Shopkick It

Alliance Against Amazon

First, Cyriac needs to find a store. Source: Shopkick
First, Cyriac needs to find a store.
  • Why it matters

    Why it matters

    The German-born founder of the Shopkick hopes his startup’s success in the United States – where it is the fourth most-used app – will translate to his native country.

  • Facts

    Facts

    • The founder, Cyriac Roeding, sold Shopkick to the South Korean Company SK Planet for $200 million in September.
    • American users spend 50 to 100 percent more at Shopkick-linked stores than other customers.
    • Upon launch, the app can be used in 1,000 German stores.
  • Audio

    Audio

  • Pdf

Cyriac Roeding is a man who takes firm positions. An American by choice, he desperately wants to sweep away prejudices when he talks about his “dear homeland” Germany.

The Germans are not at all technophobic, according to the 41-year-old originally from the southern German city of Konstanz. “On the contrary, Germans love technology,” he said sitting in his office in Redwood City, California. “They just want to be taken seriously.”

Many firms in Silicon Valley ignored this desire, he said, and therefore have gotten into trouble in Germany, as demonstrated by the recent uproar over Google and Uber.

Mr. Roeding, who was honored as a “Tech Pioneer” by the World Economic Forum in Davos in 2013, wants to do everything right with Shopkick’s launch in Germany on Thursday. Especially since he now knows the value of his idea.

At the end of September, Mr. Roeding sold Shopkick to the South Korean company SK Planet, which belongs to the telecommunications operator SK Telecom for a cool $200 million (€158 million). He remains the startup’s chief executive.

As of the launch, the Shopkick app should work in 1,000 German stores. Users are awarded small sums via their smartphones when they are shopping in stores if they disclose their personal data. The user can decide in a menu when they activate the app. In Germany, Shopkick is cooperating with large chain stores such as Obi, Karstadt, Douglas and Media-Markt/Saturn. “We want to bring customers to stores in the analog world again. We are the anti-Amazon alliance,” Mr. Roeding said.

The Shopkick principle is simple, but effective. When entering a store, the user gets points (“kicks”) on their smartphone, regardless of whether or not they buy something. If the user enters a partnering store, they are registered via a technique in which an audio signal unperceivable by the human ear is sent to the app.

The program covers the entrance area of the store, but does not give points to people who just walk by. If there is already information at a store about the user’s purchasing habits, the vendor can send targeted offers directly to the smartphone, essentially influencing their buying behavior.

Mr. Roeding has generated a good $1 billion for his partners, including Best Buy, Target, Macy’s, Samsung, Procter & Gamble, Pepsi, Nestlé, L’Oreal and Kraft

In the future, a more advanced procedure, currently only available on a few smartphones with the iBeacon technology, will be deployed. Bluetooth transmitters spread around the store communicate location information to the mobile phone. Then merchants can record how the customer is walking through the store, or guide him or her straight to a special offer.

Shopkick, which has been available in the United States for five years, pays off. A study by the financial services provider Visa showed that U.S. Shopkick users spend on average 50 to 100 percent more than other customers.

Mr. Roeding has generated a good $1 billion for his 15 partners, which include large stores such as Best Buy, Target, and Macy’s and 150 brand manufacturers, such as Samsung, Procter & Gamble, Pepsi, Nestlé, L’Oreal and Kraft.

There are similar hopes for Germany. Wolfgang Kirsch, head of consumer electronics chain Media-Saturn, expects “that Shopkick has great potential in the country and that all participants will profit.” Digitalization has radically changed shopping, he said. “Only those that are presents everywhere the customer is will remain relevant in the long-term,” he added.

The effort on the part of the merchants is astonishingly low. Shopkick gives customers 35 “kicks” when they enter a store, which is the equivalent of €0.14. If someone buys goods in the store, or scans product information, then there are further bonuses. The clothing manufacturer American Eagle Outfitters gives customers extra “kicks” worth $0.10 in the changing rooms. That has led to twice as many people trying on clothes as before. The users can later use the “kicks” as vouchers at the merchant, on Apple’s iTunes, or for movie tickets.

Since it was released in 2009 in the United States, Shopkick has paid out some $25 million to users. The program, which has eight million active users, has also become the fourth most-used app in America.

Shopkick is interesting primarily because it is an alternative model to Google or Facebook, where users pay for the free services with their information. Shopkick instead lets users earn something with their data. Other companies are also betting on the idea, including the German platform “Data Fairplay” and the New York start-up Placemeter. It pays customers up to $50 per month for converting their smartphones to sensors and sending information back to Placemeter.

It remains to be seen how successful Shopkick will be in Germany. In the United States, customers are more inclined to take their smartphones out while shopping than they are in Germany. According to a study by the Pew Research Center, 28 percent of customers research information about products and price over their Smartphones while shopping.

 

Britta Weddeling is Handelsblatt’s Silicon Valley correspondent. To contact the author: b.weddeling@gmail.com

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