Instacart acquires smart checkout startup Caper AI for $350M

GamesBeat Summit Next will be held November 9-10. Find out more about the next step.
Today, Instacart announced the acquisition of Caper AI, a startup that develops technologies to automate brick and mortar checkout experiences. The purchase was for $350 million in stock and cash. Instacart claims that the acquisition will help retailers to unify their online and in-store shopping flows for customers.

Instacart will be adding Capers New York-based workers to its product development team. Instacart plans to integrate Capers technology in the Instacart app as well as the ecommerce websites of its retail partners. This will allow customers to create shopping lists, browse recipes, and then check off their orders.

Instacart's retailer enablement services have grown over the years to help brick-and-mortar grocery stores across North America grow their businesses online and meet changing customer needs. Fidji Simo, CEO of Instacart, stated that retailers should be able to create unified commerce offerings that address both in-store and online consumer needs.

Shopping powered by AI

York Yang and Lindon Gao founded Caper in 2016. Gao, who is the president of JPG Crafts jewelry manufacturer, was previously an analyst in investment banking at J.P Morgan and Goldman Sachs.

Gao stated in a press release that the powerful technology we have created is easy to use for customers and retailers of all sizes. It also creates an ecosystem for physical retail that has never existed before. We are proud to be working with Instacart on new solutions to help grocery retailers bring the offline and online together.

Caper offers two products, the Caper Cart or the Caper Counter.

The Caper Cart uses camera and computer vision to identify and add items to a digital shopping basket (similar to Amazon's Dash Cart). The algorithm recognizes shoppers when they place items in the carts basket. It then analyzes the data to give recommendations and offers nearby. The cart will automatically measure the item's weight and provide location-based services to allow customers to search for and get directions to items in the store.

Caper Counter uses AI and cameras to scan barcode-free items. It replaces a traditional self checkout counter with a device which scans items from five angles in order to complete transactions. Staff can also access digital receipts and promotions through the counter. They can also monitor activity for theft prevention and add images to the Capers image recognition database.

The first Capers carts to be approved by the U.S. federal government National Type Evaluation Program (NTEP) are now in use at Kroger, Wakefern, Sobeys, Sobeys, Sobeys, Sobeys, Sobeys, Sobeys, in Canada and Auchan, France, and Spain. This is in addition to smart checkout counters at convenience stores that are Capers smart.

Image credit: Cape AI

Before the acquisition, Caper had raised $13 Million in venture capital from Lux Capital and FundersClub.

We are thrilled to welcome Caper AI to Instacart. We share the same goal: to equip retailers with innovative technologies that will help them succeed in a rapidly changing industry while providing our customers the best experience. Simo stated that Capers' smart carts are now available to more retailers worldwide. This is a great opportunity to reimagine grocery as we all work together. We will continue to invest in our enterprise technology services suite, unlocking new solutions that can power comprehensive ecommerce platforms for retailers across North America.

Smart retail boom

Instacart's acquisition of Caper follows the purchase of FoodStorm which provides a catering and order-ahead service for retailers. This is the latest investment in Instagram's enterprise technology services. Instacart began offering these services to its partners in 2017 at the time it was looking for new business lines beyond delivery.

Instacart, which has over 600 retailers and delivers to over 55,000 locations in more than 5,500 cities across North America, is one of the most popular online grocery stores. The company estimates that its service is available for more than 85% of U.S. households, and over 90% of Canadian households. Instacart recently closed a $265million funding round for $39 billion. This is twice the value of its October 2013 valuation.

Delivery can be expensive because of the difficulty of keeping a dedicated network for shoppers, delivery drivers and cashiers. The Gig Workers Collective, a group of approximately 13,000 Instacart shoppers, organized a strike to protest the company's low wages and insufficient communication with its workers. Instacart reported that it made a profit in its second quarter, earning about $10 million. However, the company was losing $25,000,000 per month as of 2019, despite the fact that online grocery orders have risen to $1 trillion during the pandemic.

Instacart has increased its enterprise offerings to increase revenue. Instacart Advertising allows consumer packaged goods companies to promote their products through the Instacart app. Fabric, a startup that offers robot-powered microfillment services, was launched by Instacart in July. Instacart announced that it will offer preorders for prepared foods, which are often more profitable than grocery items like produce, after the acquisition of FoodStorm.

Instacart stated previously that it plans to increase its corporate headcount by half in 2021 as part its expansion initiatives.