Shopkick puts a drop in the SMB bucket with Citibank

Last week I attended a great event called Beyond Bricks & Clicks at Stanford which was put on by Vlab.  You can look at this event to know what the secret sauce of Silicon Valley is.  A huge event hosted by volunteers at Stanford with students, investors, hackers and big time players from the mobile / retail eco-systems and a panel of heavy hitters like Ben Hedrington, the Best Buy Director of Mobile Strategy.  There was a line standing out the door for people trying to get into a 300+ person event.  The critical mass and raw energy at something like this is had to beat and this was frankly just another Tuesday at Stanford. (FB photos here)

Enough how much fun it is to be in the Valley sometimes, let’s get to original thoughts.  The main speaker was Aaron Emigh founder/CTO from Shopkick.  He explained why they started the business and what they were measuring with plenty of stats and new behaviors.  A nice story about how a husband and wife competed for KicksBucks from their app and were surprised to see how personal the offers got over time.  As I said the panel was full of food for thought and I was pleased to see everybody make fun of the walking by Starbucks SMS ad example that I hear so often.  Shopkick has a solid solution that allows retailers to measure and interact with customers via an app that is initiated by a high pitched sound rather than GPS.  Shopkick claims to have solved the GPS/SMS issue as they have no fake checkins or annoying traditional push advertising.  The challenge is that it takes a $100 physical box over the store door to allow the tech to work and my prediction had been that they would stay confined to large chain stores and malls as their clients.  Big market and plenty of money.

About 2/3rds of the way through the talk it comes out that there was an SMB project with Citibank to test the smaller retailers.  You can read about it here and here.  It is an interesting play but I am particularly curious because it is being done via an FI partnership.  I am surprised that Citibank would through their brand behind something so small as a 1,000 business test across 10 cities because it is a chicken and egg problem.

Reasons that I think this will fail:

  1. Not enough consumer adoption of the app in the 10 cities.  100 retailers per city.
  2. Likely not enough retail density for the 100 installations per city even when combined with a few national chains.
  3. High device maintenance installation and cost.
  4. Not enough skin in the game for Citibank

Citibank powered a lot of the original ShopKick Causes application which made sense because it could be used as a checkin answer where.  This made them a logical partner but now it is very specific and probably tough for consumers.  I like the idea of driving local merchants and retail behavior but I am not sure that a high cost / high touch device is the right answer.  I think that this is an incremental change but solutions that rely on less physical infrastructure will be able to pass this one before they have mass adoption.  Obviously we will be watching closely but if I were another FI I would not be worried about this one yet.

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About svmoneyball

A lifelong student of silicon valley. I also tend to play a lot of Ultimate Frisbee.
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