Digital Transactions Authoritative, insightful and timely information for payments professionals
A comparison-shopping application that works on mobile phones will soon tie into PayPal Inc.'s payment platform, blurring the distinction between online commerce and brick-and-mortar retailing and setting the stage for potentially big transaction volumes. Alexander Muse, co-founder of Dallas-based Big in Japan Inc., says he expects his company's ShopSavvy app will be using PayPal by February at the latest, but he hopes payments will be flowing sooner to take advantage of the Christmas holiday-shopping season. ShopSavvy has already had a big Black Friday. On the heavy-duty shopping day after Thanksgiving, some 612,488 consumers used the app to scan an item in a store, up from the 86,000 that use it on average on a Friday, the company says. Helping to achieve these results was the fact that Big in Japan made ShopSavvy available for the iPhone just a few days before the big shopping day. The app also runs on phones using Google Inc.'s Android operating system, and a version for BlackBerry devices will follow after the first of the year, says Muse. With ShopSavvy, a consumer can use the camera in her phone to scan the bar code on an item in a store to bring up a list of prices for the same item at competing stores, both online and in the vicinity of the store. Some merchants also provide inventory data, allowing the app to indicate whether the item is in or out of stock at each location. For each responding merchant, the list includes phone numbers, addresses, and turn-by-turn directions, based on the shopper's current location. Armed with this information, the shopper can either go where the item is cheapest or bargain with the store she's in to match the lowest price. “Women make up a big percentage of our users,” says Muse. Some 1.3 million users, or about 25% of all who have downloaded ShopSavvy, are considered active, which means they have scanned at least one item in the past 30 days. With the holiday shopping season now in progress, that's up from 1.1 million over the summer. More than 20,000 merchants feed data into the app, including 200 “major retailers,” Muse says. Each merchant has up to 10 seconds to respond to a scan with pricing data. “We figure that's the most [time] a consumer is willing to wait,” says Muse. Currently, the app doesn't itself process payment. But Muse says when the PayPal application programming interface (API) goes active, users will be able to pay for items from within ShopSavvy, and later on the company hopes to add card brands and other alternative payment methods. Big in Japan is one of the first developers to take advantage of the new, open Platform X that PayPal officially unveiled earlier this month, along with a raft of APIs (Digital Transactions News, Nov. 3). Those who don't have PayPal accounts will be prompted to create one. Muse says he doesn't know how many of the 20,000-plus merchants plugged into ShopSavvy accept PayPal, but he notes that the combination of price-comparison and payment capability through PayPal is attractive to merchants. He estimates the app could generate as much as $105 million a year in processing volume, assuming no growth in the user base or in average tickets. Since the app is free, and merchants pay nothing to contribute data, Big in Japan plans to make money by selling what Muse calls “GPS-UPC intent pairs,” or data related to each bar-code scan, including the shopper's location. Buyers for this information could include both brand marketers and merchants, he says, at a price he figures will average around a nickel to 6 cents for each pair. Once a pair is sold, Big in Japan will serve coupons, discounts, branding, rebates, or any other offer the buyer may want. While the sale of these pairs will represent the company's primary source of revenue, it also may levy a fee on merchants for payment processing, though in any case Muse says the first year of processing will be free.
