Smartphones are changing the way consumers shop. Mobile apps allow consumers to be aware of deals outside the store, search and compare products in-store using barcodes or location services, and receive customer service like digital receipts after making a purchase. Many companies have created apps to engage consumers across the mobile customer retail value chain, from awareness to post-purchase customer service. These apps offer incentives like rewards points, discounts and recommendations to influence consumer shopping behavior.

1. Smartphones – Changing the way we shop
December 2010
Author: Casey Simmons

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
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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
Milo.com(1)
(1) – Acquired by eBay
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4. In-store use case
Manual Check-in: Fourquare, Loopt, Scan bar codes: Shopkick, Red Laser, Blippy,
Gowalla, Checkpoints, Topguest Red Laser, ShopSavvy, ShopSavvy
Automatic 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 Milo.com
Shopkick, Blippy, Swipely, ShopSavvy,
Checkpoints,
Topguest, Gowalla
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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
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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
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7. Company Profiles

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
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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
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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
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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
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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
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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
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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
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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 Amazon.com, 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
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