Best Buy Launching Mobile Rewards 'Experiment'

shopkick

Starting Tuesday, consumer electronics chain Best Buy plans to roll out a new mobile rewards system at 187 stores nationwide and another 70 by Oct. 1. Powering the initiative is location-based technology from startup Shopkick that lets consumers get in-store coupons and other incentives via a scannable iPhone application.

Unlike other geolocation services like Foursquare, the shopkick app automatically detects when a consumer walks through the door, eliminating the incidence of fake check-ins. Shoppers are given award points, or "kickbucks" upon entering the store as well as having product discounts and offers pushed to their phone.

Over time, offers are customized based on preferences, past shopping behavior, interests, location, and scans.

Inside the store, users can also win points by browsing and using the app's built-in barcode scanner to get more product and pricing information. All of this is enabled by proprietary hardware Shopkick installs inside partner stores that acts as a transmitter communicating with mobile devices.

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At checkout, users redeem any in-store offers or bonus points for scanning product barcodes by providing the number associated with their Shopkick account and any relevant discounts immediately appear on their receipt. (The value of the points in actual dollars is set by the retailer.)

Best Buy calls the effort a "location-based retail experiment" the company is testing in stores in San Francisco, Los Angeles, San Jose, New York City, and Chicago to start, followed by others in Dallas, Minneapolis-St. Paul and Miami in the next six weeks.

"We intend to explore ways we can use the power of location-based technology to personalize a Best Buy shopping experience, from check-in to check-out, with rewards and offers delivered right on a customer's smart phone," said Matthew Smith, vice president, marketing services at Best Buy.

Writing about a demo of the Shopkick system at a Best Buy earlier this month, Forrester mobile analyst Julie Ask called it "one of the most interesting mCommerce plays I've heard about this year. The location detection really works, as do the personalized offers." She added it may emerge as one of the "must-tries" for retailers looking to drive real traffic to stores rather than questionable check-ins.

But to be successful, she said Shopkick will have to spread beyond smartphones and across a wide network of participating retailers and restaurants to encourage mobile users to try the app. Shopkick, led by former CBS Mobile head Cyriac Roeding, has already announced Macy's as a launch partner along with Best Buy.

Last month, Palo Alto, Calif.-based Shopkick raised $15 million in a second-round venture funding led by Greylock Partners after initially securing $5 million from Kleiner Perkins' iFund.

In a related development, Beaverton, Ore-based startup EnPlay on Monday announced the launch of its mPunch app for the iPhone, promising users the ability to replace their traditional loyalty cards with a single app.

Customers use their phone cameras scan an mPunch 2D barcode at participating stores to earn points and redeem rewards. EnPlay declined to name any of the participating retailers or restaurants at launch but company president Victor Prince said they include several national chains.

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