One of the most exciting acquisitions in the immersive content technology arena took place in 2017, when retail company William Sonoma, which specializes in kitchenware and furniture, acquired 3D imaging startup Outward for $112 million. William Sonoma stated that the deal was aimed to support Pottery Barn and West Elm customers with strong visualization tools to help them explore how furniture would look in their homes. 

We go back and take a closer look at this business deal today for a number of reasons. First, because as more retailers choose to acquire startups in the field (for instance, Ikea had just acquired Geomagical Labs, a 3D and visual AI tech company offering interactive home furnishings solutions), it’s important to observe the logic behind key milestones; second, because it seems that William Sonoma’s appetite for 3D is only growing, as the company continues to make moves in that direction with the recent partnership involving 3D gaming apps; and third, because we’ve spent many hours researching and investigating this deal and the business moves leading up to it. Here’s what we discovered: 

Content really is king

Outward’s technology solves the visual data challenge for retailers and enables customers to make a quick and informed purchasing decision. Our data shows that Outward has invested greatly in content creation and focused on growing its team by hiring more content professionals in the time leading up to the William Sonoma deal. We can see that the main focal point is 3D content creation, with many companies looking for access to tech and talent in the field, as well as solutions that simplify, speed-up, and enhance the creation process.  

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Retailers want it all

The fact that the startup company was acquired by a retailer and not a larger tech company tells us that retailers want to keep technology as an in-house asset that differentiates them and gives them a competitive edge. That is why we continue to see similar acquisitions made by additional companies, including the Ikea-Geomagical Labs acquisition, and recent moves made by Frontdoor and others. 

Go big or go home 

The price of any acquisition is based on the value that the specific acquiring company can receive from adding this technology to its list of business capabilities. This means that while $112 million is very impressive, bigger retailers (such as Amazon) could have, perhaps, paid more for a similar solution. 

When analyzing the true ROI of 3D solutions, we must always calculate the value per asset and understand what a certain company's services are worth for each business. By taking into account factors like the price per product, gross margin, volume of products, and more, it becomes clear why retail giants are willing to pay groundbreaking amounts for the right tech startups. To learn how you can approach this task, read our analysis on whether one should hire an in-house team or use outsourced 3D services. 

Look at the big picture

Outward is a true pioneer in our industry and its achievement should make us all proud. The company’s algorithm is impressive, but still somewhat verticalized as it focuses specifically on furniture visualization. Broader solutions that are able to cover multiple product categories at once are still needed to march the industry forward, particularly for startups looking to support mega retailers that offer a wide range of categories. This is clearly a technical challenge worth solving.  

It’s inspiring and encouraging to witness major acquisitions in our industry, especially as we examine the company’s journey. By learning from our peers and studying the steps that have led them to success, the 3D industry will form a clear path towards bigger and more important milestones.