I’ve been meaning to write out some thoughts on lightspeed and why I ‘think’ it is a product with tremendous potential. I have a moderate sized position in LSPD that bought ~6 months ago, and after the recent short attack I am roughly even.
This is a wordy post that is concerns the experiences of my employer.
The tldr version is that I ‘think’ lspd’s target market is NOT restaurants but manufacturers AND their retail outlets, and what they offer is completely new – they can handle the POS/inventory for the retail outlet, and also shrink to real time the data that manufacturers can get access to. This includes inventory, sales to consumer (pricing and velocity, etc.), and supply chain bi based on all that. For manufacturers, this is completely new.
The wordy part: I work for a very large craft brewer, which in the scheme of things is a small medium sized company. We are nationally distributed, and also export. Beer in the U.S. is a very unusually regulated industry, with each jurisdiction (state) having free reign to regulate as it sees fit; there are also federal laws. Nationally, since prohibition, brewers (manufacturers) have been prohibited from selling directly to retail outlets – we must sell to a local distributor, who then sells to retail outlets. In the industry, it is referred to as ‘three tiered distribution’ and it means the actual customers of any brewer likely number no more than a couple of hundred distributors. One consequence of this is that manufacturers have traditionally had ‘zero’ insights into sales to consumers. They only way to get at that was by purchasing very expensive data from Nielsen or IRI (another data aggregator). Even that data, though, is very incomplete in that most supermarket chains keep their data to themselves, so important retail sectors are very opaque. The largest brewers (Bud, etc.) can afford to work with/around all these obstacles, but not smaller ones.
20 or 30 years ago, a company in Vermont (VIP) had the good idea of writing an ERP/warehouse management/route accounting system for beverage distributors. This system was an AS400 mainframe type system that required the distributors to send their daily data to Vermont for processing. VIP gradually understood that they had all the data from all the distributors (exaggerating only a little), so they began packaging it in various ways and selling it back to manufacturers – brewers could buy from vip the line item level detail on sales to retail for their products for all their distributors. Nearly all brewers of any size buy this data, as there are nearly (more on that later*) no alternatives. But this data is only a middle tier of information, and what is still missing is the piece that really counts – sales to consumer. Moreover, the data is stale, and is of poor quality (master data issues).
This problem is a very common one, and it is what I noticed in the LSPD story that caught my eye. Giant (the largest bicycle manufacturer in the world) is requiring its retail outlets, apparently, to use lightspeed. Giant’s problems are almost certainly the same as a brewer’s, and in one fell swoop it gets real time insights into what consumers are buying and at what price (so it can immediately judge the effects of any promotional activity, etc.), retail outlet inventories, etc. This is a tremendous innovation.
LSPD for restaurants is possibly a good thing, perhaps better than its competitors, but LSPD for manufacturers and their outlets looks to me to be an incredible thing, and I don’t know of any competition. Clearly, TAM for something like this is ‘huge’.
*VIP has a new competitor that I mentioned long ago in another discussion regarding SNOW – there is a route accounting system (analogous to VIP’s) by a small company Encompass that runs on Snowflake. We purchased it for use by our division that distributes our product in our home city/county. We use snowflake elsewhere in the business (skunkworks project) and I learned working with the Encompass people that their data can be ‘shared’ (a snowflake feature) real time with us. It is a very analogous capability to what lightspeed has built in their POS.