Tech startup: ShelfX

INITIAL LIGHT BULB Ran Margalit, founder and CEO of ShelfX, saw the advent of the self-checkout line in the supermarket as a step backwards. “They made you the cashier,” he says. “You do all of the work. That’s not service. And there’s still a bottleneck.”

Customers agree: The Food Marketing Institute found that self-checkouts dropped from 22 percent of grocery transactions in 2008 to just 16 percent in 2010.

Margalit’s solution, ShelfX, turns retail shelves into intelligent electronic scales tied into payment processing and the back-end inventory system. Shoppers pick up their purchases and walk out the door.

IN A NUTSHELL Customers carry a ShelfX RFID card that’s linked to their payment option, shop for items, and buy them without ever waiting in line. A mere wave of the card means you want to buy an item after picking it up off of the shelf. The shelves detect what is taken by the weight. If a customer decides she doesn’t want something, she merely has to return it to the right shelf.

“It tells you who took what,” Margalit explains. “It reduces the need for a cashier.” He points out that this not only makes for efficiency gains among both customers and employees, but it also frees up prime retail space that’s often occupied by self-checkout or traditional lanes.

ShelfX functions with produce and other products sold by weight. The system also doubles as a real-time inventory management solution. “ShelfX tells you what’s on the shelves at any given moment,” Margalit says.

There’s a one-time installation fee; pricing starts around $10 per stock-keeping unit (SKU). “The smaller you are, the cheaper the system,” Margalit says. “We’re playing with some different pricing models.”

ShelfX launched its first retail systems at Udi’s stores in Denver earlier this year and also closed a deal with Englewood’s Premier Services in the spring to open ShelfX-based “MicroMarkets” at about 100 businesses by the end of the year. Margalit sees it as a new and improved version of the vending machine areas that are currently the breakroom status quo.

THE MARKET Margalit sees ShelfX as an option for retail stores of all sizes, from mom-and-pops to Wal-Mart. (“They called,” he says of the latter.) He also sees the possibility of ShelfX-based “Vending Fridges” replacing vending machines at numerous non-retail locations.

The company is also in talks with an undisclosed national hospital group to help manage its blood banks. “Blood banks are far away from the O.R.,” Margalit says. “The blood goes stale, so they put fridges around the hospital.” With ShelfX, the hospital staff knows when to re-stock blood before they run out, thanks to nurses with RFID cards. “Now you have live inventory of blood in the hospital,” Margalit says.

FINANCING Margalit raised $400,000 from friends and family to launch the company, but is now looking at reeling in some venture capital. “We’re talking to investors,” he says. “We’re looking for about $2 million now.”

where Boulder | FOUNDED 2011 | web www.shelfx.com