Invest in the Smart Store!

Team

Product

Physical retail is the art of staff selling stuff in a store. For ages this was the only way to sell things, until online shopping completely reshaped retail. Customers have changed and physical retailers forgot to change along with them.

Count3r turns physical stores into Smart Stores. Our personalized tablet app for sales staff enables them to sell the way customers want to buy today. We help sales staff, consumers and retailers.

Sales staff gets the best technology from online shopping and more, but tailored to physical stores, such as: product facts, stock data, product filtering & comparison, reviews, sales tips & tricks, training, sales conversation support, upselling & cross-selling support, and easy checkout & payment.

Consumers get better advice, are served quicker, and can pay anywhere in the store. This leads to more satisfied customers.

Retailers receive data from Count3r for more insight in their customers and employees. This allows retailers to constantly improve sales processes and customer experience. Their staff is able to work quicker and more efficiently, resulting in more and profitable sales.

Count3r makes physical stores fit our digital world and become Smart Stores.

1 PwC, Total Retail Survey, 2016 & 2017 (reports)

Unique Selling Points

Revenue model

Count3r is sold to large (international) retail chains as a semi-custom SaaS (Software as as Service) solution. This solution is first optimized to the specific retailer's needs and then rolled out to all stores. This results in the following two revenue streams:

Pilot phase - Retailers have unique needs. We listen to those needs in order to adapt, test and implement our core-technology to become their semi-custom Count3r sales staff app during a 3 to 6 months co-creation period. This is offered for a fixed all-in monthly fee of €10k to €25k.

Roll-out phase - After the pilot phase, a roll-out agreement is reached with the (inter)national headquarters of the retailer. The app is made available on a monthly licence fee per employee of €49. This fee includes product roll-out, employee training, updates, maintenance, and support. We are currently generating revenue with this model.

Future revenue streams could include additional software licences and performance-based models. The extra licences come from advanced business intelligence or customized features for retailers. The performance model creates a win-win for retailer and Count3r, and makes most sense when numbers of transactions increase.

Scalability

The Count3r tablet app was built from the ground-up and used in several Media Markt stores for 1,5 years. During extensive testing the app proved stable and fast. With the necessary functionality for retailers developed and tested, the app is now ready for scaling. The following aspects have been anticipated for successful scaling.

Current Status

• The Count3r app is ready for scale-up and roll-out with Media Markt:The app is fully developed and ready to be rolled-out to all Media Markt stores in the Netherlands (contractually agreed).
• All relevant integrations with Media Markt systems have been made successfully (e.g. stock levels, order management and real-time prices).
• Product content from both Media Markt and Icecat is always up-to-date, and the app is registered in Apple's Enterprise App Store for large-scale deployment on iPads.
• Various technical Integrations have been made with our partners, for improved cross-selling, payment, and delivery capabilities.

Planned Developments

We believe in the Smart Store. Therefore, we have planned the following general development milestones to realize our vision.

Market

Target group

Employees are a physical retailer's biggest expense, but retailers do too little to help staff stay relevant in a changing retail landscape. Count3r explicitly serves employees and boosts the return on investment of retail staff.

Count3r targets large and heavily staffed retail chains that want their (often) hundreds of stores and thousands of employees to better fit our digital world. We focus on companies that sell durable goods, where purchases are non-routine and customers are highly involved buyers. Relevant retail sectors include: consumer electronics, bicycles, furniture, toys, kitchen, home improvement, and many more.

Market size

Obtainable market for Count3r in the Netherlands: €41.7 million

The global market for Smart Store and retail staff performance improvement technology is enormous and rapidly growing. Count3r's long-term ambition is global, but we believe in mastering the local market first. The Netherlands is a guiding country in retail: innovations are rapidly adopted by customers and there is a strong presence of target (multinational) retail chains.

Total revenues of the Dutch physical retail market alone already amount to €100 billion of which approximately 35% is within Count3r's scope of durable goods chains. 2, 3 These retailers spend roughly 15% of this total revenue on staff. 2, 4 According to a recent study by McKinsey, as much as 53% of all current retail work activities could disappear due to productivity gains and automation. 5 Hence, the total available retail staff automation & productivity improvement market for physical durable goods chains in Netherlands is estimated to total €2.8 billion.

Count3r's tablet assisted sales technology helps retailers increase labour effectiveness and directly addresses the above described market. Few other technologies have this laser-like focus on enhancing sales staff productivity on the shop floor. Nonetheless, the obtainable financial benefits have to be shared with retailers, other technologies and direct competitors. It is assumed that device assisted sales technology can realistically capture and service 5% of the staff automation market and that Count3r can obtain a market share of 30%. Therefore, Count3r's serviceable obtainable market in the Netherlands is estimated to amount: €41.7 million.

2 Detailhandel.info, 2017 (website)
3 McKinsey, Rewriting retail, 2016 (report)
4 PwC, Measuring up, 2013 (report)
5 McKinsey, A future that works, 2017 (report)

Available device assisted sales market in Western Europe: €3.5 billion

The total Western European retail revenues are approximately €2.94 trillion.6 Extrapolating the Dutch figures to the Western European market leads to an available market estimate of €3.5 billion. The total available device assisted sales market globally is almost seven times that size: €23.3 billion. 6 Count3r wants to become a major player in capturing this global market.

6 PwC, 2015-16 Outlook for the Retail and Consumer Products Sector in Asia, 2015

Competition

Count3r is the central Smart Store platform, devoted to serving employees. As a result, Count3r does not compete with large corporate software companies heads on, but creates a new 'blue ocean' market by cherry-picking the best of each system (e.g. ERP, POS, CRM and eCommerce) and blending it into one application. Some of the traditional retail software manufacturers (e.g. IBM, Microsoft, Salesforce) have made moves towards in-store assisted selling apps. Unlike Count3r, these apps are usually simple extensions of current offerings, very much legacy system focused, and not putting the needs of employees first.

Other companies also have dedicated device assisted sales platforms. Most notably, Tulip Retail (Canada) and MadMobile (US) are serving some big name chains in the US and growing fast. Count3r is the only assisted selling platform in Europe to date. With the American markets still for grabs and with new EU data regulation coming into effect next year, we expect to maintain our leading position in Europe and benefit from early mover advantages.

Some retail chains will aim to build device assisted sales platforms in-house. However, these projects are time consuming, expensive, and always at risk of being already obsolete at the moment they are rolled out. Other competition comes from online players that simply try to copy solutions from the web to the store. These solutions generally lack the physical retail experience, ignore the strengths of stores and effectively just create a 'regular' webshop inside a brick-and-mortar store.

Current customers

Count3r is proud of Media Markt as a launching customer. We have executed twelve paid pilots in seven stores and are generating revenues for more than two years. These experiences have lead to annual contracts with a couple of stores and our admission to their global Spacelab Tech Accelerator. We were selected as one of three companies out of dozens of applications. After the program, the parent company MediaMarktSaturn Retail Group did a strategic investment in Count3r and contractually committed to roll-out to all 49 Media Markt stores in the Netherlands as a first step.

Customer Feedback

New customers

Future customers come from different retail segments. Count3r can be used for any durable goods purchase. The current sales pipeline includes companies, such as: Bridgestone (tyres), ANWR Group (shoes and Sport 2000 sports gear), Pon Holdings (automotive and Gazelle Bicycles), C&A (clothing), Blokker Holding (household, toys, furniture, and more), and Yamaha Motors (motors, off road, boats, generators). The goal of this crowdfunding campaign is to convert these and other companies to become satisfied Count3r customers.

Sales

Sales pitch

Marketing and sales channels

Count3r's sales funnel includes the following steps:

• Creating awareness, sharing expertise and getting in touch through cold calling, speaking engagements, content marketing, industry events and our wider network
• Introduction meetings enable us to share our story, navigate through the retail company, and find the right people within the organisation
• A joint pilot workshop gets all relevant people in the same room and establishes agreement on the objectives of the following pilot phase
• The paid co-creation pilot phase takes 3 to 6 months and modifies the existing Count3r app to the specific needs of the retailer
• The co-created app is ready for roll-out and sold as a SaaS solution

Marketing objective

The first awareness phase intends to have people talk about Count3r, spread our story, and get that first meeting with large retailers. Our goal is to move to a joint pilot workshop after two to four explorative meetings, phone calls and/or demos. We expect to convert one out of four companies who had an introductory meeting with us to do a pilot workshop. Subsequently, we aim to add one third of companies that did a workshop as a satisfied customer after the co-creation pilot phase.

Partnerships

Finance

Realised and expected revenues

Count3r's main revenue stream comes from selling monthly licences of the sales staff app and separate licences for unique features. Additionally, Count3r and its partners facilitate retailers to buy or lease required equipment for the Smart Store, generating a second source of income. Finally, Count3r generates revenue with paid pilot projects at prospective customers. This income stream has been the major source of income for the past two years.

Assumptions

1. Media Markt is the main driver of early stage growth. It is assumed that the contractually agreed rollout in the Netherlands fully materializes and that 25% of all stores in Europe will follow. With an assumed average of 15 licences per store, this amounts to 6500 licences in total. Hardware supplies are expected to be limited at Media Markt.
2. The financial forecasts include a single size average customer for simplification. Actual customers will be smaller or larger. This average customer is assumed to grow to 1300 total licences in two years (20% the size of Media Markt). The typical customer is expected to start with a paid six month co-creation pilot and also lease some hardware.
3. Given our current sales pipeline we expect to add 2 customers in 2017. It is assumed that sales efforts steadily improve over time and 16 customers will be added in year 5. The total number of customers by the end of 2021 will be 41, with over 37,000 licences (or approximately 6 customers the size of Media Markt).
4. Staff (hiring) is Count3r's main cost driver and assumed to be in line with the growth of sales. The recruiting is differentiated between more fixed and upfront roles (e.g. software developers, sales professionals, and marketeers), and roles directly correlating with sales (e.g. implementors, support staff).
5. Other costs involve the cost of goods sold and overhead. Costs of goods sold (e.g. third-party software) are assumed to scale linearly with sales. Overhead costs (e.g. selling expenses) are growing in line with the number of staff employed.
6. Large retailers often demand favourable payment terms. The cash flow consequences have been taken into account in the financial model. It assumes most retailers to pay only after 60 days, and Count3r's average payment terms to be less than 30 days.

Investments so far

Count3r has been funded for almost €600.000 by management, informal investors, formal investors, customers and government grants.

• Delft Enterprises (Investment fund of Delft University of Technology): €250.000
• Private Investors: €170.000
• MediaMarktSaturn Retail Group: €100.000 (convertible loan)
• Government grants: €75.000

Investment need

Count3r is looking to raise €250k to increase the number of customers and grow our team. Our stretch goal is €400k or more, to speed up (international) expansion and further improve our product offering. The different funding goals and corresponding investment plans are described below.

The Smart Store is more than technology alone. We want to make retail better for everybody: retailers, employees and customers. But in order to be really successful, we believe we need to build a community and bring all stakeholders together. Therefore, we are also inviting people to invest time, knowledge and energy and help Count3r to build this community.

Use of proceeds

The funding will be used to invest in sales, marketing and implementation of new customers. Further product development will mostly be financed from revenue. The €250k crowdfunding goal will be spent in the following way.

(For more details, see investment plan Symbid)

ROI and exit policy

Investors can sign up for our convertible loan, and convert the loan to shares of the company in a later stage or receive full repayment of the loan including 8% annual interest after 60 months.

Conversion to shares happens along with the next investment round. Investors in the current crowdfunding round can convert at a 15-30% discount, and investors of the first €150k will receive an additional 5% early-bird discount.

Count3r has been valued at €2M in Q3 2016 and aims to find a follow-up investment (and conversion moment) in Q2 2018.

Various exit opportunities are imaginable. An acquisition by a retail customer or software company (e.g. ERP, POS, CRM, eCommerce, etc.) are most likely. Acquiring Count3r helps a retail company to internalize capabilities to serve today's connected customers. Software companies can vertically integrate and get a stronger presence in the heart of every sales conversation.

Additionally, Count3r offers the following premium rewards to investors:

Risks

Company specific risks:

• The agreed adoption at Media Markt is slow, or demand from other customers is low. A slow adoption at Media Markt can be mitigated by finding other customers and vice versa. The current crowdfunding round allows for at least 9 months of finding a solid source of income (or an additional investment).
• There is a booming market for retail innovations, possibly attracting other companies and creating stiff competition. Nonetheless, Count3r has an early mover advantage and focusses specifically on the sales staff support technology niche market.
• Count3r might not be able to materialize the full potential of the data-driven store, due to new and stricter European data regulations. However, this could also offer opportunities to maintain our leading position in Europe over competition from abroad.
• Legacy IT systems could slow down implementations of Count3r at retail chains. Though, Count3r already has experience with making these integrations and we assume a 6 month implementation period. In the future, we plan to hire employees with this specific expertise.
• Employees are our biggest asset. Some of the roles we expect to hire are in high demand and could prove challenging to find. One way to solve this, is by offering interesting internship positions, train them on the job, and hire the biggest talents.

General funding risks:

• The Lender agrees that its claims against the Borrower under this convertible loan agreement rank below all other, non-subordinated, claims against the Lender as referred to in Section 3:277.2 Dutch Civil Code ('BW').
• Lender issues a (subordinated) convertible loan to convert at a later stage to depositary receipts to become a shareholder of the company. Lender expects an (exponential) growth of value of the company with the possibility to sell the depositary receipts with a capital gain. However, in many situations such capital gains do take several more years after conversion to be realized. Counterbalancing the opportunity of high returns in case of exponential value growth of the company, there is a risk that investments will be lost in case of disappointing results.
• Please read carefully about the risks of investing in a convertible loan through Symbid here. There you can also obtain insight in the default reporting of Symbid, before deciding to invest.