Shopkick, a US-based start-up that combines mobile
e-commerce, a customer rewards programme and bricks-and-mortar
retail, claims that it can reorder the shopping landscape. Though
it debuted a mobile application a mere nine months ago, Charles
Davis reports that Shopkick could be the next big thing in loyalty
schemes.
Go deeper with GlobalData
Shopkick, a Palo Alto,
California-based startup funded by some of Silicon Valley’s deepest
wallets – including venture capital firm Greylock Partners and Reid
Hoffman, founder of LinkedIn and a leading investor in Facebook and
Zynga – brings the power of the mobile internet to the retail
experience.
Shopkick launched its mobile
application in December 2009, in partnership with Citigroup, Kraft
Foods and Procter & Gamble, and became the fastest-growing
location-based retail app in the Apple app store within weeks.
In recent weeks, Shopkick has
gained national notoriety, announcing that American Eagle
Outfitters (AEO) has jumped on board, offering app users instant
communication of store deals once they enter the location and the
opportunity to earn “kickbucks” just for visiting stores, which can
be redeemed for rewards or donated to charity.
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Simon Property Group’s Simon Brand
Ventures, the business-to-consumer arm of the world’s largest owner
and manager of shopping malls, entered into a strategic alliance
with Shopkick and launched the programme in 25 malls in Chicago,
San Francisco, Los Angeles and New York. The mall operator will
roll out the programme to 100 malls before the holiday season
begins.
Transmitters in the public areas of
Simon Property malls will tell consumers of the offers that are
available even before they enter the participating stores. Once the
free Shopkick app is downloaded onto a mobile device, a shopper can
enter a participating retailer equipped with a transmitter and
instantly learn of deals at the store. The retailer determines the
rewards – for example, AEO’s reward is a gift card.
AEO unveiled the service at 52
locations in New York, Chicago, San Francisco and Los Angeles,
according to Mike Dupuis, vice-president of marketing and
operations for AEO Direct.
“Shopkick marries mobility, loyalty
and precision proximity,” explained Dupuis, who stressed that the
technology is location-specific, which makes it different from GPS
systems that are more vicinity focused.
“We believe Shopkick’s
location-based retail app is a potential game changer in retail,”
said Dupuis. “It is designed to make the shopping experience more
rewarding and fun for consumers, which in turn brings more shoppers
to our stores.”
Influencing consumer
behaviour
The idea of having a mobile device
that is location aware and that can communicate between consumer
and retailer has massive potential, particularly for creating
customer loyalty.
The data-mining ability to target
specific offers based on one’s shopping profile gives retailers the
ability to influence the purchase behaviour of the consumer while
in the store in ways retailers have long dreamed about and it is
not difficult to envisage ways that banks and card issuers alike
can insert themselves into the equation as well.
For retailers, Shopkick is valuable
because it notifies them that a loyal customer is in the building,
allowing them to offer rewards and discounts exclusively for
members. Shopkick automatically “checks in” the shopper and
instantly rewards him or her with points, or “kickbucks” when the
app picks up an inaudible noise beamed throughout participating
stores. Similar services, such as Foursquare and Gowalla, use GPS
signals that can only determine that users are in the vicinity of a
business.
Consumers visiting Macy’s, another
participating retailer, will see a bubble appear on their iPhone
saying, “Welcome! 40 kickbucks.”
Shoppers can redeem kickbucks for
gift cards, Facebook game credits, music downloads, charitable
donations and other offerings.
They can also accumulate points,
which they can spend at any of the partner chains. For example, a
shopper may earn his or her points at Macy’s but redeem them for a
gift card at Best Buy.
Shopkick earns a small fee for each
kickbuck a customer earns. If a customer buys something after using
the app, Shopkick gets a%age of the price.
Whether shoppers will get such a
kick from being relentlessly followed – and sent new alerts as they
move from one department to another – remains debatable.
What retailers see as sophisticated
marketing, many might see as intrusive.
Customers will find that it takes a
lot of kickbucks to cash in a reward. A $5 gift card at American
Eagle requires 1,250 kickbuck points while a $10 Apple iTunes gift
card requires 2,500 kickbucks.
At around 40 kickbucks to enter a store, that means a lot of
visits to gain a reward.
