Source: BasketSavings/iTunes
Can crowdsourced price data change shopping habits?
Comparing prices between brick-and-mortar grocery stores isn’t an exact science for even the most fastidious shopper. Even if someone is willing to drive from store to store to find a discount, it’s hard to imagine that person always getting the lowest price on every item they buy. The creators of a new app want to make finding the lowest price far easier.
Basket is a shopping app that aims to increase price transparency by using crowdsourced data to determine where a user can get the lowest price on the items on their shopping list, according to CNNMoney. Basket began its life, quite cleverly, as an app called StockUp, which gamified taking pictures of products and rewarded users with points and cash. The game allowed the creators to build out a database of 900,000 SKUs, which acted as the foundation of Basket. The app still enlists 5,000 “power shoppers” who continue to provide the app with SKU information from stores and uses an algorithm to predict impending price changes.
Since 2008’s financial crisis, the price-conscious grocery shopper has become an economic driving force in the U.S. Dollar stores have grown far more popular, even for the more affluent. A recent study reported that 29 percent of Millennials who shopped at three major dollar store chains were from households making $100,000 or above. Discounters like Aldi have likewise had great success in the U.S.
The hidden savings that one can find by shopping around in brick-and-mortar locations can sometimes be dramatic. In retelling the story of Basket’s creation in an interview with Street Fight, co-founder Andy Ellwood said that his business partner had found as much as 30 to 40 percent differences on some grocery prices in his neighborhood when conceiving of the app.
Though transportation, gas prices and numerous other factors would have to be calculated into the cost to truly determine how much a bargain hunter was really saving, the concept does seem to streamline finding the best brick-and-mortar prices. However, users would also have to be disciplined enough to get in and out of a store with only the low-priced items they needed.
Discussion Questions
DISCUSSION QUESTIONS: Do you see Basket or similar crowdsourcing apps becoming a go-to solution for price-conscious grocery shoppers? How might apps that crowdsource pricing information force retailers to alter their pricing strategies?
Poll
BrainTrust
Kai Clarke
CEO, President- American Retail Consultants
Tony Orlando
Owner, Tony O's Supermarket and Catering
Not many people will care to spend all the time and energy it takes to buy groceries by visiting four outlets. The value of going to one store is far higher than any savings I expect they’d find this way. Dollar stores work because they have good assortment so you can minimize locations.
But this app reflects a destructive thread that comes out of tech companies repeatedly — the dash to the bottom in price. Consumers prefer good products for a good price in a way that fits their lives. Many tech companies focus on cheapest because that’s one of the few things a tech company can focus on.
But a dash to zero margin is as harmful to consumers as it is to retailers and manufacturers. While I don’t think this app will succeed, its presence puts added pressure on the cheapening of goods in order to beat prices. And that’s a bad trend for all involved.
Doug — Thanks for the thoughts and the insights. One thing that is important to a lot of our shoppers here at Basket is that we show the best price for an entire shopping list, not just for one item at a time. Both brands and retailers are looking for ways to get on people’s shopping lists and stay there and we’re finding that 83 percent of our community’s shopping list items stay consistent from week to week but that the availability and prices locally change much more frequently.
Appreciate the reply. Wish you well. Yet I remain pretty skeptical (and I’m married to an aggressive coupon shopper). 🙂
As to what brands want … 30 years of selling (B2B and to consumers) consistently show that value is the way they get on and stay on shopper lists. I’d suggest you look for opportunity to mix up what you’re doing.
Discounting is a dead end for brands as it always has been. Somewhat concerning that brands might believe that discounting is their best way to stay on shopper lists.
Cheers….
If the information can be kept current and accurate, this app could have a significant impact on price-conscience shoppers and the stores they visit, particularly high-low growers and the drug chains. Many consumers are still reeling from the Great Recession. Looking for the lowest prices has become a way of life.
Basket appears to be a competitive price comparison shopping concept. However, with the rise of online grocers, it doesn’t seem to cover all of the bases when doing comparison shopping. Apps like Basket will empower retailers to more competitively position their products and prices to attract more customers.
There will be a subset of value consumers who will find Basket attractive — though the overall savings when taking into consideration time, gas, etc., may be be evident. And, as Kai pointed out, it does not take into consideration online prices.
In the grocery space consumers buy baskets of goods, not individual goods. The best price is an extraordinary complex function of the “need to have” items that can only be gotten at a particular store and the overall price of the rest of the basket. There could potentially be an opportunity for a company like Basket, targeting very price sensitive shoppers, if it were to recommend the most efficient way to split those shoppers’ trips from one trip to two. But in a basket with dozens of items it will rarely be worth the effort to think about shopping for each product individually.
I’m a bit shocked that this is a thing. Everything I am reading and writing about customer convenience points towards one thing — one stop. The idea that people are going to find certain things lower-priced and just buy them in one store and drive to another to buy others, when they’re all time pressed, just flies in the face of reason. Unless these people don’t have jobs or other responsibilities.
Bob – You are correct, most of our community goes shopping at one store, maybe two. The Basket shopping list prices out your entire list, not just individual products. If you put your shopping list into Basket, you’ll see the best one place to go for your entire basket of goods.
I have two apps on my phone (that I’ve had for years). GasBuddy tells me the prices of gas at the gas stations in my area. Red Laser allows me to scan merchandise and lets me know prices from other retailers (on and offline). These types of apps have been around for a while. An app specializing in groceries with pricing information based on crowdsourcing in the area is another version of apps that help consumers save money. So let’s flip it around. Retailers will also be able to use the app to ensure that their stores are competitive. Takes the mystery out of mystery shopping the competition.
These 5,000 power shoppers need to get a life. How reliable can this data be? Assume 300 SMSAs (which are still way too big) — that’s about 17 people per SMSA. I’m thinking technology in search of a solution.
A similar service, mysupermarket.co.uk, has existed in Britain since 2006 and has achieved great success. With 5 million visitors each month it is the third largest grocery website in the UK. It compares prices from 14 large supermarket chains, with their full consent and collaboration, and refers customers to the cheapest one based on the price of their individual baskets.
Crowdsourcing is completely redundant here, I think.
Basket may enable retailers to keep up with competitive pricing but I wouldn’t count on consumers shopping in three or four different markets just to save $2 at each stop. If one destination store is not decidedly cheaper than the others the app won’t help much, unless the shopper decides to cherry pick store A week 1, store B on week 2 and store C on week 3 then start again.
In-store apps don’t work. To think that shoppers will use an app to shop and price compare individual items through an app is completely contrary to all published statistics on shopper behavior. This may have a real value to 1 percent of shoppers (if that!). I don’t see this as having real shopper value and therefore no commercial viability.
Genius. Basket is utilizing customer participation to enable our deal-hunting obsessions. It’s also a great way to keep deal hunters going to brick-and-mortar stores. Of course, many of us won’t drive across town just to save a few dollars, but it gives us the option.
This reminds me of a teacher friend of mine who, in order to procure school supplies for his lower-income students, drove from store to store buying up their loss-leaders. My point being that although most of us won’t put in enough effort to really benefit from such an app, like most of us wont drive from store to store accruing loss-leaders, it will be a lifesaver for those that need it.
Another app that will create nirvana for the militant drive-around shopper, which is fine for them. In reality, many shoppers prefer a go-to store with at least one or two more choices for their meats/deli, and perhaps a farmers-type market for local stuff. Our loyal shoppers know that they can come in here any day of the week and get the best prices on our perishables all over the store, and they shop Dollar General next door for Tide and other items and of course Walmart for more staple foods. If I do my job well I can count on them coming back to stock up on our perishables and if I don’t they will go someplace else. All of us are aware of prices in the other stores and if the consumer wants to chase them all down, good for them. Most consumers value their time more than spending all day getting the lowest price in six locations, so I don’t see much changing in how we do things here.
Given that my local newspaper still has circulars screaming out with grocery promotions and offers, supermarket operators must believe that their customers actively do compare prices for their shopping trips. Not to say that all consumers are as sensitive to pricing, or that all are willing to make multiple stops to complete their basket, just that enough of them are willing to do so to make this app relevant.
So the idea that an app can look at the entire list and make an informed decision on the best place to shop is certainly useful. Things are a bit more sketchy on the timeliness and quality of the pricing inputs and how the app handles private-label items.
Store managers have always been interested in how their own store pricing compares with the local competition and this app can certainly make this possible while giving them a view of what their customers are seeing.
Couple of caveats:
This assumes that price is the key variable in deciding where to shop and will remain the priority in the foreseeable future. In the experience economy and with strong branding, this assumption is under fire.
A focus on pricing is not in the long-term interest of retailers. In focusing on price, retailers risk taking their eyes off the overall shopping experience and their overall engagement with their customers. They will quickly find themselves mired in a race to the bottom; competing on a single dimension that cannot be sustained over the long-term.
It seems some of the commentors are missing the point, in that this app can compare entire shopping lists or baskets. If so, it could be the difference in where to make a weekly stock up trip for price conscious shoppers, assuming they haven’t figured it out already themselves. And, it is a free competitive price comparison tools for smaller retailers.
I actually do know people who shop at more than one store to find the best prices … even though their time and gas exceed their savings, most likely. However, since Basket can determine overall best prices for the entire shopping list at one store, this may indeed have legs.
Basket is like the Waze of grocery prices, who is all about leveraging the network effect. I’m not sure about the success of this through crowdsourcing; as more and more grocers go online, Basket will be able to scrape sites, or otherwise download a product feed for comparison. The impact will be the same as it has been on department stores, a race to the bottom. Great for consumers, bad for business.
I do believe that a segment of shoppers always wants the lowest price and with Basket showing prices at the basket level, such low-price-is-all-that matters consumers get a valuable tool. BUT, I think Basket can and should be more than a tool contributing to the race to the bottom. My challenge to the team at Basket would be how they can leverage the power of their crowdsourced community to help other constituents. Can the crowd rate factors other than price, e.g. tell “discovery” shoppers what discoveries await them at different supermarkets, tell “experience” shoppers which supermarkets are offering cool sampling programs or wine tastings, etc.? Can the crowd help retailers spread information of relevance beyond prices? Basically, I see the active crowd as the real value of Basket’s offer — how can this asset be maximized?