Pushpins founder explains why grocery stores should avoid building their own apps

Jan 27, 2012

It is no longer just early-adopters who are using smartphones to improve their shopping experiences. According to a recent study by Portland-based digital agency White Horse, approximately 84 percent of smartphone owners use their mobile devices to enhance their in-aisle shopping experiences. From price-comparison shopping, to in-aisle navigation, to grocery list organizers, there is no […]

It is no longer just early-adopters who are using smartphones to improve their shopping experiences.

According to a recent study by Portland-based digital agency White Horse, approximately 84 percent of smartphone owners use their mobile devices to enhance their in-aisle shopping experiences. From price-comparison shopping, to in-aisle navigation, to grocery list organizers, there is no shortage of mobile tools available today at our fingertips.

The grocery store industry is confronting this new consumer behavior in varying ways. Many stores like Whole Foods, Safeway and Kroger offer branded applications for their existing and prospective shoppers. Other stores focus on spreading their presence around within multiple third-party applications.

Boston-based Pushpins operates a free iPhone app that gives consumers access to digital coupons, nutritional information and aisle sorting services for more than 10,000 grocery stores. Late last year Pushpins was cited by Consumer Reports as one of the top mobile shopping apps available.

In this edition of Meet the Makers, we sit down with Pushpin co-founder and CEO Jason Gurwin to learn more about his company, get his views on why grocery stores should avoid releasing branded apps that aren’t ready for prime time and derive a better understanding as to how apps fit within a store’s overall mobile marketing mix.

Box Score information for Pushpin:

Year started: 2010

Number of employees: 5

Amount of VC funding and primary investors: Undisclosed, Series A investment from Lightspeed Venture Partners (investor in LivingSocial, ShoeDazzle, Kosmix – acq. by Walmart) and angels.

Notable tidbits: The two founders met at Harvard Business School and won the MIT100K Executive Summary Competition. Jason Gurwin (Co-Founder & CEO) is a serial entrepreneur who previously built software to track digital content for entertainment companies.

Peter Michailidis (Co-Founder & CMO) is a serial entrepreneur who built point-of-sale systems for franchises of True Value, Ace Hardware and Do-It-Best.

Appolicious: Tell us about Pushpins and its value proposition for consumers and grocery stores.

Jason Gurwin: Pushpins is a mobile shopping platform that delivers related digital coupons to shoppers when they search/scan products in-store or while building their shopping list (scan peanut butter and get a coupon for Smucker’s jam, search CLIF and get a coupon to buy Nature Valley instead).

Our technology integrates with customer loyalty cards, so the coupons get automatically deducted at checkout. For retailers, we’ve seen our app drive increases in basket size through our patented coupon delivery algorithm that up-sells and cross-sells the consumer. Think Catalina in-aisle.

Additionally, we make the in-store shopping experience simple and easy. We sort products by aisle so shoppers can easily find product in-store.  Shoppers can also see full nutrition information and ingredients in Pushpins to make smarter eating choices.

Our app Pushpins launched in November 2010 and we were a top 150 overall app on iTunes and #2 app in our category and have been featured by Apple multiple times. We’ve already built integrations into the POS systems at over 10,000 stores, and are currently delivering coupons to consumers nationwide.

APPO: As a serial entrepreneur, what motivated you to get into this sector?

JG: When you are a serial entrepreneur,  you often look at things in the your everyday life that don’t make sense. I was always someone who looked for a deal – price matching electronics, matching coupons to circular deals, etc. To me, I didn’t understand why 125 years after the introduction of the paper coupon, the biggest innovation was printing one out on your computer!

I’ve always been attracted to markets where you can make a substantial difference and literally transform an industry. There is so much waste in the coupon business that can be saved by going mobile. Wasted marketing spend by brands because their coupons aren’t targeted. Wasted resources by retailers because they have to manage the process of collecting and processing coupons. Wasted time by shoppers because they have to spend hours clipping/printing coupons at home.

I draw my passion in trying to overhaul markets that are hard to shift. Entertainment companies are inherently skeptical about new technologies and we got them to believe. I want to do the same with retailers. I want them to be open to allowing others to innovate for them. I want to help improve their shoppers in-store experience. I want to help them use mobile to make more money. I want to make sure no clips another paper coupon ever again.

APPO: Who are your biggest grocery store customers? What do you do for them, and how do the economics work?

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JG: We are a completely free resource for retailers (thus they aren’t directly customers – more enablers). We are a performance-based marketing company that earns money from brands/media partners when shoppers clip and redeem digital coupons. Customers can clip coupons in retailers like Giant Eagle, ShopRite, D’Agostino, Lowes Foods, FoodTown, MainStreet Market, Marsh, Shop ‘N Save and Rite Aid – with thousands more coming in the first half of this year.

We do help retailers understand what shoppers (anonymously) are doing in the aisles of their stores. While they have tons of loyalty card data on what shoppers actually bought, we have tons of purchase intent data which can be linked to their T-LOG data.

We also have received a lot of interest from retailers to white label our platform. To date, we haven’t done it because we’ve felt that to create the best shopping experience we needed to be able to innovate quickly within our own application. And in reality, the customer experience within our application is as “white-label” as it can get without being a licensed application. We aren’t doing price comparison or cross-selling from one store to another, so we have the best interest of the retailer in mind. We purely are trying to help them increase the basket size of their shoppers.

APPO: Talk about how building an app should be part of a multi-tiered mobile marketing strategy rather than a standalone effort.

JG: A mobile strategy cannot take place in a vacuum. You need to use other channels to drive and build awareness for your mobile app and make the shopper comfortable using it in store. This includes:

  • Signage that says “scan this product to earn digital coupons and rewards”
  • Adding free Wi-Fi in stores that have based cellular signal.
  • Incentives to download and use your application – like “Free Milk” when creating your first mobile shopping list.
  • Building awareness in your print store circular for exclusive content within your mobile application.
  • Leveraging your customers to share actions within your mobile app on the social networks (Facebook and Twitter).

    APPO: Aside from poor production quality, are there negative impacts to a grocery chain developing its own app (assuming it is also investing in other mobile initiatives)? What are the key components to an owned-and-operated app?

    JG: Would you continue to stock a product if no-one purchased it? I use the same example with mobile apps. Everyone feels the need to have app, but they build something no one wants. If you are a large chain, you will without a doubt get downloads, but they are vanity metrics. Before you invest in building one yourself, ask are your shoppers really going to USE your app?

    Most retailers have decided to invest in “cookie cutter” apps that quickly give them a mobile presence. They include a basic shopping list, information about nearby stores, and a way to view the store circular.

    Shoppers will only use your mobile app if it’s easier than the real-world alternative. A great example is the store circular. We’ve seen so many retailers try to bring their circular to mobile and all they do is replicate the desktop web experience on mobile. At best they have a categorized list of all the items in the circular, at worst they display a tiny image of the circular on screen. To date, as a shopper, it is easier to pick up the big color paper circular upon entering the store, than using the circular from within an app.

    Mobile is totally different than anything people have built for in the past. The screen is smaller, it requires touch interaction, and the consumer is using it in a different context. You must build something unique. For example, we’ve built “smart” circulars where consumers are recommended circular items based on their shopping behavior, rather than being overwhelmed by the thousands of choices in the paper circular.

    You can’t expect consumers to use something if the option in the analog world (e.g. the paper circular) is easier than the digital one (e.g. image of a circular on phone). We want to re-invent experiences for mobile, not merely replicate them.

    Grocery stores are dramatically under-investing in mobile, whether it is in building their own or forming partnerships with third parties. Spending $50-100K on a mobile strategy in not enough. If you are spending more on printing your store circular than you are on your overall mobile strategy, you should rethink your mobile strategy. You can’t expect to get it right the first time. You have to continue to invest in mobile and take advantage of new hardware/software changes on the devices. You have to listen and observe your customers to truly see how they are using their device in store.

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    A great example is shopping lists. The most used shopping list app is surprisingly the “Notes” app on the iPhone. We saw this repeatedly in our market research when building Pushpins. We knew we had to build something that allowed people to build lists like the “Notes” app but with a better experience. So for Pushpins, you can search by brand (Crest), generic product name (toothpaste), or purely type the text you want to add it the list (“Toothpaste I always get”).

    APPO: What are the most successful drivers of a mobile campaign in the space (recognizing that each chain is different, but universal principals)?

    JG: If you are not partnering with third-party apps, you are losing an opportunity to leverage a relationship with your customers. There will be some people who access you through your website, some via your mobile app, but there are many who want to interact with you through other platforms like Pushpins.

    We have thousands of shoppers everyday shopping with Pushpins in stores that don’t yet support mobile coupons. In fact, we see more check-ins in Wal-Mart than in any other retailer despite the fact that they do not support mobile coupons.

    There are some retailers that feel that if they own the complete mobile experience for the customer, their shoppers will be forced to use their apps. If someone gave you a choice – 1 million downloads of your own app or $2.50 of incremental spend per customer visit in someone elses – which would you take? And therein lies the problem. A download doesn’t mean a user, just as much as a shopper doesn’t mean a customer.

    We have seen a few key success factors for mobile campaigns:

  • Don’t purely rely on your own mobile application
  • We see thousands of shoppers using Pushpins in retailers every single day. They are your customers – interact with them.
  • Make experiences targeted and unique for the consumer
  • Use customer data to make their shopping experience customized and easier
  • Remind the consumer to use your application in offline and other online channels
  • Use push notifications, in-store signage, and your social channels to remind customers to use mobile
  • We’ve seen ~3x redemption rate on coupons when a customer is reminded to clip with a targeted push notification based on previous shopping history or proximity to a store
  • Encourage social sharing to drive usage back to your application
  • Shoppers in Pushpins can share the coupons they redeem on Facebook and Twitter. We’ve seen this as a great “pay it forward” effect for retailers and brand.

    APPO: Are there any cases/chain examples where a mobile app alone is good enough? I think I know your answer, but please indulge me.

    JG: There is nothing to say that a retailer can’t build a great mobile application. However, I think having your own app is just not enough. Third-party mobile apps give you customers that you may not be able to reach via your own channels (your app, website, etc.) – why aren’t you trying to reach them? There are big online players (e.g. Amazon) that will do whatever they can to drive traffic offline to online. We are trying to do the opposite, we are trying to help brick and mortar retailers compete against those online players.

    It has not hit grocery as hard as big box electronic retail, but online players are doing whatever they can to capture a share of offline commerce. Think about what Amazon did rewarding shoppers to buy online when they priced compared via their PriceCheck app in local stores.

    We are trying to HELP retailers sell more products in store. We are trying to make shoppers WANT to shop in your store. We are helping shoppers SPEND MORE in your stores. Instead of putting up a barrier towards third-party innovation, embrace it. And the first thing you can do is realize that having a “cookie cutter” mobile app is not a mobile strategy.

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    Brad Spirrison

    Brad Spirrison is the managing editor of appoLearning and Appolicious Inc. In this capacity, he has sampled and evaluated thousands of iOS and Android applications. He also holds an M.A. in Education and Media Ecology from New York University.

    Spirrison worked in concert with appoLearning Expert and Instructional Technology Specialist Leslie Morris while curating and evaluating educational applications.

    A longtime media and technology commentator and executive, Spirrison is also a regular contributor to ABC News, The Huffington Post, TechCrunch, Bloomberg West and The Christopher Gabriel Program.

    Spirrison is married and lives with his wife and young son in Chicago. As his son was born just weeks before the debut of the iPad, Spirrison takes his work home with him and regularly samples and enjoys a variety of educational applications for young children.

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