan Daniyalzade to create a retail startup called Stylr, said it only took a few conversations with the company’s Silicon Valleybased research and development center to be convinced otherwise. So when @WalmartLabs, the online technology and innovation arm of the company, made an offer to buy the startup and bring Atikoglu and Daniyalzade onboard, he welcomed the opportunity.
“At the time we were talking to Wal-Mart, we were in talks with a couple of other companies, as well,” Atikoglu said. “They were very techfocused companies. But we didn’t find any of them as compelling. They weren’t even near Wal-Mart in terms of the impact we could have.”
The acquisition has been productive for the software engineers and the Bentonville-based retailer.
Daniyalzade, 31, and Atikoglu, 30, were the driving force behind the development of Scan & Go, a mobile application that allows Sam’s Club members to skip the checkout line by scanning items as they shop and paying for them on their mobile devices. The technology was rolled out nationwide by the company’s warehouse division last year and a similar version of Scan & Go is now being tested in Wal-Mart Supercenters in Rogers, Orlando, Fla., and Tomball, Texas.
The software engineers are also part of an outfit that has developed other mobile applications aimed at improving shopping for customers, including Walmart Pay and recent improvements designed to speed up the process in the pharmacy and financial services sec-
tions of Wal-Mart stores.
Those types of tools, and Wal-Mart’s commitment to acquiring the technologists who develop them over the past few years, have been integral in establishing a seamless experience for shoppers, which one retail expert said is key as it competes with the likes of Amazon.com.
“Acquisitions like Stylr are really about how Wal-Mart can leverage its store base with technology to create a richer experience that Amazon doesn’t yet have because they’re only building a few stores at the moment,” said Chris Petersen, the founding partner and chief executive officer of Integrated Marketing Solutions Inc. in Omaha, Neb. “The innovation technology in terms of checkout, Scan & Go, and store-based [artificial intelligence] are those kinds of things that are going to make the difference with Wal-Mart core customers that are already shopping in store.”
FORMING A TEAM
Daniyalzade and Atikoglu began recognizing the opportunity to make an impact in retail not long after they met while attending Stanford. Both are natives of Turkey and played on the same soccer team, which helped them forge a friendship that would eventually lead to a business partnership.
It took a few years to get started. Daniyalzade finished his master’s degree at Stanford and began a career in the San Francisco Bay area, while Atikoglu continued to work on his doctorate degree. A couple of years later, Daniyalzade decided to take a position at a company in New York. Although Atikoglu stayed behind at Stanford, the two remained in touch and talked about starting their own company.
“We were more or less waiting for the right time.,” Daniyalzade said. “But all along we were bouncing back ideas. At some point, we found what we wanted to pursue and as he was finishing up his Ph.D. we started working on the idea.
“Once he finished it, I left my job, he moved out to New York and we kicked it off.”
Stylr was developed to provide shoppers with a way to search for clothes available in nearby stores, solving what Atikoglu and Daniyalzade perceived as a lack of transparency between businesses and customers. The retailbased startup was funded by New York-based incubator Dreamit Ventures and had enough success for others to notice.
It included Wal-Mart, which had been in the process of snapping up startups — and their founders — to strengthen its e-commerce and technology capabilities. When @WalmartLabs bought Stylr for an undisclosed amount in June 2014, it was the 13th acquisition in three years.
FROM SMALL TO HUGE
“It was exciting because being within Wal-Mart would allow us to take all the ideas we had and be able to implement that within the context of the world’s largest retailer,” Daniyalzade said. “But at the same time, it was quite different mentally switching from a very small company to the world’s largest.”
The good news, according to Daniyalzade and Atikoglu, is that the first six months of their work with @WalmartLabs felt much like a startup. A small team of Daniyalzade, Atikoglu and another designer were given time to come up with a way to solve the problem of checkouts in physical stores.
The idea had been introduced by Wal-Mart a few years ago, but the testing phase never led to a larger rollout. Daniyalzade believes one of the sticking points was the fact that, while customers could scan items as they shopped, they still had to go through the checkout lane to finish the transaction.
So Daniyalzade and Atikoglu decided the latest iteration would be different by providing mobile payment capability inside the Sam’s Club Scan & Go app. Now, customers only have to show their receipts to a Sam’s Club employee stationed at the front door on the way out of the store.
“What we created was fundamentally different [from] five years ago,” Daniyalzade said.
SCAN & GO A GO
Sam’s Club began testing Scan & Go in two clubs in the summer of 2015. It extended it to a few more in February 2016. During much of that time, Daniyalzade and Atikoglu remained closely connected to customers trying the tool through a chat function, which allowed them to ask questions or voice issues.
The constant pinging kept them busy, but Atikoglu said it proved convenient for both sides.
“If something goes wrong for the customer they’re looking for somebody to talk to,” Atikoglu said. “So this way they can talk to us and feel much better. On our side, we can learn from customers directly and improve our product and experience much faster.”
Eventually, Sam’s Club decided to roll Scan & Go out to all of its U.S. clubs and Rosalind Brewer, the division’s former chief executive officer, referred to it as a “game changer” for customers.
The application also helped Sam’s Club become a recipient of a retail innovation award from Innovative Retail Technologies, a Pennsylvania-based publication.
“Amazing things can happen when you let loose brilliant associates to become entrepreneurs within our company,” said Eddie Garcia, a vice president at Sam’s Club. “At Wal-Mart and Sam’s Club, we’re committed to creating a culture where great technologists from all over the world can thrive and drive innovation.”
NEW CHALLENGES
Scan & Go has been introduced at the three Wal-Mart Supercenters and there are new challenges.
For starters, Wal-Mart Supercenters have a much larger number of items than Sam’s Clubs. Also, Daniyalzade said, everything in Sam’s Club has a barcode that makes it easy to scan and pay. That’s not the case at Wal-Mart, with produce items that must be weighed to determine the price.
But the application will be tested, while other tools are in the development stage as WalMart continues to live up to CEO Doug McMillon’s vision of the retailer operating more like a tech company as it moves forward.
Daniyalzade and Atikoglu, nearly three years into their tenure at Wal-Mart, said there are more opportunities out there as technology evolves rapidly. They’re looking forward to their continued role in Wal-Mart’s transformation.
“I wasn’t expecting to make this much impact when I joined,” Atikoglu said. “I look back at the impact we’ve made and the things we’ve accomplished and I’m really proud.”