Mobile Payments V7


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Smartphones - Changing the way we shop - Mobile Customer Retail Value Chain

Published in: Economy & Finance, Business

Mobile Payments V7

  1. 1. Smartphones – Changing the way we shopDecember 2010Author: Casey Simmons
  2. 2. Author Background• Investment professional in early and late stage companies for 3+ years – Sourced early-stage investment opportunities within transactional marketing, security software, and digital media for Comcast Interactive Capital, venture capital arm of Comcast, with over $500 million under management – Closed ten growth equity and buyout investments within security software, telecommunications, and semiconductors for HarbourVest Partners which manages over $3 Billion of direct Investment capital• Technology investment banking analyst for Jefferies Broadview for 2 years – Involved in all aspects of transaction development and execution• Education – MBA at the Wharton Business School – Master’s of Telecommunications at the University of Pennsylvania – BS in Electrical Engineering at Villanova University 2
  3. 3. Mobile Customer Retail Value Chain Awareness In-store Customer Purchase outside store search/selection Service Promotions Comparison shopping 2D Barcodes Product Disposal Group deals Product recs Digital gift cards Renewals Coupons Barcode scanning Mobile card reader Installation Social networks In-stock availability Mobile self-checkout Upgrades Blogs Plan meals NFC Stickers Returns Location based services Smartcards Malfunctions Contactless key fob SMS Companies: Companies: Companies: Groupon Blippy mFoundry Facebook Swipely Swagg Twitter Red Laser(1) Bling Nation Google ShopSavvy Square Mashable Shopkick AisleBuyer Loopt Visa CheckPoints Mastercard Foursquare VeriFone Topguest Think Computer Ziplist Venmo – Acquired by eBay 3
  4. 4. In-store use caseManual Check-in: Fourquare, Loopt, Scan bar codes: Shopkick, Red Laser, Blippy,Gowalla, Checkpoints, Topguest Red Laser, ShopSavvy, ShopSavvyAutomatic Check-in: Shopkick Checkpoints Recipes: Ziplist Search & Walk into a store Check prices compare products Share product Check in-stock Redeem rewards recommendations availability with friends Foursquare, Loopt, Foursquare, Loopt, Gowalla Shopkick, Blippy, Swipely, ShopSavvy, Checkpoints, Topguest, Gowalla 4
  5. 5. Foursquare vs. Shopkick• Reach – Shopkick signed up large retailers such as Best Buy & Macy’s in over 1,100 stores – Foursquare has 4 million users with self-service platform that requires merchants to authenticate and customize loyalty platform• Engagement – Foursquare requires user to check-in, share location with friends, and choose to post comments – Shopkick enables earn rewards by walking in, scanning products, and completing tasks within store• Loyalty Program – Shopkick: A long time to earn rewards: song download is 250 kickbucks and a $5 gift card at American Eagle requires 1,250 kickbucks – Foursquare: Small % of merchants offer mayor, frequency and wildcard specials• Business model – Shopkick: $100/RF transmitter, a small fee for each kickbuck delivered, revenue share if consumer buys an item after using the app – Foursquare: to be determined but possibly analytics, cost/check-in 5
  6. 6. Blippy vs. Swipely• Privacy – Blippy links with your credit card and automatically shares the place, amount, and the item purchased with your friends • Consumer credit card information exposed on Google search – Swipely links with credit card and email receipts and allows to choose why, what, when, and where you purchased items but not the amount• Incentives – Blippy: Share product recommendations with friends to influence their decisions, brand perceptions, & leveling up based on number of reviews – Swipely: Earn badges based on what you’re buying, discover new products, and share deals and bargains with friends• Business model – Swipely: To be determined but probably aggregate user preferences and spending habits to charge merchants for targeted ads – Blippy: To be determined but maybe rewards based on recommendations, retailer analytics, & targeted ads 6
  7. 7. Company Profiles
  8. 8. Shopkick• Description – Location based iPhone and Android shopping application that generates user rewards (“Kickbucks”) based on user activity within the storewiRF transmitters in store that generates rewards based on user activity• Investors – $20 million raised to date from Kleiner Perkins, Greylock, Citi Growth, and SV Angel• Key Highlights – Live in 1,000 retail stores by Black Friday • Existing merchants – Best Buy, American Eagle, Macy’s, Sports Authority, Target – 550,000 downloads in first five months – Collect rewards for walking in and scanning products with phone – App generates discount code for cashiers – Phone microphone picks up audio signal from RF transmitter – Redeem points for retailer gift cards, music downloads, or Facebook credits – Shopkick server integrated with merchant POS – Accessed loyalty incentives with phone number – High conversion rates in physical retail • 20 % fashion, electronic 40-60%, groceries 95-100%• Major Risks: – Reliability of camera scanner – Long time to earn significant rewards 8
  9. 9. ShopSavvy• Description – Mobile application for iPhone and Android phones that allows a user to scan a barcode to find the best prices from local and online retailers• Key Highlights – Downloaded more than 10 millions times with more than 6.5 million users – Offer discounts to users based on items scanned or related product category – Revenue sharing based on user purchases – Cross-selling opportunities with competitive goods – Identifies store location and lowest prices for list of goods or services – Up-sell adjacent products and warranties while in store• Challenges – Incentivizing users to scan products – Misalignment with retailers – Competitive differentiation in a crowded market – eBay acquired largest competitor, Red Laser 9
  10. 10. Checkpoints• Description – Mobile application for iPhone and Android phones that allows a user to earn rewards for checking-in and scanning products to redeem for prizes• Key Highlights – Redeem points for cash, gift cards, airline miles and gadgets – Downloaded by 100,000 users in first month – Partnerships with Belkin, Energizer, Seventh Generation and Tyson Foods to engage with consumer through messaging, recipes, coupons or promotions• Challenges – Keeping users engaged long enough to earn rewards – Differentiation among other bar code scanning solutions – Scaling up brand partnerships quickly 10
  11. 11. Topguest• Description – Mobile application that gives you real hotel points, air miles, and elite travel perks automatically for your Facebook Places, Foursquare and Gowalla check-ins• Key Highlights – Exclusive partnerships with Virgin America Elevate, Hilton HHonors, and Priority Club – Perks include free drinks, spa passes, complimentary stay credits, and 25% off premier rooms at top-flight hotels• Challenges – Unclear how awards compare to existing loyalty programs – Little value creation relative to current solutions 11
  12. 12. Foursquare• Description – Mobile application that lets users check-in to various venues, share tips with friends, and earn badges based on frequency and destination• Key Highlights – Inexpensive solution for small merchants to use Foursquare as low cost advertising to increase foot traffic – Incentivize users with rewards based on frequency and number of check-ins – Self-service analytic tools enabling merchants to create, manage and track promotional campaigns – Real-time stats on frequency, time of day, gender, # of check-ins• Challenges – Verifying false check-ins – Maintaining customer engagement – Developing attractive reward programs with merchant – Scaling retail partnerships with large chains 12
  13. 13. Bling Nation• Description – Mobile payments platform enabling consumers to pay for products at the point of sale through near field communication (NFC) stickers funded through local banks or PayPal• Key Highlights – Convenience and faster transaction time • Visa survey indicates 69% of respondents cite speed or convenience as the chief reason to use a credit or debit card – 50% lower merchant fees – Integrated with Facebook so merchants can deliver targeted loyalty programs, promotions and coupons directly to consumers – Data analytics on customer preferences and purchase behavior – Integrated with VeriFone point of sale hardware – Market opportunity to replace cash • 75% of cash transactions in the U.S. are less than $25• Challenges – Lack of merchant awareness – User desire for merchant ubiquity – Fraud prevention – Lack of NFC installed hardware – Distributing NFC tags and signing up merchants efficiently – Generating significant need to convince users to use Bling over credit or debit – Low barriers to entry and carriers/device manufacturers hold bargaining power 13
  14. 14. Zong• Description – Enables users to pay for digital and virtual goods with their mobile phone number or credit card• Key Highlights – 220 carrier relationships worldwide in 40+ countries reaching 3 Billion users – Integrated with carrier and social network/game network – Virtual good market drivers – in-game purchases, new business model for gaming industry (EA, Ubisoft), Console gaming (Xbox and Sony), casual gaming – Frictionless payment systems – Enter phone number and authenticate – 10 million users in 2009 with 100%+ growth in 2010 – Mobile payment provider for Facebook Credits with a $835 million virtual goods market • Single global currency across games – Merchant value proposition • Uptime reliability (10 year history), latency (no aggregation), bursting (1,000 tx/sec), pricing, monetization – Higher customer conversion • 100% with phone and 20% with credit card • 20% of merchant volume funded through credit cards (Zong+)• Challenges – High carrier fees 14
  15. 15. PayNearMe• Description – Enables consumers without access to credit or debit cards to use cash at 6,000 local 7- Eleven stores to complete e-commerce, transportation, and financial transfers• Investors – $23MM raised from Khosla Ventures, August Capital, True Ventures, & Maveron• Key Highlights – 2-3% transaction fee funded by merchants – Caters to 60 million unbanked and under-banked population in the U.S. with 1.3 Trillion of purchasing power – Converts 7-Eleven stores into payment network for consumers to pay for bills, bus tickets, loans, and transfer money – Integrated with, Facebook, Progreso Financiero, MOL AccessPortal (MOL), m-Via, Lexicon Marketing, Adknowledge’s Super Rewards, Money to Go and SteelSeries – Greater convenience and less expensive than money orders, prepaid generable reloadable cards, walk-up bill pay locations – Generates new consumer segment for merchants with no fraud or charge-back risk – At time of purchase, consumer can print slip or receive SMS and redeem at 7-Eleven• Major Risks: – Generating customer awareness within target segments since rely on merchants to acquire new customers – Marginal benefit of buying in store vs. shopping online and going to 7-Eleven 15