The launch of shopping apps aimed at generating in-store traffic is already reaping results for retailers like American Eagle and Best Buy. Unlike Shopkick and WeReward, CheckPoints targets a broader brand rather than store base, while sharing the smartphone marketing idea. See the following article from The Street for more on this.
Forget about virtual mayorships and badges offering no tangible benefits but bragging rights with your friends. A wave of new smartphone check-in applications like Shopkick and CheckPoints let shoppers get real rewards and discounts simply by walking into stores, scanning product barcodes and performing simple tasks.
While social mobile applications like Foursquare and Gowalla that allow users to share their location with friends have generated considerable buzz in the last year, they’re haven’t enjoyed mainstream adoption.
More than 84% of U.S. adults online have never heard of location-based applications, and only 4% actually use them, according to Forrester Research.
It also remains to be seen if these apps provide concrete benefits for local businesses.
“It’s unclear to me if being the mayor on Foursquare pushes more sales other than announcing to all your friends and your social network that you stop at Starbucks(SBUX_) three times a week,” said Tobi Elkin, an analyst at eMarketer. “Is that really driving other people who might not ordinarily go?”
Mobile shopping applications, however, hope to influence consumer behavior by granting real-world incentives for shoppers to select one product over another.
“We have people who say they use our product list to determine what they’re going to buy in the grocery store,” said Ted Murphy, CEO of social media marketing company Izea, whose WeReward app gives cash to shoppers who visit featured businesses.
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Shopkick, another mobile app that offers rewards to consumers, lets shoppers earn points — called kickbucks — for walking into sponsored stores, and interacting with products. Shoppers can collect points through activities like scanning a poster in a dressing room at American Eagle(AEO_) or a printer at Best Buy(BBY_).
Users can then redeem kickbucks for Facebook credits (25 kickbucks for one credit), iTunes gift cards (over 3,700 kickbucks) or a Coach(COH_) handbag (75,000 kickbucks).
Unlike other location-based apps like Foursquare, Shopkick knows when shoppers are actually inside the store, not several blocks away. Retailers install special boxes within their stores that emits sounds that humans can’t hear, but phones can detect.
The app, said founder Cyriac Roeding, is designed to increase foot traffic, “the number one problem of every physical retailer.”
Shopkick, which launched for Apple’s(AAPL_) iPhone in August and recently rolled out a version for Google’s(GOOG_) Android-based phones, is already impacting its retail partners’ business.
Sports Authority Chief Marketing Officer Jeff Schumacher said last week that 50% to 70% more shoppers entered its stores using the application when it increased the rewards for walking in.
“There is a direct and measurable correlation,” Schumacher said. “Shopkick’s model works.”
American Eagle also upped the number of stores offering Shopkick to 200 from 50 after three months of using it.
Shopkick receives a percentage of kickbuck transactions and sales made after using the app. The company declined to discuss the size of its user base, but said it’s “very happy” with its growth.
While Shopkick focuses on working with retailers, CheckPoints is more interested in developing relationships with brands and manufacturers regardless of the retail location.
“If I work with Best Buy that might work for consumers in [1,000] locations, said Mark DiPaola, who co-founded CheckPoints with his brother Todd after they sold their search marketing company Vantage Media in 2007 for $150 million. “But if I work with Belkin, a product that’s sold by Best Buy, Radio Shack(RSH_) and others, we’ll be in 300,000 or 400,000 stores.”
Shoppers who use CheckPoints get points for scanning barcodes from featured products like Energizer batteries and Seventh Generation laundry detergent. Consumers can then redeem these points for rewards like gift cards, airline miles and a Nintendo Wii.
CheckPoints, which takes a fee when consumers earn points, has over 300,000 users since the app’s launch eight weeks ago, DiPaola said.
While some digital privacy advocates have expressed concern over the amount of data that these services have access to, it’s up to the consumer to decide if giving up some of their personal information is worth the trade-offs, said Neil Strother, an analyst with ABI Research.
“On the one hand, people care about privacy and their location being tracked, but they also want to do things cheaply or for free,” he said. “As long as consumers feel like they’re getting a fair exchange, they’ll be OK with it.”
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