Social Commerce

Rules for the Revolution: Interview with Shopkick CEO Cyriac Roeding

“Retail is not broken, stores are.” – Ron Johnson

Imagine walking into a retail store and, upon crossing the threshold, have it know you are there. Not the store personnel mind you, but the store itself. That’s been the experience of 25 year-old shopper Diana Ku for more than a year, thanks to an app called Shopkick.

Prior to her discovery of the app in August 2010 (she saw a poster in a dressing room of American Eagle that talked about it), Ku was primarily an online shopper. “Before I found the app, I did most of my shopping online, but the app has caused me to go into stores,” said Ku. “Otherwise, I would be doing more online shopping without the app than I do now.”

That change in shopping behavior is music to the ears of Shopkick creator, Cyriac Roeding, who designed the app with the revolutionary goal of transforming retail shopping in the real world.

“Shopkick is changing how consumers shop into a much better experience using their smartphones by realizing that someone is at a store where they get rewarded just for coming in,” said Roeding.

Shopkick uses a virtual currency called “kicks,” which consumers can redeem at participating retailers, including BestBuy, Macys, Target, American Eagle and seven others stores. Alternatively, consumers can use the rewards points to give donations to charity, purchase dinner vouchers, Facebook credits, or a number of other ways.

The technology differs from other geo-location apps such as Foursquare because it doesn’t rely on GPS, which Roeding says is “highly inaccurate.” Rather, Shopkick uses what he refers to as “presence technology” through a small box located in stores that emits an audio signal, which is imperceptible to the human ear, but that smartphone microphones can pick up and decode. The signal is only perceived by the microphone once the shopper crosses the store’s threshold.

Retail’s Number One Problem

Roeding said the number one problem faced by retailers is foot traffic, so getting customers through the door is the key to driving incremental transactions. The predicament, he says, is that most stores have it backwards, which led him to ask, “If foot traffic is so important, then why not reward customers for coming into store?”

The answer, according to Roeding, is that no one has a clue that a shopper is there until they purchase an item with their credit card. “That’s the first moment when it’s too late to add an item to you basket. Most stores only greet you when you’re leaving and that’s a little awkward,” he stated. “The purpose of the app is to turn this around and welcome shoppers when they come in, not the other way around.”

Based on in-store conversion rates, which can range between 20 – 95 percent (as opposed to e-commerce, which averages less than one percent) based on the type of store, getting more foot traffic can be the difference between a store becoming little more than a showroom for Amazon or other online retailer as opposed to a destination where shoppers like Ku spend more of their time.

Retail is a $3 trillion industry, the third largest industry in the United States behind energy and healthcare. Therefore, the importance of making the shopping experience a better is of inestimable value. Overlaying a digital layer onto it  is what Roeding believes will make for fundamental change.

Stores need a renewal of vision as to why they exist, states Roeding: “They are not places to pick up items sitting on shelves, but, rather, destinations designed to provide consumers with a good experience, solve problems or give them great forms of entertainment. Stores exist to enrich the consumer’s life.”

Roeding sees a confluence of two trends that mandate the need for retailers to change:

  1. Consumers demand it. Prior to the advent of the Internet and e-commerce in particular, retail had no reason to change, which often meant the consumer was left with a less than desirable shopping experience. That is no longer the case. “Consumers are much savvier. They have alternatives that didn’t exist before. Now they can go online where no one mistreats them,” he said.
  2. Mobile commerce has transformed shopping. “Smartphones are the only interactive medium you carry with you when you enter a non-interactive physical store. By overlaying the real world with a digital layer, you enhance the shopping experience  and make it better.” remarked Roeding.

Shopping Versus Social as the Core

Even more revolutionary than the app itself is Roeding’s belief about how social commerce should function. “There is a misunderstanding in the market about social commerce. Retailers are not going to win by trying to move people from social layer to shopping. The leap from social to commerce is to far. It feels awkward to sell things in social environment,” he stated, and cited Facebook’s shutting down of Deals after only three months as case-in-point. Instead, Roeding believes that, in order for social commerce to work, shopping must comprise the core, with social as an additional layer.

Roeding’s stance is not based on reason alone. His passion for leading the way to such change is evident, as can be seen in the following soliloquy:

“I’m for dramatically changing how consumers experience shopping. I’m for people waking up in morning and knowing exactly what is interesting to them; for people having Sunday afternoon without having to wade through piles of newspaper shopping inserts to find the one deal that’s interesting to them; for people walking into a store and being treated like an individual rather than a nameless face. I’m for people walking out of the store with a smile on their face rather than frown – feeling well-treated rather than being treated like a number, without having found what they were looking for. I’m for creating the possibility that consumers can have wonderful shopping experience in real world.”

Roeding’s zeal has certainly rubbed off on Diana Ku, who says she likes getting rewarded for in-store shopping. In fact, it has caused her to visit stores that she never considered prior to downloading the app. “The added incentive provided by the app has made me want to go out and shop more. It’s made me get off my computer and get into the store. Now I even go to stores that I wouldn’t otherwise,” she acknowledged.

It is his belief that overlaying a digital layer on top of shopping in traditional brick-and-mortar retail will be the key to getting people like Ku off their sofas and into stores. That is the driving force behind his creation of Shopkick and is precisely the reason we consider him to be a social commerce revolutionary!

Roeding’s Revolutionary Rule

“Don’t mistake social as the core of the shopping experience. Social is a means to make shopping better, not vice-versa.” 

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