The checkout terminal at The Ridge Supermarket.

Supermarkets are increasingly adopting self checkout terminals. But Seattle entrepreneur Aaron Roberts, a former engineer at RIM and Attachmate, believes he’s come up with a better way for people to do their shopping at the local grocery story. It’s called QThru, and the young upstart just raised $3.5 million from undisclosed angel investors to start rolling out the concept beyond its initial test store at The Ridge IGA Supermarket in Snoqualmie.

Here’s the basic idea. Customers download an iPhone app (Android is coming soon) and preload their credit card information. They then add items to their shopping cart, scanning a bar code each time they pick out an item. After they complete the shopping trip, they check out by entering a passcode and scanning a QR code at a kiosk machine. A receipt is generated from the kiosk, and a supermarket employee checks it to make sure items match before sending the shopper on his or her way.

Roberts said he came up with the idea a few years ago while standing in line to buy a pumpkin pie for Thanksgiving dinner.

“There was a line for the pumpkin pies, and there was a line to checkout,” recalled Roberts. “While I was waiting I said: ‘Gosh, this process doesn’t need to be this painful.’ It seemed like a no-brainer to me.”

Even though he’d been kicking around the idea for a couple years, Roberts didn’t form the company until last year.  It now employs five people, including former interim PopCap CFO Karla Horowitz.

For the past several months, QThru has been available only to select customers at The Ridge Supermarket. But the company expects to go public in the coming days once Apple approves the free iPhone app. At that point, anyone can install the app and head to the grocery store aisles at the Snoqualmie IGA.

Roberts said that they plan to roll out additional installations with the Myers Group, the owner of the Snoqualmie IGA and other regional supermarket and hardware stores, in the coming months. Tyler Myers, president of the Myers Group, said that initial tests were “enormously popular,” adding that he’s excited about the possibility of adding exclusive announcements, events and coupons.

In addition to those add-ons, grocery store owners like the idea since they are able to collect detailed shopper analytics, creating the possibility to target customers with specific offers.

Obviously, grocery stores like the concept of collecting data on their customers, something that online retailers such as Amazon.com have mastered.

How is QThru different from the self checkout terminals at the local Safeway or Fred Meyer?

For one, Roberts said that customers can see how much they are spending before they get to the checkout aisle. The customized offers also allow shoppers to reduce their overall bill, and notifications can remind people if they are about to run out of toilet paper or cat food, he said. But the big selling point, he said, is speed.

“There’s no line to stand in. QThru is so fast, we can replace four checkout lanes with one QThru kiosk,” said Roberts, adding that initially they plan to outfit stores with customer service reps to help answer questions.

The supermarket as we know it is getting ready for a makeover. And we’ve certainly seen a lot of activity in this space in recent months. In Seattle, Point Inside has been pivoting in recent months to develop mobile shopping technologies for grocery stores. Meanwhile, two of QThru’s main competitors have been acquired in recent months. In April, Boston-based AisleBuyer was gobbled up by Intuit and Modiv was purchased by Catalina Marketing.

Roberts thinks that consolidation wave helps his chances.

“We are kind of the last man standing who does this whole soup-to-nuts thing that we are doing,” said Roberts, adding that Modiv doesn’t have credit card payments integrated into the device. That means customers have to transfer payments to a checkout system.

“We just see that as too much friction,” Roberts said. “People for years have been paying for things with stored credit card information, like on Amazon, so why can’t we do the same thing with brick-and-mortar?”

Speaking of Amazon, Roberts said that retailers like the QThru system since it can reduce the problems with “showrooming.” That’s the concept of brick-and-mortar retailers serving as the showroom, and then having customers complete their purchases online. Roberts also said once customers establish a grocery store list, retailers could begin to offer online shopping and in-store pickup or delivery. That would allow them to compete head-to-head with the likes of Amazon Fresh and Safeway’s online grocery service.

Roberts said they plan to target mid-tier grocery stores and retailers, noting that the QThru system allows them to compete with the big players.

“A lot of these guys don’t want to spend $70,000 on a self checkout kiosk, and our solution can go from no cost on the hardware up to about $5,000 would cover a decent-sized store,” he said.

Of course, with any self checkout system, theft is an issue. Roberts said that the system can be configured so that retailers can highlight specific items on the receipt, say a $50 bottle of wine. That, of course, could create more work for clerks who will need to spend their time doing inventory of what is in a person’s shopping cart.

“Costco has gotten pretty good at it,” said Roberts.

In terms of the new funding round, Roberts said that the company has received a commitment of $3.5 million from two out-of-state investors who have invested in technology companies in the Seattle area in the past. At this time, QThru is only drawing down $1 million of the round.

Here’s a closer look at how QThru works:


Previously on GeekWireWhole Foods prototype puts Kinect on shopping cart, follows people around store

Comments

  • rokiuk

    This kind of system has been available at Waitrose (A UK supermarket) for quite a few years now. They have a stack of personal bar code scanners which you carry around the shop and scan in everything you buy. Then go to a self check out counter and let it read the device and make your payment. I am not sure about the iPhone bar code reading but the Android app that Google has created is quite slow and not reliable as a hand held bar code reader used in super markets.

    • johnhcook

      Roberts also told me that Costco has reportedly been testing a similar hardware-based device where shoppers carry a wand around a store and scan bar codes. Apparently they are testing it in Arizona.

    • Phil

      The QThru app uses a different scanning technology that is far superior to what you have experienced with RedLaser.

    • http://www.facebook.com/people/Steve-Murch/705204492 Steve Murch

      This basic mechanism also exists at Carrefour in France. (Scanette, I believe it’s called.)

  • Guest

    This looks like a great idea! Once grocery stores add wi-fi, which at this point is basically free, a $70,000 self checkout station could be replaced with a $100 iPod Touch. The notion of a “checkout line” is particularly antiquated here because Seattle no longer permits free plastic or paper bags to be distributed to customers. I want to buy my items, scan them, bag them up in my reusable totes, pay for them, and go. Go QThru!

  • http://www.facebook.com/profile.php?id=100000176348804 facebook-100000176348804

    Consumers like getting in and out of the grocery store fast. Most consumers today like ready-2-eat and heat-N-eat fresh prepared food which is part of the fast growing grocerant niche. This app is a great starting point for aan industry undergoing rapid change.

  • guest22

    What grocery store would implement a system that only works for 10-15% of their total # of shoppers (iOS), compared to a system that works with 100%?

    Even if they release on Android, a combined Android/iOS solution barely reaches 40% of all mobile users, leaving 60% in the dust.

    Stores that rely on revenue from all consumers to barely eek out a 2% margin, aren’t going to fracture their customers by treating them differently. Maybe I’m dead-wrong on this, but, in my experience with mass market retailers they are loathe to implement systems that are not all-inclusive. That’s why existing automated customer service check-out works (and no one is going to replace that investment quickly).

    I’m sure this system could be kludged to work with feature phones and smartphones that have an NFC sticker (or onboard NFC feature) as with systems being launched in Europe; at least that would allow 100% of possible customers to participate (think NFC in reverse of how it’s typically featured); but it would require customers to undertake a physical step in the process (not too difficult, considering they are shopping for physical goods).

    • Guest

      An automated checkout system costs $70,000. With a quantity discount that buys 700 iPod touches, enough to accommodate everyone in a store. You could also buy 1,400 cheap Android tablets for the same price.

      Of course not everyone has a smartphone yet. For those not yet “smart,” a stopgap measure will be offered.

  • AaronRoberts

    To add to the info, another request we have been getting from retailers is for in-store pickup. We plan to add this offering to our service as well. For shoppers ordering groceries from work and picking them up on the way home would be a snap.

  • Neil Crist @Venuelabs

    Congratulations to the Qthru team! As a fellow technology company in the retail space, we here at Venuelabs are big fans of their technology and their team.

  • Guest

    A shoplifters dream

  • Chris

    Stop & Shop (a supermarket chain in the northeastern US) has had a scan-as-you-go system for quite some time. Recently they introduced a mobile app to do the same thing.

    The one pain point is that you still have to stop at a checkout register in order to complete your trip and pay. If they could keep your credit card on file and make it even faster to check out, it would be more of a time saver.

  • http://www.facebook.com/KevinFink Kevin Fink

    The self-serve checkout lanes in virtually every mid-to-large market in the Seattle area have largely eliminated that pain point for me, so I’m not sure how much of an advantage this gives to them. It does let the smaller guys compete, though, which is great.

    My current pain point is that I’m frequently given a shopping list to pick up on my way home, and then spend an hour or so wandering around the store, trying to find everything. I would love an app that would import the shopping list (it’s usually emailed or texted to me), find the location of each item in the store, and then build “shopping directions” that would take me from item to item in an efficient manner. If it would include all of the free samples on my route, that would be even better! :-)

  • dothehomework

    The Swift Shopper App saves the same amount of time and works in any store with no integration to the system. No cost solution. We use it in Compare Foods in Charlotte, NC all the time. Great app with a GREAT scanner and saves tons of time.

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