Social Commerce Platform Overview: Shopkick – Mobile Commerce on Steroids

Shopkick – the mobile commerce app for iPhone and Android that knows when users walk into a store and rewards them with points called “kicks” just for doing so – may be the traditional retailers newest best friend. At least brands like American Eagle, Crate&Barrel, Macy’s, Best Buy, Target, Procter & Gamble, Kraft Foods and most of the nation’s top 250 retailers think so, for each has incorporated use of the app in their respective stores. (Old Navy announced last Wednesday that it is joining Shopkick’s roster in all of its nearly 1,000 U.S. locations.)

Each time a Shopkick app user walks into a participating store they are rewarded with points. The more points that accumulate, the more rewards, discounts and special offers are made available. Think of kicks as a form of currency that can be used in any participating store.

For example, walk into any of the 1,300 Best Buy stores, open the Shopkick app in the entrance area, wait for a few seconds and Shopkick provides an instant reward. The more stores a user visits, the more points that stack up — points that can lead to exclusive deals, some of which are available to Shopkick users only. Also, users can accumulate additional kicks rewards by scanning barcodes of featured products.

Rewards come in many forms including: iTunes gift cards, restaurant vouchers, gift cards, Facebook Credits, movie tickets, or even a cruise around the world! Users can also donate kick to as many as 30 different non-profit causes.

Shopkick Versus Groupon and Foursquare

If Groupon and Foursquare had a child, it would be named Shopkick. However, Shopkick CEO Cyriac Roeding says that the app differentiates itself from either of the other two platforms in these respects:

• Groupon – Groupon’s major strength lies in its ability to bring in new customers. Shopkick places its emphasis on building customer loyalty through the accumulation of kicks. The more kicks, the more rewards, the more customers return to redeem them.
• Foursquare – Similar to Foursqure, Shopkick utilizes game mechanics – kicks rewards – as a way to incite shoppers to buy more. However, unlike Foursquare, which uses standard and often imprecise GPS technology to pinpoint a user’s location, according to Roeding, Shopkick has its own location-based technology that utilizes an in-store audio signal detectible by the mobile device to know when a user has crossed a store’s threshold. Only then does it go into action. To put it another way, Foursquare has “check-ins” while Shopkick has “walk-ins.”

When to Use Shopkick

From the consumer’s standpoint, there are primarily three ways to use the app:

1. While browsing: Shopkick aggregates deals and offers from retailers, so shoppers can browse and locate what they want at the right price, from their favorite stores and brands – it is like a mobile version of Sunday circular ads.
2. While shopping: the heart of Shopkick’s rise with retailers is its patent-pending presence detection technology. Using a smartphone’s microphone, Shopkick is able to connect shoppers with a retailer the moment they cross the threshold and enter a partner store – so shoppers know how and where to earn the best rewards, and retailers are able to offer kicks and deals to actual shoppers.
3. While checking out products: by using kicks to incent shoppers to scan barcodes, search for branded items in a store and otherwise interact with their products, brands are able to have an active dialogue with shoppers both inside and beyond the store.

What’s in it for Retailers

There are a number of benefits to retailer that choose to use the app:

1. The app helps drive foot traffic. Shoppers who have the app can see a list of participating nearby stores and how many “kicks” each offers. The Sports Authority said it has seen foot traffic produced by the app rise by 350 percent when comparing the initial benchmark data versus what it’s currently seeing.
2. Through the accumulation of points, loyalty is encouraged. Ed Kaczmarek, director of innovation and consumer experiences at Kraft Foods, said in an interview with Direct Marketing News that “the primary reason [Kraft partnered with Shopkick] is we want to get to mobile loyalty.”
3. Businesses are in a race to take advantage of all that mobile technology has to offer and Shopkick certainly puts mobile commerce on steroids.
4. It enables stores to find new, tech-savvy ways to communicate with customers while they are in the store and at the point when they are most likely to make a purchase.
5. By providing information about products instantly, it empowers consumers to make better, more informed purchase decisions on the spot.

All is not sunshine and roses, however, because it’s possible for a consumer to earn points without actually ever buying anything. In an effort to close the loop, brands like Target are tying loyalty programs to Shopkick or adding email opt-ins to the app.

There is also the question of incremental sales. Does traffic produced by Shopkick result in additional sales? Shopkick says so stating that, in the case of one retail partner, it has seen an increase of $50 million in incremental sales due to use of the app.

Cost to Retailers

Aside from the $100 required to purchase the in-store audio transmitter, there are no additional costs to the retailer. (You heard me correctly; no additional costs. No wonder big brands love the app.)

The way the financial model works is that every time a consumer walks into one its retail partner stores and earns kicks, Shopkick gets a share of the value. When customers make a purchase via the app, Shopkick get a share of their basket and the online world cost-per-action becomes the “cost-per-basket” at physical stores.

Sample Screenshots

ShopKick Factoids

• Shopkick boasts more than 2.5 million users who have browsed more than 350 million items, scanned 7 million products and have “favorited” more than 75,000 stores.
• There have been over 2 million physical walk-ins to stores (which are measured from the shopkick signal device installed at the store).
• 59 percent of Shopkick users are women, most between the ages of 20 and 60 years old.
• The average user opens the app 14 times a month and looks at products from 16 stores each time.
• Fast Company called Shopkick one of the 10 Most Innovative Companies in Retail.
• WSJ said it was on of the Top 10 Apps of 2010.

Company Information

Shopkick was founded in the summer of 2009 by Cyriac Roeding, Jeff Sellinger, Aaron Emigh, and is funded by Kleiner Perkins’ iFund, Greylock Partners and Reid Hoffman, founder of LinkedIn, and investor in Facebook and Zynga, and Ron Conway.