Shopkick Partners Break $1 Billion With Beacons

Location-based in-store app provider cites Visa transactions that point to its retail clients generating half-a-billion in sales over the past 12 months alone.

ShopKick's Cyriac Roeding
ShopKick’s Cyriac Roeding

Sales by brick-and-mortar businesses using Shopkick’s customer rewards app, shopBeacon, just exceeded $1 billion, the company says, as it heralds the results of a test by casual clothing chain American Eagle Outfitters.

The $1 billion threshold was reached four years after Shopkick debuted. But most importantly, the company’s big break came after Apple launched its iBeacon indoor advertising system in mid-2013.

Up until the availability of iBeacon, Shopkick’s method of connecting retailers’ marketing messages to customers’ smartphones while in a store was solely built on sending signals via ultrasound waves that can be picked up a device’s built-in-microphone. These days, Shopkick uses a combination of sound waves and Bluetooth Low Energy-powered iBeacons to deliver its shopper rewards, which it calls “kicks.”

Shopkick Shines

It’s been a busy time for Shopkick. Last month, the Redwood City, CA- based company built on its partnership with Macy’s, bringing its beacon technology to every one of the department store chain’s 4,000 U.S locations.

A couple weeks later, Shopkick was scooped up by the Korean mobile geo-marketplace operator SK Planet. The acquisition brought Shopkick more than $200 million in cash and allowed it to retain its brand. In addition, the SK Planet deal beefed up Shopkick’s resources for its own expansion plans, just as the Korean telco tapped it to serve as its sole platform and its US gateway. The Korean company sports a user database of over 38 million consumers, which should also strengthen Shopkick’s value to analytics-hungry brands and agencies.

Beacons + Discounts: A Successful Formula

Shopkick can assess the revenue its app has sparked for its respective retail and brand partners thanks to its partnership with Visa, which CEO and co-founder Cyriac Roeding says it formed in 2011.

“We set up a structure with Visa where Shopkick users link their credit and debit info into the app and get extra ‘kicks,’” Roeding explains. “Visa can compare [our app users’ purchases to those of] a separate control group that does not use Shopkick’s app. We found that those who use Shopkick spend way more than those who do not — 50- to 100 percent more, in fact.”

Apparel and “general merchandise” were credited as the primary categories that drove the most revenue earned with the help of Shopkick’s app, Roeding says.

Aside from the joining of beacons to ultrasound, the $500 million revenue haul tracked over the past year is reflective of user growth, as well as wider adoption of its platform through retail and brand partnerships, Roeding notes. Among those retail brands that have seen a spike in sales using Shopkick’s ShopBeacon is American Eagle Outfitters. Last February, it rolled out shopBeacon in 100 of its U.S locations as part of a trial run. In a statement, American Eagle Outfitters spoke to the success of the experiment.

“We’ve found that focusing on the customer and creating engaging experiences is core to customer satisfaction, and that translates into better sales. So we were very excited about these results from Shopkick’s shopBeacon experiment,” said Joe Megibow, American Eagle Outfitters’ chief digital officer.

An expanded rollout of shopBeacon at other American Eagle Outfitters is being discussed, but an official decision has not yet been made, Roeding says.

Beacon Facts At Last

Shopkick’s claim should be met with a warm welcome by those in the retail industry curious about the value of beacons. It’s not only because reaching $1 billion in transactions attests to the technology’s effectiveness when connected to shopping rewards, but because they provide any solid numbers whatsoever. In the burgeoning world of beacons, there’s been a lot of buzz, but scarcely any hard numbers available for reference.

“At the end of the day, retailers are asking, ‘Am I going to make more money with beacons?’” says Roeding, adding: “Now we have a real answer.”

Shopkick also has some interesting facts about its app, which Roeding says Nielsen recently surveyed in context of all other shopping apps. The research found Shopkick to be the most used shopping app in the U.S. “Consumers spend almost two hours a month in the Shopkick app,” Roeding says. As a point of comparison, Roeding notes that Nielsen’s research also showed that consumers spend about 14 minutes a month in Walmart’s shopping app.

Beacons, Toilet Paper, and a B2B Business

Going forward, Roeding hopes to see the grocery sector — which thus far has shown the least interest in using Shopkick’s beacons — get behind the technology. The general lack of beacon implementation is a surprise, Roeding suggests, because there’s such ample opportunity for supermarkets to reward shopping activity.

“There’s the old saying in the grocery world, ‘Everyone needs toilet paper,’” Roeding says with a chuckle. “But not everyone buys toilet paper in the supermarket. These stores need to get people to cross the aisle and make that [purchase], which beacons can help them do, as they can reward shoppers for visiting parts of the store that they may not normally attend.”

In time, Shopkick will develop shopping solutions that go beyond beacons, Roeding says. The capital infusion provided by its new parent SK Planet should help it realize its plans, he adds.

There’s already a glimmer of new horizons. Shopkick is now offering its beacon technology as a white label B2B solution, Roeding says. “We created a software developer kit, our B2B partners can drop it into their own app and can leverage the beacons installed in-store without using our app,” he says. “We’re just starting to build it out and can’t say much about it yet, but we’re already seeing usage.”