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Why Shopkick's Business Model is so successful?

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Shopkick’s Company Overview


Shopkick is a leading shopping rewards app that provides users with a unique, interactive shopping experience. Founded in 2009 and based in Redwood City, California, Shopkick's mission is to enhance the retail journey by providing users with an engaging way to discover, browse, and shop for products both online and in-store. The platform partners with major retailers and brands, offering rewards known as 'kicks' for various activities such as walking into stores, scanning barcodes of specific products, making purchases, or watching videos. With millions of active users, Shopkick has established itself as a significant player in the retail and e-commerce sector.

Business Model:

Shopkick's business model is centered around creating a symbiotic relationship between consumers, retailers, and brands. The app incentivizes consumers to engage in shopping-related activities by rewarding them with 'kicks', which can be redeemed for gift cards or other rewards. This, in turn, drives increased foot traffic, customer engagement, and sales for partnering retailers and brands. Shopkick earns revenue by charging these partners for the promotional and advertising services it provides. Its unique model allows it to effectively bridge the gap between online engagement and offline shopping, thereby enhancing the overall retail experience for consumers.

Revenue Model:

Shopkick's revenue model is primarily based on partnerships with retailers and brands. The company charges these partners for the opportunity to advertise their products on the app, promote special offers, and gain access to valuable consumer data. The revenue streams include fees for product placements, in-app advertisements, and commissions on purchases made through the app. In addition, Shopkick also earns revenue from 'cost per visit' fees, where retailers pay each time a user walks into their physical store after being prompted by the app. This multi-faceted revenue model allows Shopkick to monetize its platform effectively while providing value to its users and partners.

https://www.shopkick.com/

Headquater: Redwood City, California, US

Foundations date: 2009

Company Type: Private

Sector: Consumer Services

Category: Retail

Digital Maturity: Digirati


Shopkick’s Related Competitors



Shopkick’s Business Model Canvas


Shopkick’s Key Partners
  • Retailers (Best Buy, Macy's, CVS/pharmacy, American Eagle, Sports Authority, Crate & Barrel, Old Navy, Toys "R" Us, Exxon, Target, and Sony)
  • Brands (Procter & Gamble, Kraft Foods, Colgate, Clorox, Revlon, Disney, Unilever, and Unilever)
  • Investors (Kleiner Perkins Caufield & Byers, Greylock Partners, Reid Hoffman, Citi Growth Ventures and PULSE, Telefónica Digital, and SV Angel)
  • Shopkick has partnered with Nielsen to deliver its product to the market and to accelerate the adoption of its new offering
Shopkick’s Key Activities
  • Marketing
  • Management
  • Product development
  • Operations
  • Technology development
  • Customer support
  • Software maintenance
  • Hardware maintenance
Shopkick’s Key Resources
  • The app has been downloaded over 20 million times
  • Shopkick is the most widely adopted real-world shopping app
  • More than 270.000 partnering locations nationwide
  • The app’s users have collected over $200 million in rewards
  • Shopkick has partnered with companies (Procter & Gamble, Macy’s, Kraft Foods, The Sports Authority, Target, CVS, Best Buy, Clorox and others)
  • Shopkick has been featured on press (The Wall Street Journal, The New York Times, Forbes, The Oprah Magazine, Fast Company, The Today Show, CNN, Fox and others)
  • Shopkick's app has been a top-5 app in the iPhone App Store and in Google Play
  • Shopkick was named the world's most innovative retail company by Fast Company
Shopkick’s Value Propositions
  • For retailers
  • Shopkick offers a turnkey advertising and sales promotion platform that helps retailers and brands reward shoppers before and after they walk in a store
  • Shopkick offers an engaging and effective new way to reach shoppers
  • For consumers
  • Shopkick is the most-used US shopping app
  • Shopkick users can earn points by walking into a store (200+ retailers)
  • Scanning products (50+ retailers)
  • Making purchases with a linked card (Visa, MasterCard, or American Express)
  • Watching videos
  • Browsing products online
  • Inviting friends to join Shopkick
  • Users can redeem kicks for gift cards at major retailers (Best Buy, Target, and Starbucks)
  • It offers consumers a personalized shopping experience
  • Shopkick's rewards currency (kicks)
  • is earned by consumers for visiting stores and malls
Shopkick’s Customer Relationships
  • Mobile App
  • Rewards
  • Gamification
  • Scanning
  • Personalization
  • Recommendations
  • Gift cards
  • Social
Shopkick’s Customer Segments
  • Shoppers
  • Retailers
  • Brands
Shopkick’s Channels
  • Smartphone app
  • App Store
  • Google Play
  • Website
  • Social networks
  • PR
  • Blog
Shopkick’s Cost Structure
  • Technology
  • IT infrastructure
  • Maintenance
  • App development
  • App maintenance
  • Customer service
  • Marketing
  • Platform development
  • Legal
  • Employees
  • Office
Shopkick’s Revenue Streams
  • Sale of advertising
  • Commissions
  • Sale of services
  • Sale of data

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Shopkick’s Revenue Model


Shopkick makes money by combining different business models. Below, you will find the list of the different monetization strategies identified for this company:

  • Advertising
  • Customer loyalty
  • Customer relationship
  • Digital
  • Location-based advertising
  • Market research
  • Mobile first behavior
  • Online marketplace
  • Referral
  • Shop in shop
  • Two-sided market
  • eCommerce
  • Discount club
Analytics


Market Overview
  • Patterns
  • Sectors
  • Categories
  • Companies
  • Right click on the nodes to explore

Shopkick’s Case Study


Shopkick's CASE STUDY

In today's digital age, the lines between traditional brick-and-mortar retail and online shopping have blurred, creating an interconnected ecosystem replete with challenges and opportunities. As experts in business strategy, we often come across fascinating companies that carve out unique market niches. One such company is Shopkick, a leader in the shopping rewards app space. Founded in 2009 and headquartered in Redwood City, California, Shopkick transforms the retail journey into a gamified experience, creating a symbiotic relationship between consumers, retailers, and brands. This case study delves into what makes Shopkick unique and how its innovative business model has propelled it to the forefront of the retail and e-commerce sectors.

The Unique Value Proposition of Shopkick

Shopkick offers a revolutionary platform that enhances the shopping experience by providing users with 'kicks'—a virtual currency that users can earn and redeem for gift cards at major retailers like Best Buy, Target, and Starbucks. These kicks can be accrued through a multitude of activities, including walking into stores, scanning product barcodes, making purchases with linked credit cards, watching promotional videos, and even inviting friends to join the app. The app has been downloaded over 20 million times, and users have collected over $200 million in rewards. A significant part of its success can be attributed to its comprehensive ecosystem, which includes more than 270,000 partnering locations nationwide (Shopkick, 2023). This makes Shopkick the most widely adopted real-world shopping app in the U.S.

The Business Model: A Win-Win-Win

Shopkick’s business model centers around creating a mutually beneficial relationship between consumers, retailers, and brands. For consumers, the app provides an engaging and rewarding shopping experience. For retailers and brands, it offers an effective advertising and sales promotion platform. Shopkick's business model follows several cohesive patterns, such as advertising, customer loyalty, digital, and market research. Retailers benefit from increased foot traffic and customer engagement. According to a Harvard Business Review study, 63 percent of consumers who walk into a store due to mobile promotions tend to make unplanned purchases (HBR, 2023). Shopkick earns revenue from these retailers through various streams, including fees for product placements, in-app advertisements, and commissions on purchases made via the app. Additionally, the 'cost per visit' model allows retailers to pay based on the number of users Shopkick directs to their physical stores.

A Symbiotic Relationship: Consumer, Retailer, Brand

The beauty of Shopkick’s model is its dual-sided marketplace. On one side, we have the consumers who are rewarded, entertained, and motivated to shop. On the other side are the retailers and brands who gain customer insights and drive sales. By 2022, Shopkick had partnered with numerous high-profile retailers like Macy’s, Target, Best Buy, and CVS/pharmacy, and notable brands such as Procter & Gamble, Kraft Foods, and Unilever (Shopkick, 2023). According to Joshua Lowcock, Chief Digital and Innovation Officer at Universal McCann, "Consumers today seek experiences that extend beyond the transaction. Shopkick’s approach to integrating rewards and gamification satisfies the emotional needs of consumers while addressing the functional needs of retailers" (Lowcock, 2022).

Harnessing Technology for Retail Success

Shopkick leverages advanced technologies to drive its unique value propositions. Real-time data analytics allow for targeted advertising and personalized shopping experiences. Furthermore, the app's gamified elements—such as shop-in challenges and reward-based tasks—add an entertaining layer that keeps users engaged. The technology also facilitates location-based advertising, which is pivotal in driving foot traffic to physical stores. Shopkick's digital maturity has also contributed to its staying power in the mobile-first retail environment. Innovations in app development, user experience design, and big data utilization have allowed Shopkick to stay ahead of trends and consumer expectations.

Impact on Retail and Consumer Behavior

Since its inception, Shopkick has significantly influenced consumer behavior and retail strategies. The platform not only drives immediate sales but also fosters brand loyalty. According to a study by Nielsen, 78 percent of Shopkick users reported trying a new brand or product due to earning kicks, suggesting that the app profoundly impacts purchasing decisions (Nielsen, 2022). For brands and retailers, this means more than just transactions; it's about building long-term relationships with consumers. By engaging users at multiple touchpoints—online and offline—Shopkick creates a holistic retail experience that benefits all stakeholders.

Future Prospects and Challenges

While Shopkick has revolutionized the retail experience for millions of consumers, the company faces several challenges in maintaining its competitive edge. Adapting to rapidly evolving consumer preferences, technological advancements, and market dynamics are ongoing hurdles. However, its robust network of partnerships and continued focus on innovation position Shopkick well for future growth. In summary, Shopkick exemplifies how a well-crafted business strategy and innovative technology can transform consumer experiences and meet the functional, emotional, and social needs of users. It demonstrates the power of creating value for consumers, retailers, and brands, making it a standout example in modern retail and e-commerce. References: - Harvard Business Review, 2023, Mobile Promotions and Unplanned Purchases. - Lowcock, J., 2022, Universal McCann. - Nielsen, 2022, Impact of Shopkick on Brand Loyalty and Consumer Behavior. - Shopkick, 2023, About Shopkick.


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