Polish-Chinese tech-startup Cosmose, which has software tracking the exact location of a massive 1.1bn people around the world, has closed a $12m seed funding round to expand its operations into Japan and open a new office in Europe.
The little-known company, which is based between Warsaw and Shanghai boasts leading luxury brands as clients such as LVMH, Richemont, Kering, Estée Lauder and L'Oréal — companies which are eager to understand customer behaviour in their shops. It could be described as Poland's answer to Foursquare, the US company that started out as a social check-in app before moving into footfall analytics.
Cosmose's technology is able to tap into people's location data via their smartphones — something that people opt into by downloading one of a number of apps. According to Cosmose, there are 400,000 apps in Asia that can provide this kind of consent, including Weibo and various taxi apps.
From the moment someone downloads one of these apps they become part of Cosmose’s tracking ecosystem. This means that when they enter a shop that is part of Cosmose's network their movements will be traced accurately within a 1.6m range. The customer doesn't need to connect to wifi or bluetooth, or even open the app for the tracking to begin.
This level of accuracy means the system can reveal shopping habits with a high-level of detail, such as the specific aisles that people spend time in or the number of people that take a trip to the fitting room but choose not to buy anything.
So far the startup's system is able to track 1.1bn smartphone devices globally, 850m of which are in China, with the rest from elsewhere in the Asia-Pacific region. There are 350,000 shops in its network.
This data can be useful for companies that want to gain an understanding of how customers use the physical space in shops, and can also be used to target people with ads via Google, Facebook, WeChat and Weibo. For instance, a brand might use Cosmose's system to identify those that have visited one of its shops and later target them with an advert. It could also choose to advertise to customers that had visited a competitor's shop.
The startup has a "complex system of encrypting and segmenting the data" so that it is fully compliant with General Data Protection Regulation (GDPR), according to Miron Mironiuk, Cosmose's chief executive and founder.
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This kind of location-tracking is one of a number of techniques used by the indoor tracking industry to provide retailers with insight into shopper's behaviours. Other players in the space include Kraków-based Estimote, which uses signals from built-in sensors or beacons to detect people's movements, and Vayyar Imaging Ltd, which uses 4D imaging tech to track customers as they shop.
By linking up smartphones with people's movements these kinds of technologies are able to blur the lines between online and offline shopping, so that people can receive personalised alerts and discount offers based on their shopping behaviour. On a global scale the indoor tracking industry is estimated to reach $23.6bn by 2023, according to MarketsandMarkets research.
China first, then everywhere else
While European startups often struggle to expand into China, Cosmose is an example of a company that owes its success to its focus on the country, where there is greater scope for data collection.
It is also the home of some of the most enthusiastic luxury shoppers. Chinese customers spent $115bn on luxury items last year — meaning China accounts for a third of the global luxury market, according to McKinsey.
“If you are focussing on AI, then you need data — and in China there are 850m smartphones to provide data,” Mironiuk told Sifted. "People used to say that if you can make it in New York then you can make it anywhere, but now I think if you can make it in Shanghai then you can make it anywhere."
Having tripled its revenues over the past year, Cosmose will use the $12m raise to expand its operations into Japan, where it will start tracking Japanese customers. The startup will also open an office in Paris to target European luxury brands that are interested in better understanding Chinese customers.
“In China we’ve seen great results from retailers using Cosmose and now we are setting our sights further afield as we take on this new investment,” said Mironiuk. He said that after expanding into Japan the startup will consider moving into the US and Europe after that.