What specific technologies and processes does Open Commerce utilize to detect and prevent the sale of counterfeit goods?
By Randy Ferguson
In today’s complex global market, efficient and transparent trade is essential. Justin Floyd, an award-winning entrepreneur with a 25-year track record of founding and investing in pioneering technology companies, offers insights and lessons learned from his extensive career. He has consistently focused on solving the world’s biggest economic and social challenges.
On the other hand, manufacturers use robust manufacturing software like SAP, Oracle, or Infor, which are great for production but not practical for a convenience store in Times Square. Open commerce technology serves as a platform that brings retailers, distributors, and manufacturers together, allowing them to trade instantly and digitally. This transformation is akin to the early days of Bloomberg terminals in the stock market, enabling immediate digital engagement across the community.
Secondly, there is a level of self-governance because it becomes obvious if there is a bad actor in the network. If there is a problematic retailer or distributor, it becomes instantly and very quickly apparent through their pricing, how long they hold stock, whether the stock goes to the intended place, which retailers bought it, at what price, and why. Our technology can even compare pricing dynamics down to specific locations, like Times Square versus Fifth Avenue, and whether these match the way retailers are buying from distributors and the prices manufacturers are charging.
We use inventory and pricing analysis. Our approach involves complex technologies like Snowflake and large language models such as those from OpenAI. We also use deep data integration, data querying, and interrogation models developed by our own data scientists. These models analyze trading flows, pricing, inventory holds, and comparative pricing across the supply chain. This comprehensive analysis is highly effective in fraud prevention.
In the following interview, Justin discusses the critical challenges, innovations, and strategies necessary for brands, distributors, and retailers to thrive in fast-growth economies.
So, on one hand, the platform is open. But it is also trusted because all the parties involved are known to each other.
The reason why Amazon was very successful in the early days is that they aggregated purchasing power. Initially, they started as an online bookseller and then expanded to sell a wide variety of products. They aggregated hundreds of thousands, eventually millions, of consumers who wanted to buy books. Amazon then approached distributors and said, “Guess what? We have millions of consumers who want to buy books. Give us your best terms.”
We are doing exactly this for small retailers. We are saying, “We have hundreds of thousands, if not millions, of retailers who want to buy everything from baby powder to Kellogg’s cornflakes.” With that purchasing power, you can offer your products through our platform. You can offer better discounts and terms to those retailers than you ever have before. The reason is that you are dealing through one platform with many, making life a lot easier for you as a production company. When you say that to a manufacturer, whether it’s the chief executive of a large corporation in New York or a small manufacturer in Ohio making baby biscuits, they love the sound of that. That’s what they want to hear.
Open commerce eliminates these issues by building transparency across all relationships. You know exactly who the seller is, where the product comes from, which manufacturer made it, how it was distributed, and you can see the entire process instantly. This ensures a fairer marketplace and a more transparent supply chain.
The key aspects are price and inventory. The AI experience in our business focuses on mass analysis of pricing and inventory. For instance, AI can be deployed to check the authenticity of a product, like verifying if a label is fake. However, the most effective method is analyzing prices at which products are sold and the inventory being carried.
Secondly, we will give you the data from that. You will have complete visibility of who is buying what, why, when, how, and at what price. When you offer this to an FMCG manufacturer, it’s their second Christmas present of the day. This addresses their biggest current problem—they have no access to quality data.
In what ways does Open Commerce contribute to a fairer marketplace, and a more transparent supply chain?
We are aligned with all GDPR data requisites in every market we operate. Our technology is designed to comply with these standards, ensuring data privacy and security. The quality of data is massively improved by open commerce because many organizations currently lack comprehensive data. For example, if you ask Procter & Gamble to name their 10,000 retailers in the Midwest of America, they wouldn’t be able to do so. Open commerce enhances data quality while maintaining strict data privacy and security measures.
Open commerce creates transparency and visibility, ensuring everyone is clear on what is being sold, at what price, to whom, and how. This creates a more democratized playing field than currently exists. At the moment, many transactions are invisible, which is problematic. For example, on Amazon, you might buy a pair of headphones for .99, usually priced at .99 in stores. When they arrive, you might realize they are made in Bangladesh, leading to returns and complications because you can’t trust seller reviews.
For example, if we see that inventory of Coca-Cola is being sold at 20% of the typical retail price in a local market, it indicates a serious issue—either someone is skimming Coca-Cola bottles off the top, or they are dealing with fake products. The Holy Grail of AI in this context is understanding pricing dynamics and inventory quality. This provides deep insights into what is happening in the market and what should be happening.
What are the specific AI technologies powering Open Commerce and how do they differentiate from traditional e-commerce platforms in terms of enhanced transparency?
How does AI within Open Commerce proactively address and correct pricing and inventory discrepancies to reduce the losses due to inventory distortions?
AI provides immediate visibility, allowing users to see straight away what’s happening. Currently, many retailers use basic technology for their operations, such as Square for payments or platforms like WhatsApp, Facebook Marketplace, or TikTok for buying inventory. They lack the technology to give them substantial purchasing power, often dealing with cumbersome websites and extensive Excel spreadsheets to figure out what to buy.
What innovative payment solutions does Open Commerce offer to mitigate high credit card transaction fees, and how do these solutions work?
We are responsible for the trading relationship between the retailer, distributors, and manufacturers, so credit card fees don’t apply in our business. Instead, we have created a payment infrastructure within our platform that allows these parties to pay each other directly, bank to bank. As a result, there are no credit card charges at all, making payments completely free.
The relationships we build and the products and inventory we hold on our platform are driven by domiciled manufacturers. For example, in the U.S., all manufacturers, distributors, and retailers on our platform are based in the U.S. This ensures that when you buy from a U.S. retailer, you are purchasing an American product. This approach guarantees authenticity and quality while providing competitive prices and bypassing the constraints of third-party platforms.
That’s a great question. The platform becomes very self-governing because we are building on pre-existing relationships. Companies like Procter & Gamble, Unilever, Coca-Cola, and Estée Lauder already have established relationships across their supply chains. The problem is that these relationships often operate almost entirely offline from each other. Our platform creates a digital bridge to connect all these offline relationships.
How does Open Commerce, driven by AI, ensure access to authentic, quality products at competitive prices while bypassing the constraints imposed by third-party platforms?
Justin founded RedCloud to address fundamental issues in the global supply of consumer goods that hinder brands, distributors, and retailers in fast-growth economies from trading efficiently, transparently, and cost-effectively. His previous experience includes founding and running the cloud intelligence company Vecta and co-founding the transatlantic fintech company CC. Throughout his career, Justin has been recognized as a two-time regional Ernst and Young Entrepreneur of the Year finalist, a four-time Red Herring 100 winner, a Finalist Codie award winner, and a Fast Track 100 finalist.
- Immediate Visibility: For the first time, participants can clearly see trading history and relationships in real time.
- Digital and Efficient Trading: The platform allows all parties to trade with each other digitally and efficiently, significantly reducing costs for everyone. Distributors can receive rebates from manufacturers more easily, retailers can pay less for products, and manufacturers can optimize their production and inventory systems to align with buying patterns across the supply chain.
- Improved Supply Chain Management: These improvements address common supply chain issues such as product shortages, overpriced products, misplaced products, or incorrect inventory in stores. This ultimately enhances the consumer experience, whether they shop in-store or online.
In what ways does Open Commerce facilitate better communication, transparency, and transactions between retailers, distributors, wholesalers, and manufacturers?
When dealing with Amazon, they get no data at all and are often told, “Screw you, that’s our data, you’re not getting anywhere near it.” Amazon might even manufacture their own competing brand. Alternatively, manufacturers deal with a dysfunctional distribution network where they never really understand what the retailer is buying. They are essentially guessing their production in the dark.
How does RedCloud’s AI-driven Open Commerce platform fundamentally shift the power dynamics in the e-commerce landscape from giants like Amazon to smaller retailers?
How does Open Commerce balance the need for data-driven insights with stringent data privacy and security measures?
Even better, we are enabling these manufacturers, which is very different from the Amazon play, to access the data driven by those retailers. You create two ideal worlds for them. On one hand, you’re bringing them all this aggregated retail purchasing power, making it much easier for them to sell their products. It’s almost like a real-life Santa Claus experience for them.
How does Open Commerce balance scalability with the need to maintain a high-quality, secure marketplace for small businesses?
Open commerce provides three key benefits:
In this trillion market, open commerce allows users to instantly see where inventory is, the prices at which inventory is selling, the demand for that inventory, predicted demand, predicted pricing, quantities, and delivery times. Each party has a tailored visual experience: retailers see what they can buy, when, how, and where; distributors see what they are holding and what needs to go out the door; and manufacturers see a clear view down the supply chain. This transparency helps reduce losses due to inventory distortions by providing accurate, real-time data for better decision-making.
