YDISTRI in advanced talks to raise EUR 10m Series A round to support scale-up - CEO

Interview 13 October

YDISTRI in advanced talks to raise EUR 10m Series A round to support scale-up - CEO

YDISTRI, a Czech startup that has developed a tool to help retailers optimise inventory, is raising a EUR 10m Series A to support scaling up, CEO and co-founder Roland Dzogan said.  

The company is in advanced talks with several parties for the Series A round and aims to reach an agreement in the next few weeks, he said.  

The company also plans a Series B of around EUR 50m in 18 months to support scaling up in the US, Dzogan said.

For Series B, it is particularly interested in US-based investors such as venture capital funds that invest in the space and can provide contacts in the local market, he said.  

Founded in 2019, YDISTRI is an algorithm-computed cloud application to identify and redistribute unsold inventory (‘dead stock’) across retailers‘ branches. The software can calculate the sales potential of each item at individual stores and propose mass redistribution so that unsold goods can be sold at full price at another location.   

YDISTRI helps companies maintain an optimal level of stock and thereby avoid both waste and unnecessary discounts, as well as shortages of items.  

The company has 20 clients in the DACH region, the UK, the US, Canada and Mexico, and is in negotiations with a further 50 potential clients including some in France, Italy and Spain, Dzogan said. Its clients are leading retailers with hundreds or thousands of stores, he said.  

Its clients include department stores, pharmacy chains, supermarkets, and retailers of other consumer goods such as petfood, beauty products and perfumes, do it yourself items and electronics. It is also talking to clothing and sports goods retailers, Dzogan said. 

Inventory valued at more than EUR 500m

By the end of the year, the company intends to manage the rebalancing of inventory valued at more than EUR 500m, he said.  

Dzogan declined to reveal revenue figures or specify its targeted pre-money valuation but said the Series A valuation is in the “tens of millions of euros”.  

YDISTRI raised a EUR 2.5m seed round in 2021 from V-Sharp Venture Studio, Nation 1, Falco Capital and Hungarian entrepreneur and investor Marton Szoke, according to a company announcement.  

The Series A round would largely be invested in hiring more people on the ground internationally and expanding its team to at least 50 people, while the Series B will largely be invested in expanding its back office and marketing teams, Dzogan said.   

Between 10%-20% of supermarkets’ inventory is deadstock - products that remain unsold in two or three months, he said. 

As much as 20%-40% of slower-moving consumer goods retailers’ inventory is dead stock, ie inventory that has not sold for the past six months, he added.  

While dead stock is a significant problem across the retail segment, supply chain management is particularly difficult in consumer electronics goods, Dzogan said. These retailers have to order new products many months ahead and before they are launched, and without knowing exactly what the products will look like, he said. In this segment new products often sell quickly in the initial period after their launch with a long tail-off, he noted.  

The problem of inventory management is even bigger in the US due to its scale, with retailers handling significantly larger numbers of stores and assortment of goods, he said. 

An additional problem is unclaimed click-and-collect orders in stores, Dzogan pointed out. 

Offline retailers stock between 10%-20% of the amount of goods of online competitors so have to regularly change their assortment to stay competitive, he said.  

Redistribute stock to avoid significant discounts

Ydistri helps retailers redistribute stock to other stores without having to sell items at a significant discount, not only improving cash flow but also avoiding any negative impact on the reputation of both the brand and retailer, Dzogan said.   

Goods can sell better in different stores for a range of reasons including demographics and the competition from other retailers in the immediate area, Dzogan said.  

Further benefits include reducing plastic waste from packaging and saving retailers from the cost of disposing of food and packaging waste, he said.  

In the US particularly, store theft is a significant problem and Ydistri helps stores identify phantom stock that still appears on their books, Dzogan noted.  

The cloud application can be used in combination with merchants’ existing solutions and has an accuracy rate of above 90%, he added.  

During the Covid-19 pandemic the retail segment struggled with supply shortages, delays and uncertainty regarding stock, but now the situation is slowly returning to normal, the CEO said.  

However, merchants are once again faced with warehouses and shop shelves overflowing with seemingly unsaleable goods, and often resort to large discounts to try to solve cashflow problems, he said. The current macroeconomic situation aggravates these problems, he added.  

Ydistri aims to be the number one player for solving the issue of unsold inventory, he said. 

Ydistri was this year selected for the SAP.iO Foundry programme, paving the way for an official partnership with SAP.

The company has two founders – Dzogan and CTO Lukas Estvanc.   

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