This weeks sign of the times has to be the news that eBay saw their sales via mobile devices rise from $600mm to over $2b in 2010. The apps, which are available for the iPhone, Android, Blackberry and Windows Phone 7 operating systems, have been downloaded by over 30 million people in more than 190 countries. Interestingly, the UK has been the fastest Eurpoean adopter of eBay’s mobile app, and combined with Germany they “generated nearly one third of all eBay’s mobile sales in 2010“. According to eBay, every minute there are 94 bids made for various products and 13 items of clothing/shoes/accessories are purchased. This really highlights the growing trend for consumers to do their shopping online and should resonate loud and clear with traditional, brick and mortar retailers.
The message being sent by the market is very clear – develop an online/mobile presence so that our shopping experiences are as fast and painless as possible, or we’ll buy from someone else who can. We’re already seeing the response to this trend from macro retailers like Target, Safeway and BestBuy with their expanding presences on Facebook, mobile applications, and location based services like Shopkick and Foursquare. For the mid-size and smaller retailers who are losing the tech-race, the time is now to start implementing solutions like the Accelitec software suite if they hope to close this growing gap and ultimately start winning back a percentage of these sales lost to online retailers.
CKE Restaurants, which owns Carl’s Jr and Hardee’s, has an iPhone/Android app that allows people to check-in at their local fast food locations to be rewarded with a chance to win free stuff. The interface is very clean and at first glance the prizes appear to be pretty substantial, including anything from a dollar off your next soda to free burgers. The Wheel of Awesome, which is also available on both companies’ Facebook pages, is able to ramp up the rewards that an individual is eligible to win based on their frequency of application usage. Once a coupon has been awarded, the winner has 7 days to redeem it by showing their “winning ticket” at the point of sale. This is a great example of a way for restaurants/retailers/grocers to reward their customers through location based services, leverage the functionality of social media, and ultimately increase brand awareness and customer loyalty by applying a simple and fun ‘game-layer’ to what would otherwise be ordinary, everyday coupons.
It was announced this week that Google acquired Zetawire, a Toronto-based mobile payments-focused startup, in August. This is important and revealing news for anyone trying to understand the long-term mobile strategy for the Silicon Valley search engine behemoth. It’s widely known that the latest version of the Google Android mobile OS, known as 2.3 or “Gingerbread”, has been designed to include the functionality of a digital wallet for users to store value; Zetawire is a natural augmentation to the digital wallet because they bring vital pieces like NFC (Near Field Communication) and payments transactions into the fold. There isn’t a great deal of information available on the startup in question, but we do know that they had several very important patents around mobile banking, identity management and credit card/mobile coupon transaction processing - all of which points directly to the idea that Google is attempting to turn smartphones running on their OS into virtual, digital wallets. With Google now officially stepping into the mobile payments and LBS space, retailers need to keep an eye on ways to enhance their business by incentivizing and engaging customers in/around their stores via Android smartphones.
Safeway launched a pilot customer loyalty program this week at 300 of its Vons grocery stores in Southern California, combining location based services from Foursquare and special offers from PepsiCo. The results of this trial will have very important implications for the customer loyalty programs of retailers everywhere; if these three companies can prove out this “check-in” loyalty model, then we should expect to see many others like it across all types of retail.
The most glaring omission from this pilot program is the lack of a digital wallet tied to individual customer loyalty accounts, which would allow for the check-in reward to be processed and realized without requiring the shopper to do anything beyond simply checking in via Foursquare. Ultimately it seems that LBS and customer loyalty programs are a natural fit, but this most recent model is still a few steps away from realizing its full potential.
Looking for ways to increase their penetration in Location Based Services (LBS), Facebook announced yesterday that they’ve added an application called Deals to their platform. Currently only 4% of online adult Americans use LBS applications to let their friends know where they are throughout the day. As an incentive, Facebook has teamed with 21 businesses (so far) to offer deals to users who check-in to certain locations around their cities; Gap is offering a free pair of blue jeans to the first 10,000 people who check-in at a Gap location on November 5, 2010; Macy’s is giving shoppers 20% off for checking in; REI, Starbucks and 24 Hour Fitness are all offering to donate money to various charities for every check-in at their locations. These rewards are clearly more pragmatic and meaningful than the badges and titles that users on Gowalla and Foursquare have competed for up to now, and should provide greater incentive for the general public to at least start considering the use of LBS. Ultimately, Facebook needs to remove as many barriers-to-use of this LBS functionality as possible; the most powerful delivery method of these rewards will be the user simply collecting and storing their credits in a digital wallet, as opposed to “proving” that they’ve checked in to a store clerk before they can claim their discount at the point of sale. The user could then simply check-in at various locations and the store would instantly recognize their account and provide discounts automatically. What do you think about Location Based Services? Do you use them currently? Would you check-in for a free pair of Gap blue jeans?
Starbucks has tried a variety of media plays in the past (magazines, music) as brand extensions, with varying success. This digital program is a horse of a different stripe, however, and appears to be a platform that will keep the brand in a position to leverage new technology to drive loyalty benefits. It makes their stored value card initiative look positively, well, old-school.
“Imagine a Starbucks patron is reading a review in the free version of the New York Times about a Chardonnay and suddenly their iPhone buzzes. A text coupon arrives in your mobile inbox and you are offered $5 off a wine purchase of $20 or more from a local wine purveyor. The coupon has a timed code and expires in 3 days, nudging you to act. The era of the hyper-relevant advertisement is upon us. And that example is just scratching the surface.”
This is part of a larger, quickly emerging trend of location-based, personalized, opt-in promotions and marketing. A key development appears to that this does not stitch together commodity services like Foursquare, but is retailer-branded and unique to the experience at Starbucks. That has enormous differentiation benefits.
Although it is retailer-specific, the hypothetical contemplates an affiliate program that may – or may not – dilute the underlying purpose of getting people to and keeping them in a Starbucks, but in any case adds a level of operational complexity we won’t likely see in the near future.
We look forward to checking it out – at one of the dozens of Starbucks within shouting distance.
Facebook announced yesterday that they have officially entered the LBS market with their release of ‘Places’, which is expected to compete immediately with the business models of Foursquare and Gowalla. Largely built on Microsoft’s Bing Maps architecture, this release is also a threat to Google’s dominance in the map-based application space. “Check-in Fatigue”, a phrase that has become more and more common recently, seems to be the biggest hurdle ahead of these LBS providers; convincing current users to keep interacting and enticing new users to join will depend on a combination of the relationships these companies are able to build with brands and retailers, and the resulting benefits or discounts that are tied to frequenting each location. Another major hang-up are privacy concerns, and although Facebook promises to have put major development effort behind improving these issues, many users remain skeptical. The ACLU of Northern California has been one of the first groups to step forward on the current issue, saying that “Facebook made some changes to its regular privacy practices to protect sensitive location-based information, such as limiting the default visibility of check-ins on your feed to ‘Friends Only.’ But it has failed to build in some other important privacy safeguards. In the world of Facebook Places, ‘no’ is unfortunately not an option. Places allows your friends to tag you when they check in somewhere, and Facebook makes it very easy to say ‘yes’ to allowing your friends to check in for you. But when it comes to opting out of that feature, you are only given a ‘not now’ option (aka ask me again later).” This has been raised as a key issue in the past with Facebook apps, and their management are adamant that with ‘Places’ these problems with user privacy have been solved with the use of “opt-in” functionality. All privacy issues aside, Facebook has just entered a new space with over 500 million active users in tow, which compares to a little over 2 million currently on Foursquare. If they are able to combine the Facebook social experience with meaningful rewards for LBS users, then we have entered a whole new realm of social media where monetizing a user base just became a whole lot simpler.
As location-based services like Foursquare and Gowalla gain more and more users, and the coverage of retailers using these services grows apace (the PR guys and tech media are really showing nice symbiosis here), the long-term challenge for retailers remains sustained differentiation. These services may be creating buzz and driving short-term results, but when everyone has the same access to the same tools, it’s unclear how meaningful the technology really is in producing results.
If the goal of the marketer is to achieve short-term objectives, all is well and good. A friend of the company once reminded us that discounting can drive behavior, but doesn’t produce long-term brand relationships; that’s where the hard work is, and it’s work that can’t be compressed into a weekend promotion. While it’s fun and interesting to have short-term projects around some of these new technologies, whether the important long-term results can be achieved is an open question.
It’s surely worth pursuing the experiments and running the campaigns to see how LBS (location based services) can work, and we’re all watching them with great interest. But if they’re offering the same thing to everyone, and unable to fit coherently into a broader strategy aimed at sustainable brand engagement, they risk being marginalized over time as an interesting but ultimately unproductive distraction.
Best Buy announced today that it plans to implement Shopkick technology in about one quarter of its total stores by October 1, 2010. Shopkick, Inc. is a location-based software development company that allows retailers to reward customers with discounts, points and special offers for entering their stores, and also for walking to different departments within the store. This is a major development for Best Buy who have seen their stock price fall by 16% this year and are looking for a way to begin building greater traction among shoppers on tight budgets.
The first release of Best Buy’s Shopkick app will be available only to iPhones, with a Droid version due out later, in 257 of its total 1,010 locations. Clearly the success of this program will depend on customers’ willingness to participate in the “scavenger hunt” that Best Buy and Shopkick have devised, so the depth and breadth of the rewards and special offers should ultimately determine the outcome. Overall, very exciting new technology from Shopkick with virtually limitless potential for driving customer behavior and interaction!
Very cool info in this interview with Gowalla CEO Josh Williams, discussing social media context, viral advertising and the battle for relevance in location-based marketing.