Mohawk Group: Invest in a Proven AI Model that Outsmarts Rivals in E-Commerce

• Mohawk Group Targets Consumer Product Categories Where Rating Trumps Brand
• Mohawk Uses AI to Improve Products, Market and Price Them Optimally
• Mohawk Only Months Away from Positive EBITDA
• Mohawk Trades at Deep Discount to High-Growth Technology Companies

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="By John Jannarone” data-reactid=”24″>By John Jannarone

As the great migration from brick-and-mortar to online shopping continues, top rankings have become the holy grail among consumer products companies vying for sales. For savvy investors, there is a chance to own a company that has cracked that code, and at a reasonable price to boot.

Meet Mohawk Group Holdings, Inc., a recent IPO that is revolutionizing the design, marketing and pricing of consumer products. The thesis behind the business: Consumers in categories such as home appliances, electronics, and beauty products have begun to search and purchase on third-party marketplaces around the world such Amazon.com, Inc., Alibaba Group Holding Limited’s Tmall, JD.com, Inc., and MercadoLibre, Inc. In turn, purchase decisions are based on data such as customer reviews and star ratings rather than brand name.

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="That created an opportunity for Mohawk to create algorithms to replace several elements of the consumer product lifecycle. &nbsp;Take for instance Mohawk’s hOmelabs Beverage Refrigerator and Cooler (pictured above). It currently ranks at the top of the list of non-sponsored results in a search for “beverage refrigerator” on Amazon and has over 900 reviews, the vast majority of which are five out of five “stars.”” data-reactid=”27″>That created an opportunity for Mohawk to create algorithms to replace several elements of the consumer product lifecycle.  Take for instance Mohawk’s hOmelabs Beverage Refrigerator and Cooler (pictured above). It currently ranks at the top of the list of non-sponsored results in a search for “beverage refrigerator” on Amazon and has over 900 reviews, the vast majority of which are five out of five “stars.”

How did Mohawk get its refrigerator to rank so high? The credit goes not to focus groups or a crack design team but to the AIMEE (Artificial Intelligence Mohawk e-Commerce Engine) software platform. AIMEE uses data from marketplaces to identify the features of products that lead to success, allowing Mohawk to remove much of the guesswork in new designs. In total, Mohawk can deliver a product to market in six to eight months from the time the idea is generated, versus 18 to 24 months under the standard consumer products development model.

AIMEE’s work doesn’t end there. Once a typical product is launched under the traditional approach, an expensive and time-intensive marketing process begins, with agencies and other outside firms often spending months on advertising decisions. But AIMEE again uses data to decide the optimal placement of advertisements to drive search results in Amazon and other platforms while constantly adjusting price to drive maximum profit. Those decisions take a matter of minutes.

The result is a very high rate of success. Approximately 80% of the company’s products over the last year became profitable within three months of launch, the company said on its third-quarter conference call in November. The company defines such profitability by a positive “contribution margin” which accounts for all variable costs associated with a product, such as manufacturing and marketing but not fixed costs.

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Another example of a successful product is the hOmeLabs 4,500 Sq. Ft Energy Star Dehumidifier. Similar to the beverage refrigerator, the product has over 5,000 reviews on Amazon and ranks at the top of the list under a search for 70 pint dehumidifiers. Importantly, the company can continue introducing products without adding headcount or other significant costs because the AIMEE platform is highly scalable and manufacturing is outsourced for every item.” data-reactid=”39″>Another example of a successful product is the hOmeLabs 4,500 Sq. Ft Energy Star Dehumidifier. Similar to the beverage refrigerator, the product has over 5,000 reviews on Amazon and ranks at the top of the list under a search for 70 pint dehumidifiers. Importantly, the company can continue introducing products without adding headcount or other significant costs because the AIMEE platform is highly scalable and manufacturing is outsourced for every item.