The App That Helps Retailers Steal Each Others' Customers

It's co-evolution gone wild. Whatever advantage technology provides to customers or competitors, it is quickly offset by some new development designed to negate the negative impact of its predecessor.

In this case, retailers are combatting consumer show-rooming - the propensity to compare prices online with what they find in the store and then go wherever its cheapest, as well as competitors using GPS and tracking technology based on what info they've captured from those self-same customers to lure them away with better deals and promotions. But instantaneously via smartphone.

The problem is that all these competing apps and services are creating stalemate because of their ability to anticipate and then offset whatever anyone else is attempting.

Perhaps there will eventually be a breakthrough that is difficult to combat, but for the moment it's whoever makes the best offer latest and quickest.

While customers benefit from the somewhat lower prices, the question is why they are not getting more of a cut based on the fact that it is their own personal information that is driving these tactics. JL

Issie Lapowsky reports in Wired:

Retailers are looking for ways to use mobile technology to their advantage. They’re using geolocation technology to pitch deals at shoppers who are near their stores. But instead of offering better deals at the store where you are, it tries to send you somewhere else.

Holiday shopping, that happy American pastime, seems to get a little more cutthroat with each passing year.
Those already insane 4 a.m. door-buster deals have now given way to retailers opening up on Thanksgiving night. And the price-gouging war between retailers has become so extreme that even Walmart, with its bargain basement prices, is vowing to match Amazon’s prices so it won’t lose customers to its e-commerce adversary.
But this was just a prelude. Thanks to Ben Smith, things are about to get even nastier.
Smith is the CEO of Wanderful Media, the company behind a couponing app called Find&Save. The app was originally designed to serve you coupons for nearby stores—and it still does. But on Wednesday, Smith and company announced that they’ve added a new wrinkle. It’s called Cash Dash, and basically, it lets retailers push you promotions the minute you walk into a competitor’s store—or merely past it.
In other words, when you’re at Walmart, Target could offer you $25 to visit one of its stores within the next 24 hours. Yes, the goal is to help retailers steal shoppers away from the competition. “When you’re walking into a Home Depot on Saturday morning, your intent is clear,” Smith says. “You’re in home repair mode. That would be a very valuable audience for Lowe’s.”
The smartphone has become the smart shopper’s best friend in the last few years. According to a recent survey by Accenture, 68 percent of consumers say they are likely to check out prices in-store and then search for lower prices online, a phenomenon now commonly referred to as “showrooming.” But retailers are now catching onto the trend and looking for ways to use the proliferation of mobile technology to their advantage.

In other words, when you’re at Walmart, Target could offer you $25 to visit one of its stores within the next 24 hours.

In many cases, they’re using geolocation technology to pitch deals at shoppers who are near their stores. But Cash Dash inverts that model.
It too uses GPS to track your location, but instead of offering better deals at the store where you are, it tries to send you somewhere else. Once you accept the deal and complete the purchase, you submit a photo of your receipt using the Find&Save app, and the cash reward gets sent to your PayPal account. Smith says the next version of the app will connect to users’ credit cards, and subtract the dollar amount automatically.

The Dash for Cash Dash

Cash Dash has only been live for three weeks, and already, some 50 retailers, from Walgreens to Macy’s, are paying Find&Save to send these notifications. About 100,000 alerts have been sent out every day since the feature launched, and Smith says about 30 percent of shoppers who receive an alert actually click through and accept it.
What’s more, Cash Dash has completely changed how users feel about allowing the app to track their location. Before it launched, only 20 percent of users opted into geolocation. Afterward, 80 percent did.
In many ways, experts say, this is an evolution of what Amazon has been doing all along, enabling users to do online price checks. Now, brick and mortar retailers can play that game as well. But this doesn’t mean Amazon is no longer a threat. It still offers shoppers all the convenience that physical stores can’t.
“There’s a travel cost for consumers to go from one store to the other,” says Raj Venkatesan, a professor of business administration at University of Virginia’s Darden School of business, “but if you’re on Amazon it’s on your phone.”

The Power of Discounts

The Cash Dash promotions become less appealing if, say, you’re standing in Walmart, and the nearest Target is 15 miles away. That’s why Venkatesan says the deals work best in densely populated shopping areas. They will also have to be substantial enough to compel people to get in their cars and drive to another store.
But that doesn’t mean the deals can’t work. In that Accenture survey, a whopping 96 percent of respondents said discounts would be important to their purchasing decisions this season.
Meanwhile, Venkatesan points to research that’s been done on traditional coupon circulars, which has found that the right deal will, in fact, drive shoppers to different stores. “If you think about that fact, then, yes, this app could have the potential to switch consumers to another store,” he says.
Smith, however, admits his biggest competitors are the retailers themselves, many of which have built apps that already push promotions directly to shoppers. And yet, he says, even those promotions can’t reach competitors’ audiences. “For Walgreens to do what we’re doing, they would have to get everybody to install their app, including people who aren’t Walgreens customers,” he says. “They can’t do that. I can do that.”