Location based shopping - Shopkick, Groupon, Facebook, and others

Christian DahlenJan 2011

www.linkedin.com/pub/christian-dahlen/1/447/4b3

Content of this document

• Key challenges for bricks and mortar retailers• Key players• Shopping conversion value proposition• Shopkick

– Value proposition and monetization– Key partnerships

• Loyalty programs – Example: payback.de

Consider purchase

Enter store Buy Return

to store

KEY CHALLENGES FOR BRICKS AND MORTAR RETAILERS

Conversion rates• Online 0.5 – 3%• Offline fashion 20%• Electronics 40-60%• Groceries 90-95%

1. Get more customers into

the store

2. Convert to buy

3. Upsell/ cross sell

4. Keep loyal

KEY PLAYERS IN LOCATION BASED SHOPPING

Consider purchase

Enter store Buy Return

to store

SHOPPER PURCHASING CYCLE

Shopkick • Receive discount offers for partners on iPhone

• Receive discounts and loyalty points when entering

• Detect offers throughout store

• Redeem discount at the POS

• Participate in loyalty program

Groupon • Buy heavily discounted offer

• Visit retailer to redeem coupon

• Redeem Groupon

• Potential for additional purchases

-

Facebook Places and Deals

- • Check-in and notify friends

• Receive FB Deals points

• Convert FB deal points into credits

• Collect Facebook Deal points

How much traffic did Groupon drive into

the GAP stores?

50%-70% increase in foot traffic at Sports

Authority

SHOPKICK

Monetization from retailers

Fee for every loyalty point earned

+Percentage of sales that can be attributed

to shopkick application

Value proposition for retailers

Increase traffic into stores by location sensing

+Referrals from cross retailer loyalty

program

Value proposition for customers

In store discounts+

cross retailer loyalty rewards

KEY SHOPKICK PARTNERSHIPS

“Deals are largely non-exclusive”

Name Category Number of initial stores

Best Buy Electronics 181 - > 257

Macy’s Department store 150

American Eagle Fashion 52 -> 200

Sports Authority Fashion 52 ->

Target Big box retailer 242

The Wet Seal Fashion 500

Crate & Barrel Housewares and furniture

170

Simon Property Group

Malls 25 -> 100

LOYALTY PROGRAMS – EXAMPLE PAYBACK.DE (GERMANY)

Customer

Retailer

Loyalty card provider

• Drugstore• Eyewear chain• Department store• Gas station• Grocery store

• Eur 150m revenue, 300 employees, 30% CAGR

• Touches 15bn of retail revenues, %7 of total national total

• In 1/3 of all households

http://techcrunch.com/2010/08/16/best-buy-shopkick-257-stores/

http://gigaom.com/mobile/location-is-the-new-shopping-assistant/

http://kara.allthingsd.com/20101116/shopkick-checks-in-with-target-ceo-cyriac-roeding-talks-about-social-shopping/?mod=ATD_search

http://techcrunch.com/2010/08/10/why-i%E2%80%99d-use-shopkick-but-not-foursquare/

http://blogs.forrester.com/julie_ask/10-08-03-shopkick_new_mobile_service_drive_legitimate_foot_traffic

NOTABLE REFERENCES