Good Idea, Good Deals

Consumers love a good deal, and that’s exactly what shopkick is trying to deliver.

shopkick, a location-based iPhone shopping application, has taken geo-location technology and combined it with coupon and loyalty strategies.

It’s a location-based shopping app, not a location-based social app like Foursquare, says co-founder and CEO Cyriac Roeding. “shopkick is focused on empowering consumers and retailers by making their real world shopping experience an interactive one with awesome rewards, great offers and more fun.”

shopkick, he says, “can actually reward consumers for walking into stores – not just for shopping, but simply for walking in. That is not possible with GPS because it has an error radius of 50-1,000 yards on mobile phones.”

shopkick’s trial application, CauseWorld, allowed shoppers to donate to charities simply by checking into stores. That app had 550,000 downloads within five months, making it the fastest-growing retail application in the App Store.

Roeding says the physical store conversion rates range from 20 to 95 percent – figures that have impressed quite a few major retailers. Within a month of being fully deployed, shopkick signed agreements with American Eagle Outfitters, Best Buy, Macy’s and Sports Authority. Offers and rewards are live now in all partner store locations in New York, Los Angeles and San Francisco, with Chicago and other cities expected to come on line soon.

The technology “is a real breakthrough,” says Richard Rommel, senior vice president of new business customer solutions group for Best Buy. “It provides a way to help our customers bridge their physical and digital shopping experiences.” Best Buy anticipates that it will help personalize the shopping experience “from check-in to check-out, with rewards and offers delivered right to a customer’s smartphone.”

How it works
Stores deploy transmitters that send out a “shopkick signal.” A shopkick-using consumer’s iPhone is detected when she’s in the store, and the app delivers reward points called “kickbucks.” Shoppers can also earn kickbucks for trying or scanning products in some retailers. Kickbucks can be redeemed for Facebook credits, song downloads, in-store gift cards, magazine subscriptions and donations to charities.

“If getting people in the door is the No. 1 goal” of retailers, Roeding wonders, why don’t they “reward anyone for visiting a store? That’s what shopkick does. This application helps bridge the customer service gap between customer and retailer.”

Gloria Barczak, marketing researcher and professor of marketing for Northeastern University, says shopkick seems more focused on getting customers into stores to buy.

“It does this by partnering with particular stores/locations, whereas with Foursquare, the stores themselves have to solicit Foursquare,” she says. “Retailers can make money off of shopkick by bringing customers into their stores who might have passed them by.” They can also advertise special items, sales, etc., “that can draw customers into their store as they are walking by.”
Still, in order to counter both existing and future competitors, shopkick needs to rapidly expand both stores and cities, Barczak says.

The shopkick signal is currently in 600 retail stores, and consumers can get offers from 3,500 stores. “Nobody else has any coverage like that,” Roeding says. “If you look at any others, they have 10 stores. We have about 100 times more scale.”

shopkick’s instant gratification attracts consumers, Roeding says. “If you go in a [shopkick-enabled] Best Buy today, you get a redeemable coupon 10 seconds later,” he says. “In most loyalty programs you have to log in online to redeem your points. All you do with shopkick is tap on a screen and have instant rewards. It doesn’t get any more instant than that.”

shopkick is only available on the iPhone, but Roeding says the company is developing applications for other smartphone platforms. “shopkick will be available on other phones soon,” he says.