Nearly all of us have seen one of our favorite shops or restaurants close after less than a year in business. While there are a plethora of potential reasons for the death of one of these businesses, if the values proposition was clear, often the geographic location is to blame.
Regardless of size, location makes all the difference to businesses that operate brick-and-mortar stores. However, Ontario-based startup Piinpoint now offers a service that uses location analytics to help businesses find the best location for building or expanding.
Piinpoint co-founder Jim Robeson found out the impact of location first-hand after the expansion and relocation of his parents' small business. He also began to see that this process was typically done with software that only could be used by people with a technical background, a frustration shared by Piinpoint's other co-founder, Adam Saunders. The two met at the University of Waterloo in Ontario and decided to combine forces to tackle the issue; Robeson brought his practical small business experience and Saunders brought his technical expertise.
"Ultimately, our vision is that every organization should have access to sophisticated location analytics," Robeson said.
The company made it into Y Combinator's latest batch of startups, and has drawn investments from a variety of Angels and VCs around the world. Investors include Garage Capital, Dan Deboe from Salesforce, and Michael Stork, a well-known angel investor in Waterloo.
Let's take a look at how it works.
Using analytics to choose location
After signing up for Piinpoint, you'll have the option to define your market. It is a simple business idea with a high potential impact. By defining the target audience for your business, and then moving or expanding your business into the area occupied by audience members, you will increase traffic and sales.
"You can identify your target market from thousands of different variables, such as demographics, household expenditures, consumer expenditures, traffic, etc.," Robeson said. "Once you identify your target market, we essentially show the top locations based on that market. We can then show you, in real time, where your competitors will be located."
Users can also choose anchors, such as landmarks, universities, or a sports arena if they are looking to capture some of that traffic. It can also show what commercial real estate is available at what price, if it is for sale or lease, the square footage, and who the real estate broker is.
You can also see all competitors in the area, searching by business type (coffee shop) or business name (Starbucks). Piinpoint can also show an analysis of the market share and it can show how your business would impact your competitor, and whether or not there is a risk for cannibalization. What's even more interesting is that Piinpoint can show you how much money you'll make if you move your business to a specific area.
"Assuming you allow us to work with some of your data, we can also provide a sales forecasting model," Robeson said. "We've built this model to be 75% accurate, which is the industry standard. So we can show you, based on neighborhood, what type of sales would you be able to anticipate, based on the type of store you are."
You can upload your own data, like loyalty programs, if you want to add another layer. Users also have access to a dashboard so they can see sales in real time and get a pulse on the organization in that area. According to Mike McCauley, a partner at Garage Capital, they invested in Piinpoint because they believe it solves a real problem.
"It's definitely one of the most important factors in the success of the businesses that they are going after in terms of selecting the right locations," McCauley said. "I think they have a really unique way about bringing the right data to the surface for a lot of these companies, and really eliminate a problem that a lot of them have."
Translating location into business
Piinpoint was built from scratch in Python, using MongoDB databases with spatial indexing. Some of the data is publicly available, while Robeson said some of the data sets are purchased so Piinpoint can maintain "high accuracy and reliability" with their output. Part of the output is in the form of reports the product can generate. Users can have Piinpoint create a PDF report of a certain set of data if you need it for a presentation.
Currently, the company has nearly 15 organizations in their pilot program. Some of these companies chose to share their sales data with the company so the Piinpoint could test and refine its algorithm. Currently, the product is only available to companies in North America, according to Robeson.
"They have some awesome early customers already using the product, which is a great indicator of success," McCauley said. "In terms of revenue model, I think they're going about it in the right way. As they learn more about their customers, and interact with their customers more, they're going to learn more about the best ways to go about positioning their revenue model and, so, that may change going forward. But, I think they're starting in the right way."
The revenue model is straightforward. After the pilot is over, pricing will start at $3,000 USD per month as a subscription. That may sound expensive, but consider the fact that the right location could mean the difference in hundreds of thousands, or even millions of dollars.
Robeson said Piinpoint will be publicly launching sometime in 2014, and he alluded to the company already working on something extra, such as a new feature set, for 2015.
Conner Forrest has nothing to disclose. He doesn't hold investments in the technology companies he covers.
Conner Forrest is a Senior Editor for TechRepublic. He covers enterprise technology and is interested in the convergence of tech and culture.