Perhaps most telling about how well the Bay Area startup Engage3 has integrated into its Davis headquarters is the fact that one of its co-founders, Ken Ouimet, hasn’t driven to work in more than a year.
The small, bike-friendly city of Davis has served well as a base for Engage3, a company that specializes in comparative retail pricing data. And the local business has thus decided to not only remain in Davis, but to expand here.
One of Engage3’s initiatives has been establishing ShoppingScout.com, which provides a list of grocery retailers and a database of their respective prices. Ouimet says shoppers can potentially save between 20 to 40 percent on food budget.
Engage3 was created in 2008 in San Francisco, the product of what has been referred to as a “passion for pricing and technology” by Ouimet and his brother, Tim, the company’s other founder.
If such a strong interest in price optimization seems peculiar, it helps to know that their parents, Roger and Colleen Ouimet, owned Comparative Prices International in Sacramento for 40 years. The entrepreneurs have long had an intimate understanding of this industry.
“We’d be in stores as little kids (not more than 7 or 8 years old), writing down the prices of different products,” Ken Ouimet recalled. “My mom would use that for reports, using a manual typewriter, to sell to retailers so they could understand where they were in the market.”
But his approach differs somewhat in that he’s learned to apply modern solutions and complex mathematical models to optimized retail pricing, due in part to the bachelor’s degree in chemical engineering he earned from UC Davis in 1991.
He and his brother first branched out with KhiMetrics, a software company that specialized in pricing optimization software. They launched it in Scottsdale, Ariz., after struggling to find investors in Sacramento.
“We used mathematical models that helped inform retailers how shoppers would respond to prices and promotion,” Ouimet explained. “We could predict at the store level, given any set of prices or promotion, how many sales there would be.
“Also, people hear about price optimization and think we’re finding the highest price to gouge the consumer, but that’s not how it’s implemented. Most our clients want to figure out how to lower prices to remain competitive.”
The advanced analytics the brothers introduced to the tracking of pricing data allowed KhiMetrics to become one of the nation’s fastest-growing enterprises. The Ouimets sold the company in 2006, seven years after founding it.
“My brother and I decided two years later that it was time to start out on our own again, and attack this from a fresh perspective,” Ouimet said. “We realized the key was the shopper. … We started Engage3 with the goal of understanding consumer demand really well.”
He further explained that the name of the company represents the desire to engage all three of the groups with vested interests in the supply chain’s proper function: shoppers, retailers and manufacturers.
It’s one of the concepts driving ShoppingScout, the aforementioned application that intends to help consumers save money while grocery shopping. It soon may include local retailers like Nugget Market and the Davis Food Co-op, Ouimet said.
Though the main office of Engage3 is a quaint space at 231 E St. in downtown Davis, the company has plans to remodel the former UCD Occupational Health Services building at 501 Oak Ave. to accommodate its growth.
The city of Davis just last month approved the plans for construction of the 12,000-square-foot modern office facility, so Ouimet expects it will be complete in “a year or two from now.”
Having Engage3 located in close proximity to the university is something Ouimet believes is key to its long-term success, because of the relevant resources provided by the school’s various departments: “from theoretical physicists who may help us develop algorithms, to sustainable agriculture experts who may help us better understand where food comes from.”
There are also 20 student interns assisting the company’s 15 full-time employees in Davis, most of whom are UCD alums, Ouimet said. He confirmed that the company plans to hire more employees soon.
It’s a group that David Chan, head of sales and marketing at Engage3, believes can solve the relevancy problem affecting small local grocers; that problem also has taken a toll on book sellers and record stories.
“(Engage3) is building these tools to help these companies stay relevant,” Chan said. “They’re going to be competitive, irrespective of us, with the big chains. This allows them to compete in a different way.”
— Reach Brett Johnson at [email protected] or 530-747-8052. Follow him on Twitter at @ReporterBrett