Nextail raises $1.6M to help retailers optimize stock levels

Nextail, a Spanish startup that has developed technology to help retailers better manage inventory levels and, ultimately, sell at higher margins, has closed $1.6 million in new funding. The round was led by Nauta Capital, with participation from existing backer Realiza. It brings total raised to $2 million, while I’m told the new financing will be used by Nextail to accelerate product development, and expand its sales and marketing efforts.

Founded by Joaquín Villalba and Carlos Miragall in 2014, Nextail has developed a Software-as-a-Service that claims to bring artificial intelligence to physical retail inventory management. Its technology attempts to optimize the daily allocation and replenishment decisions that retailers have to make in order to ensure they hold the correct amount of stock at any point in time and can sell it at full price.

“The problem is retail’s billions of dollars in unsold inventory and markdowns because the goods were not in the right place at the right time,” explains Nextail’s Villalba. “In fashion, given the proliferation of styles, colors, and sizes, this problem is quite hard to crack”.

“Our product helps retailers extract the highest return from their stock investment, by placing the product in the stores where it will sell the fastest. To do so, we use fast fashion principles… coupled with the most advanced tech, such as machine learning or AI algorithms for image recognition”.

Furthermore, Villalba says Nextail’s product is proving to have a strong impact on a retailer’s bottom line. That’s because in fashion retail, profitability is driven by the percentage of goods that can be sold at full price rather through discounting, which is typically used shift unwanted stock.

“Thanks to our fast fashion optimization algorithms that leverage machine learning, massive computation in the cloud, and collaborative decision-making, we are able to solve this, resulting in increased amounts sold at full price and reduced inventories at the same time. Our clients love our product because it basically enables them to sell more, at better prices, using less stock,” he adds.

Nextail’s typical customers are fashion retailers with 100-1,000 stores, with buy-in coming from CEOs, heads of retail, store managers, and area managers, to the teams on the ground actually dealing with inventory allocation and replenishment. The SaaS is currently operating in Spain, Italy, France and Russia, but the plan is to expand to the UK next year.