Cutting food waste with dynamic market pricing


With food waste ranked as the world’s third-largest contributor to greenhouse gases (No. 1 is refrigeration, No. 2 is fossil fuels), Israeli tech entrepreneur Oded Omer developed a product that, he believes, can reduce food waste by 30 percent or more.

Omer calculates that in the European Union, 2.5 to 4 percent of a retailer’s annual turnover “is literally being thrown away. In the US, it’s touching 5.5 percent.”

“That’s insane in an industry which enjoys margins of just 1 percent,” Omer says.

Software from Tel Aviv-based Wasteless, Omer’s latest startup, updates electronic shelf labels so the price changes based on a product’s expiration date.

“I was standing next to a wall of cottage cheese, and I thought, it doesn’t make sense to pay the same price for a cheese that expires in two days compared with one that expires in seven days,” Omer says.

“Let’s say that a store has ten packages of chicken thighs,” Omer explains. “They might sell seven and throw away three. On the last day, they offer a 40 percent markdown. We say: Don’t wait. Start with a 2 percent markdown six days before the expiration date. Then drop it another 7 or 11 percent. That way you’ll never reach 40 percent only on the last day. The product will sell well before the expiration date.”

A processed food with a long expiration date wouldn’t be a good candidate for a dynamic price reduction. But for products like fresh meat, fish, dairy or prepared salads, Wasteless is ideal.

Omer says that tests with a retailer in Spain resulted in a 32.75 percent decrease in waste combined with a boost in revenue of 6.3 percent.

Two-thirds of consumers, when choosing between a discounted product with a shorter expiration date, and the same product with a longer expiration date, will choose the discounted option, Omer says.

“We need to find the common point between two mathematical functions: to give incentives to the consumer to buy without harming the retailer’s revenue stream.”

How does the Wasteless system know when a product will expire and what price to assign?

That’s where AI comes in, tracking how consumers respond to dynamic pricing so a retailer can find the perfect discount: If a product is marked down 10 percent for two days and doesn’t sell, the AI will make deeper markdowns until the product starts moving, and will learn from that history.

The electronic shelf labels display both the original price and the markdown, so consumers can see how much they’re saving. Prices are updated no more than two to four times a day to avoid causing customer confusion.

These automatic changes eliminate a normally laborious task for supermarket workers.

Wasteless can work in stores using a 13-digit barcode that includes the expiration date. (Traditional 10-digit barcodes don’t have this appendage.) The 13-digit barcode is becoming more common in the US where the Whole Foods and Publix chains use it.

For online grocery shoppers, Wasteless has an app for mobile phones.

The idea for dynamic pricing came from Weissbeerger, another Omer startup. Weissbeerger attaches monitors to beer taps to track how much alcohol is being poured in a bar or restaurant, allowing for a precise pay-for-what-you-drink approach. A Weissbeerger dispenser can even be placed at the customer’s table, eliminating the need for interaction with the wait staff.

Weissbeerger was sold to Anheuser-Busch InBev for $80 million in 2018. “I was very proud but decided not to stay on after the acquisition,” Omer explains. “I wanted to start another company.”

That company, Wasteless, has now raised $7 million and has 20 on staff at its headquarters in Tel Aviv and in Amsterdam and San Diego (where part of the R&D is being conducted).

Omer says he knew he was on to something while shopping in California. He noticed that the seafood was marked down 60 percent as the expiration date drew close.

“How many of these will you sell?” Omer asked the clerk.

“None, man,” the clerk said. “We’ll throw this all away.”

Wasteless’s first commercial deployment was in 2019 with an Italian supermarket chain. Not only was waste reduced nearly 40 percent, but revenue increased by the same amount, he said.