News & Views

Wasteless / Dynamic Pricing System

by Contagious I/O
This story originally appeared on Contagious I/O, our intelligence tool featuring the most creative and effective ideas in marketing from around the world

A startup is bringing the dynamic pricing system used by airlines to retail, in a bid to reduce waste and save the industry billions of dollars.

Wasteless claims to have devised a system using machine learning and product tracking that allows supermarkets ‘to sell more and waste less’ by managing inventory and prices in real-time. Put simply, it automatically reduces the price of food that’s been sitting on the shelf too long.

The Wasteless system works by combining RFID sensing at the level of individual items, a dynamic pricing engine (that considers 43 factors, including sell-by-date and location) and electronic shelf labelling. As well as reducing the price of old food, the system alerts stores when popular items are running low, meaning they don’t miss out on revenue because of a lag in their inventory management.

‘Dynamic pricing is something used daily when booking a flight, a hotel, or an Uber, and there is no reason why our groceries should be different,’ said Wasteless’ founder, Ben Biron, in a statement. ‘This is amazing for all stakeholders because it means lower prices for the consumer, more revenue for the supermarket, and of course, it saves our planet by significantly reducing food waste at the retail level, which accounts for 40 percent of the world’s total food waste.’

The startup, which is based in Tel Aviv and New York, was founded in June 2016 and is presently trialling its system with several retailers.

Contagious Insight / 

The cost of waste / On its website, Wasteless publishes stark figures about the cost of food waste. According to the startup, supermarkets in the US lose an average of $2,300 per store per day because of unsold food passing its sell-by-date. This results in an annual industry loss of around $57bn. On the flipside, Wasteless also estimates that US supermarkets lose $47bn because they cannot manage their inventory in real time and re-stock sold out items soon enough.

These stats are more than salesmanship. A 2016 report by Rethinking Food Waste through Economics and Data (a collation of food waste leaders) echoes Wasteless, stating that the US spends $218bn each year growing, processing and transporting food that no one will eat.

Practical and meaningful / The economic benefit of a system like Wasteless (provided it delivers what it promises) for retailers is obvious, but it is also mutually beneficial to a shop’s customers. It gives them the opportunity to save money by picking low-price products they know they will use before they go bad. Similarly, the automatic inventory management means they can have more faith that a store will stock the item they want.

That said, there is still likely to be a brand benefit to becoming waste conscious. In 2014 French supermarket Intermarché started selling the misshapen fruit and vegetables that are usually ignored by customers at a discount price, and built a campaign around the stunt, increasing in-store traffic by 24%.

Clearly, doing good for the planet is a boon for brands. Unilever conducted a survey of 20,000 adults from five different countries, asking them about their sustainability concerns, and found that a third now choose to buy from brands that are doing good for society, or for the environment.