Watch out Groupon: Visa bets on mobile deals space

By Giselle Tsirulnik

April 22, 2011

Consumers are increasingly relying on their mobile devices to find deals

Visa is delivering real-time discounts to mobile consumers when and where they shop, which means the financial services company is now competing with the likes of Groupon, LivingSocial, foursquare, Facebook and eBay.

Currently, Visa is working with Gap to deliver real-time deals to consumers via text message. Consumers are asked to opt-in and are sent deals and promotions in real-time while shopping.

"I think right now the general trend is that retailers are enamored with mobile and looking for ways to reach consumers on their devices," said Mark Beccue, senior analyst at ABI Research, Oyster Bay, NY. "Since Visa has such broad reach it is well-positioned to connect retailers to consumers.

"Deals are so hot in mobile because mobile means anytime, anywhere since consumers always have their devices with them," he said. "In fact, the most compelling use case for driving transactions via mobile is through deals.

"A lot of companies are using it to their advantage and that is changing the retail landscape. Mobile is making the deal space explode because it lets consumers act immediately."

Visa Inc. has approximately 1.6 billion credit and other payment cards in circulation worldwide. Its reach makes it an attractive platform for retailers looking to reach customers with tailored deals.

Visa did not respond to press inquiries.

Gap test
The new offering is part of Visa's strategy to personalize the shopping experience for cardholders and let merchant partners tailor marketing programs to achieve greater ROI and ultimately drive sales.
 
How does it work?

The fact that Visa can process transactions in real-time provides the capability for retailers to reach consumers while they are out shopping.

Gap tested the Visa service in November to see how customers respond to receiving real-time offers on their mobile phone.

Visa cardholders enrolled via a secure Web site and were sent Gap offers when they made Visa transactions and also met certain pre-determined program criteria.

Pre-determined program criteria could mean that deals can be targeted at a specific segment of Visa cardholders such as those shopping at a merchant within a specified ZIP code, a specific merchant category type, or spend on a specific day or during a specified time period.

Gap customers redeemed the offers by presenting the text message displayed on their mobile devices to the associate at the register.
 
Amy Carr, director of customer relationship management strategy at Gap, San Francisco, said that the Visa pilot provided the company insight into its enrolled consumers, which improved the targeting of promotional programs and timing of communications. The program allowed the company to tailor offers to Gap customers.

Visa now plans to make the new service available to retailers nationwide.

Bigger picture
The bigger picture here is that the mobile deals space is now becoming cluttered. With 50 percent of consumers in the United States using a mobile device to aid in the shopping experience, according to a study by Leo Burnett's marketing services arm Arc Worldwide, it is no surprise that companies are quickly jumping on board.

Companies are realizing the opportunities. The majority of mobile shopping activity has to do with trying to find deals, the Leo Burnett study found (see story).

There have also been some recent activities that prove that mobile deals are really hot.

Daily deals giant Groupon acquired Whrrl to make its product more social (see story).

EBay Inc. just entered the mobile deals space, acquiring Where. EBay plans to integrate PayPal into the Where app (see story).

Other players in the deal space include LivingSocial, The Dealmap and foursquare, which are seeing massive consumer uptake.

"The explosive growth of location-aware devices combined with applications like The Dealmap that help people find local and daily deals is changing the way people shop locally," said Dan Visnick, vice president of marketing at The Dealmap, Menlo Park, CA.

"These new mobile [services] allow businesses to reach consumers in a highly relevant way that drives in-store traffic, and they help consumers discover great deals nearby and save money at places they like," he sad.  

Mr. Visnick provided an example of the positive impact mobile can have on in-store sales.

The Dealmap ran a multichannel, store-wide sale for Crocs and mobile conversion and redemption was 30 percent higher than printable coupons.

Also Facebook has its Deals service, which is expected to be a success (see story).

Why the attraction to deals on mobile?

Facebook Deals, eBay, Groupon and other third party deal distribution platforms make is simple for any business to get started in mobile.

The opportunity for low-cost deal distribution can help small and mid-sized businesses in addition to the big-box retailers and traditional bricks-and-mortar shops. 

Merchants both large and small can offer discounts to a targeted audience and the benefits include raising awareness, generating upfront revenue and, hopefully, gaining new, repeat customers.

"Given the impact to consumer shopping behavior and the potential revenue at stake, it makes sense that larger companies are starting to place bigger bets on this space," Mr. Visnick said.

http://www.mobilemarketer.com/cms/news/commerce/9775.html