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[17 comments]

Is Shopkick's In-App Purchase Option a Showrooming Weapon?

July 29, 2013

Shopkick, the app that rewards users with incentives — or "kicks" — for everyday shopping activities, has added a new feature that lets shoppers purchase items directly through the app and still earn rewards for doing so.

Shopkick users earn rewards for walking into a store, scanning product barcodes or QR Codes using a device's camera and by making purchases.

Kicks can be redeemed for store gift cards, a free coffee or dinner, song downloads, movie tickets, charity donations and more. Besides supporting traffic, stores can deliver special offers, like a discount on specific merchandise, through the app.

The addition of in-app purchasing follows Shopkick's rollout of curated "Lookbooks" last fall showcasing products from its retail partners. Users save and then can share favorite items in their product books across social media. Another feature just added provides app users the ability to "Like" favorite items and be automatically reminded of them upon walking into a store where they're sold.

In a statement, Shopkick said the in-app purchasing feature addresses the increasingly omni-channel shopper who shops when they "feel like it," whether in the store, at home on the couch, or on the train to work.

For retailers, Cyriac Roeding, CEO of Shopkick, told TechCrunch that the purchasing option will help stores defend themselves against showrooming and particularly Amazon.

"We're not including Amazon in our app," Mr. Roeding told TechCrunch. "Using our app to buy goods means you will be buying goods from the actual stores, not Amazon. We are the anti-Amazon coalition."

Said Joe Megibow, SVP & GM of omni-channel e-commerce at American Eagle Outfitters, "We are now able to meet the consumer desire for kicks not only in the American Eagle stores, but anywhere our customers may be via Shopkick and our mobile commerce."

According to a study released last week by Parago, 58 percent of smartphone owners now showroom, with just $5 in savings on a $50 purchase enough of an incentive for most to do so. Amazon was also found to be used two times more than Google for showrooming comparisons.

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Discussion Questions:

What benefits do retailers get from adding a purchasing component to location-based shopping apps? Do you see it as a potential defense against showrooming? How appealing is such a tool for shoppers?

While we value unfettered opinion, we urge you to show respect and courtesy for people or companies about whom you comment. Keep in mind that this is a public, professional business discussion. RetailWire reserves the right to edit or refuse the publication of remarks that we deem unsuitable. We may also correct for unintended spelling and grammatical errors.

Instant Poll:

How would you rate the benefit of adding an in-app purchase option to Shopkick?

Comments:

Wasn't the idea of showrooming that you would look at a store then check online? Wasn't it the theory you'd want the least expensive price? Shopkick (with only 4 million users) is saying kicks are more important than dollars. I'm not feeling that.

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Dr. Stephen Needel, Managing Partner, Advanced Simulations

Interesting idea, yet it sounds like the "shopping mall" aggregation web sites of the '90s retooled. There's not enough functional details here or in the Shopkick press release to understand the full mechanics, but from what I gather, this may eliminate Amazon from showrooming amongst participating retailers, but not between one another. Are retailers able to offer deals when a product is shopped among a participating competitor? Are Lookbooks exclusive to one brand? How is data shared? Plus, how does Shopkick's cut affect the bottom line over time?

My guess is that after the initial hype wears off and retailers really evaluate the cost/benefits of this, there won't be much there. Of course, I'm always encouraging retailers to develop their own apps/marketing/merchandising systems and to steer clear of these outsourced plug and play solutions.

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Ken Lonyai, Digital Innovation Strategist, co-founder, ScreenPlay InterActive

I think it is really tough to have any definitive answers to questions about such a new and fast moving technology. Twenty years from now, in hindsight, we will all see that somebody will have said something profound about where mobile shopping was now, where it will have been, and how we will have been getting there. (I can't be held responsible for improper usage of verb tenses in this case.)

Let me give it a shot, maybe I will be the great mobile/social shopping prognosticator of the early 2000s!

I think retailers gain new audiences and new tools that allow their shoppers to engage their brands in new ways. It's similar to the marketing that a lease contract offers. Somebody else has a stake in your success, there is mutual benefit in creating or curating new audiences together. Giving that audience more options to purchase can only strengthen the effectiveness of the marketing technique.

Shoppers that enjoy a physical store yet tend to purchase elsewhere have an array of reasons for doing so. Price and convenience come to mind. With discounts and purchase flexibility seemingly jointly addressed with the addition of in app purchase, I think it can only help to convert the showrooming shopper.

I don't think the appeal of this technology is in question. What shopper doesn't want more accessible discounts and more choices about how they purchase? I think the biggest hurdle is adoption of the technology. If the retailers and technology partners can find a mutually beneficial model, if both parties are bought in, they will need to work together to improve the usage. In store signage may be the next step. I am not talking about little "Yelp" stickers on the front door. I am talking about real coverage. The success to be achieved in social and mobile shopping today isn't a lack of technology, but a lack of awareness and adoption. Maybe it is UI or UX, but I doubt it. It seems that there aren't enough users to justify a serious effort from marketing teams, yet there aren't enough users because there isn't a serious effort from marketing teams. Is that a classic chicken/egg dilemma? Can I buy a chicken in app at a discount?

Joe Devine, Solution Consultant, Listrak

Are you kidding me? Will actually closing the sale be useful in a shopping app? Sorry if I sputter a bit here, but the question easily illustrates how the self-service industry is not about retailers selling, but shoppers buying. The entire purpose of shopping is the purchase! The entire purpose of retailing is to SELL. Unfortunately, too many apps are as ignorant of selling as their developers are.

I don't know whether Shopkick accidentally took this direction, but this is a MASSIVE move toward breaking down the retailers' own proprietary walls. This means Shopkick is providing a mobile wallet that works across stores, but is also a personal salesman, with the potential of mediating sales to the shopper in much the same way as the store staff did 100+ years ago, when genuine SELLING occurred on the sales room floor. In this case, one app able to sell ACROSS multiple stores.

However, I seriously doubt that Shopkick will "own" this business. There are a lot of players poking around the edges of this. Soon we'll know who has been serious, and who the thumb-suckers have been. (Where is Amazon with a mobile wallet, and beginning with their massive affiliate program?)

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Herb Sorensen, Ph.D., Scientific Advisor TNS Global Retail & Shopper, Shopper Scientist LLC

This is a natural progression of the app and I applaud this retailer for trying to compete with giants like Amazon. To have a tool that automatically purchases is a smart business practice. Location-based shopping is even better and encourages people to visit local retailers with coupons and deals. Buy-it-now accessibility will help against show rooming, but if people are looking for a deal, they will continue to find other sources.

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Zel Bianco, President, founder and CEO, Interactive Edge

As a retailer, I'd have serious reservations about ShopKick, and this move only amplifies them. ShopKick mentions that they will allow brands to sell direct to a consumer via the in-app purchase. If I'm Best Buy, how is a shopper buying a TV through ShopKick from Sony any better for me than buying it through Amazon?

In either case, Best Buy helped ShopKick build an audience that ShopKick is then monetizing without Best Buy. Does Best Buy need ShopKick to enable out-of-store purchases? (It seems like Best Buy has a commerce-enabled mobile optimized website and set of apps of their own). And why does Best Buy even want to promote a consumer using the ShopKick app when they walk in a Best Buy store, instead of promoting their own mobile tools (that are integrated to Best Buy affinity program, etc...)?

Thinking of ShopKick as a mall operator is a good analogy. So what would happen if Simon Properties launched an e-commerce site and tried to compete with its tenants for web traffic?

Frankly, I admire team ShopKick, they have good execution, have built some good tools, and tried a number of brave business model pivots. I just don't think they have arrived at business model that is particularly retailer friendly.

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Jason Goldberg, VP Commerce Strategy, Razorfish

Retailers benefit when users can engage sales/CSR staff anytime/anywhere, ask questions about the product, other options, and accessories, and then buy what, when, and where they want—all while preserving their privacy. Foursquare and other check-in apps don't offer these features. But other retail shopping platforms do....

'timoplatt'

It's interesting to see this new extension of Shopkick's concept at a time when several major retailers are ditching their reward programs. If this becomes a replacement for several, it will be back to the future for grocers. S&H Green Stamps, just more hip. And we all know how well that worked for a while.

The "anti-Amazon coalition" rhetoric is a bit off-putting. Interesting to see the two discussions posted here today with completely oposite perspectives on the most important new retailer to come along this decade. I guess you either get on the train or wait for the next one, which could be Shopkick.

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Dan Raftery, President, Raftery Resource Network Inc.

I agree with Ken on the questions of in-Shopkick competition. Yes, Amazon is a significant competitor but they are not the only one. Will Shopkick limit the competition within its app?

The other challenge Shopkick is facing has been discussed before on this site: the singular presentation format Shopkick offers reduces the participating brands to the lowest common denominator and removes their ability to significantly differentiate their brand.

There is a perceived value to "kicks"—if that can help drive traffic and sales, it's a benefit to the retailers. Would need to see some actual numbers to understand the trade-offs.

The real opportunity for retailers, though, is to use mobile to help connect the shopper with the physical store and all of its benefits. Shopkick's original strategy was to do just that. This latest addition looks more like an ecommerce play than leveraging in-store experience. And once you're playing the ecommerce game, Amazon is one click away.

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Todd Sherman, Managing Partner, T3C Partners

I do not think this will be a defense against showrooming. Rather, this will be a tool the shopper will be able to use to get more "kick's" by simply scanning and maybe later purchasing. Seems this allows the shopper to purchase and receive "kicks" after showrooming to price check.

I keep seeing these new tools and concepts as pushing us closer to being sedentary and getting less exercise. The fattening of America continues.

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Ed Rosenbaum, CEO, The Customer Service Rainmaker, Rainmaker Solutions

The benefit of the purchasing feature to Shopkick is clear—retailers are permitting consumers to act in an omni-channel approach, shopping when they want, through the channel they want, for the products they want. By providing that feature, retailers are able to monetize showrooming and keep the money "in the family." It reduces the chance that consumers will search for the products, which can take them outside of the store to online retailers, particularly to Amazon.

We already know that showrooming is more and more popular—the question is whether Shopkick can take consumers off their Amazon app or not.

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Mark Price, Managing Partner, LiftPoint Consulting, Inc.

Sometimes we pundits (I include myself!) get so analytical and objective that we jump past the crux of an issue. Seems to me the success of the latest Shopkick features will depend upon who will use them, and how much.

So far, about 4 million individuals are on board. These folks apparently enjoy the gameification of the shopping experience enough to collect and redeem "kicks." The rest of us either never heard of it or can't be bothered.

Of course Shopkick wants to capture and control the transaction. So does every mobile wallet, e-coupon, mobile network and credit card purveyor on the planet. Not to mention Google, Amazon, Square, PayPal, Isis, and the retailers' MCX consortium.

The potential for showrooming is built into all of these competing platforms. Most shoppers need simplification more than gameification. Too many retailers and solution vendors seem to persistently ignore this.

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James Tenser, Principal, VSN Strategies

The perception of making the purchase experience simple and smart is a great benefit for retailers. It's possible for consumers to create outfits, decorate a room, or build an entertainment center while still experiencing the "thrill" of shopping from anywhere. Shopkick is not unique, there are other options, which is good for retailers because competition will breed better apps.

The best defense against showrooming will be to integrate it into a consumer and retail friendly approach. Location based shopping apps with a purchase component can provide that approach.

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Carlos Arámbula, Managing Partner, MarcasUSA LLC

We are seeing the early stages of a battle between various players to build the platform that combines a multi-retailer rewards program and mobile commerce and this is a move by Shopkick to remain a leader in that fight.

This should help participating retailers remain competitive against Amazon. The big unanswered questions are will the average (non early adopter) consumer use the app and will that be enough to turn the tide against Amazon? Only time will tell.

I have to disagree with my fellow panelists who are encouraging retailers all to build their own solutions in this space. Consumers will download apps for stores that they visit very frequently (grocery, home improvement), but the average consumer is not going to bother having an app for every mall store that they visit a few times a year. Shopkick is providing a valuable service by aggregating together retailers and offering the consumer a convenient platform.

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Martin Mehalchin, Partner, Lenati, LLC

I like everything about Shopkick.

It acknowledges the consumer's affection for the interplay between shopping online and in brick and mortar. It eliminates reward cards, signups and pesky membership rules. It takes curation of online retail to wonderful places with product look books that can be customized with a shoppers preferred looks.

Absolutely love the fact a shopper can "like" items while browsing Shopkick and then be reminded when they walk into a store where the item is sold. This is a first and really capitalizes on mobile geotargeting.

Shopkick makes shopping easy. This is the first benefit for retailers. Shopkick creates a deeper level of engagement with shoppers. This is the second benefit for retailers. Shopkick creates loyalty through earning rewards for shopping. This is a third benefit for retailers.

Incidentially, I see Shopkick's greatest competition not from Amazon, but from Zappos.

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Karen S. Herman, Founder & Design Director, Gustie Creative LLC

Showrooming isn't just about price checking. If I were a retailer, I would want to manage my own fate, but more importantly, maintain the shopper relationship with my business and not hand off important pieces of it to third parties a bit at a time. If the customer ends up engaged with Shopkick, wed to their Visa points, and loyal to a manufacturing brand, then what's left for the retailer to insure that lifetime value of the customer?

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Peter J. Charness, SVP America, Global CMO, TXT Group

This is not a defense against showrooming, but certainly a great platform for retailers to get their products in front of consumers.

When people showroom, they are checking pricing through Amazon or possibly Google. That won't stop. In fact, I am sure some people will check an item in their Shopkick Lookbooks and compare the price to Amazon or Walmart.

This new feature is another place for retailers to communicate with consumers. I do not believe it will end showrooming.

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John Boccuzzi, Jr., Managing Partner, Boccuzzi, LLC

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