Since Eduardo Saverin, the other Facebook co-founder, invested in ShopSavvy reporters have been calling non-stop. Every week one or more reporters will call or email trying to get an interview with him. While I can’t confirm or deny the reports you may have read about the elusive entrepreneurs and investor, I can tell you having Eduardo on the team is VERY valuable. Eduardo is very connected and has made several very valuable connections in the short time he has been on the ShopSavvy team. Of course there are other benefits, for example, whenever Eduardo’s investment in ShopSavvy is mentioned in he press as it was today in the WSJ our downloads, which range between 1,000,000 and 2,000,000 each month, can double for the day. Eduardo has a unique vision with regard to mobile and retail – a vision we share. He is attempting to monetize that vision through several very targeted investments including ShopSavvy and Jumio. I wouldn’t take his strategy lightly and I wouldn’t believe everything I read in the New York Post.

Note to Reporters: we do not manage Eduardo’s calendar, but feel free to keep calling – we’ll take all the PR we can get.

If you are a student of retail you are well aware of the phenomenon called ‘showrooming’. According to a study by Pew 52% of shoppers used their smartphone to perform research while standing in retail stores – more than 19% convert their offline/in-store purchase to an online retailer. We believe retailers should not fear showrooming – instead they should embrace it sooner than later.

The ShopSavvy team works with almost every major brick and mortar retailer as well as lots of online retailers – more than 40,000 in total. We began hearing concerns about ‘showrooming’ more than two years ago. In fact, as recently as last week I was in London speaking at the Rutberg Summit and half of the audience questions were about the topic of showrooming. Some of the other panelists recommended various ‘answers’ to the phenomenon including:

• offering products not found online – i.e. custom UPCs
• disconnect WiFi and block cell signals
• ban the use of cameras (i.e. the barcode scanner uses the camera)

When we talk to retailers we try to help them understand that showrooming might be a great way to grow their own business. First, we begin by explaining that at any given moment MORE shoppers are in their competitors stores than in their own retail locations. Here are some interesting figures:

• Best Buy has 1,099 out of 43,810 electronic retail locations
• Barnes & Nobel has 691 out of 32,050 book store locations
• Macy’s has 805 out of 36,140 department store locations
• Safeway has 1,725 out of 253,572 grocery store locations

What if a retailer like Best Buy could start a conversation with the shoppers in the 43,810 locations they don’t own? ShopSavvy can provide a set of rails that enable a retailer to start a conversation with a consumer at the point of purchase both inside and outside of their own retail store locations.

Once retailers began realizing that showrooming wasn’t just a game to be played by Amazon they began looking for solutions. With more than 40,000,000 downloads, ShopSavvy is a great way to connect with shoppers who are VERY deep in the purchase funnel – we know which store they are in and what product they are about to purchase. Last year we launched ShopSavvy Wallet that enabled one-slide purchases from shoppers – they simply scan a product and without leaving the app they can pay for the item with a simple swipe of their finger. We have built wallet adapters with leading brick and mortar retailers like Barnes & Nobel, Walmart, Target, Toys ‘R’ Us, RadioShack, Dick’s Sporting Goods, GNC, Macy’s, JCPenny, Office Depot, Lowe’s, OfficeMax and Nordstrom – a total of 64 retailers to date. The feature allows each to leverage the showrooms of their competitors.

Some retailers play fair – just displaying their pricing in our app and offering a quick and easy way to convert a purchase from offline to online. Other retailers leverage information provided by ShopSavvy – capturing the business of the sort of shoppers who are the most profitable. Barnes & Nobel is a perfect example of a retailer who is skillfully leveraging ShopSavvy.

Barnes & Nobel sells books at two very different price points. In their stores they sell books at a 10% discount to members. On their website they sell books at prices that are often less than Amazon’s prices (our data shows that Amazon only has the best price about 6% of the time, meaning that 94% of the time other retailers offer a better deal). Whenever shoppers scan the barcodes of books in any one of the 32,050 bookstores not own by Barnes & Nobel they see the online price which is almost always significantly less than the price offered by the retailer whose store they are standing in. Our data shows that shoppers first scan is almost always going to be purchased from their current location – the second and third scan is VERY vulnerable to capture. The most interesting bit of data we uncovered was that when B&N did convert the sale, 30% of the converted shoppers showed up in Barnes & Nobel and scanned a product within 30 days. B&N was able to convince the consumer to show up in their store to buy books instead of the original bookseller’s store.

Retailers who leverage an omni-channel approach as well as applications like ShopSavvy can reach far more shoppers than their own retail locations can alone. Start a conversation where the consumer is, not where you wish he was.

The Grand Bazaar is located deep inside of the walled city of Istanbul. Founded in 1455, it is the largest and oldest covered markets in the world with more than 61 covered streets and 3,000 shops attracting more than 250,000 visitors each day. It might seem strange to look back to a 15th century shopping experience to point to the future of retail, but we believe retail is headed ‘back to the future’.

Many retail watchers are beginning to realize that in-store experiences are too linear and too one dimensional. Today shoppers enter retail stores and see the same products for the same prices every other shopper experiences. We believe that retailers who strive to create specialized experiences will see their share of consumer spending increase.

For hundreds of years shoppers in the Grand Bazaar have experienced a unique 1-on-1 conversation with retailers. With more than 3,000 shops competing for the same shoppers you might assume everything would come down to price. You would be wrong. If you stopped watching the retailers and started watching the shoppers you would begin to see order out of the chaos. Take for example the throngs of designer-clad women holding their designer Chanel and Hermes bags as they weave purposefully through the narrow streets and aisles. If you watch closely you will see them disappear through certain shop’s ‘anonymous portals‘, Inside they are able to find the best of the best in designer merchandise delivered in a highly personalized and intimate manner. These ‘in the know’ shoppers have discovered an exclusive shopping experience that isn’t available to just anyone. Coupled with the exclusive nature of the experience the retailer has added a second, important, ingredient: scarcity. Think of these retail experiences as ‘highly curated’ for these ‘in the know’ shoppers (designers, buyers, locals, stars and moguls).

Smart retailers can begin to leverage the ingredients of the Bazaar to begin to start 1-on-1 conversations with today’s highly connected consumer. These conversations don’t have to be about price. For example Macy’s CEO, Terry Lundgren, is in the process of remaking his storied retail brand. Last year ShopSavvy licensed it’s scanner technology to Macy’s for the development of their Backstage Pass program – touted as a way to ‘Shop like a VIP with Macy’s Backstage Pass’. Shoppers scan the red stars throughout the store to watch exclusive fashion tips and insider advice from stars like Carlos Santana, Rachel Ray, Donald Trump, Tommy Hilfiger, Martha Stewart and Michael Kors – all specifically tailored to individual shoppers. Over time this ‘backstage’ experience becomes more and more customized as Macy’s begins to build a more intimate relationship with the shopper.

But it isn’t just about mobile, Lundgren is also installing kiosks in-store than provide consumers access to reviews, advice from friends and the ability to pay on the spot. Additionally, he has placed an electronic concierge in the cosmetic section to recommend skin care products. Lungren explains, “It’s clear to me that the consumer likes shopping online, I am focused on how do we make them feel as comfortable and ready to buy in our stores as they do online?” Finally, Macy’s is turning 292 of its more than 800 stores double as distribution centers for online orders t0 better compete with Amazon.com. Macy’s is embracing an omni-channel, 1-to-1 approach to consumers.

Applications like ShopSavvy can help retailers open new lines of communications with shoppers. By making a topical connection at the exact right moment shoppers will appreciate the conversation. Successful retailers will learn to leverage these exclusive and scarce moments and shoppers will reward them.

ShopSavvy in Austin talking mobile payments, NFC, mobile advertising, and the war between Amazon and local retail.

Two months ago we updated the iOS version of ShopSavvy with a mandatory user account. We explained the thinking behind the account in a post here. Most users simply updated and created an account (millions of them), but a very small and vocal minority (hundreds of them) complained that forcing users to create an account was asking too much. To limit the carnage in our rating, we decided to limit the mandatory user account (we have had an optional account for almost a year) to just iOS for 60 days. Our experiment is over and we have decided to make a change.

When users who don’t have an account download the next ShopSavvy update the first thing they see upon opening the app will be the scanner screen. Users without an account will immediately be able to scan a barcode and get the standard online prices, local prices and product reviews. If the user wants to edit the product, add photos, add prices, check history, create lists, create wallet, export data, sync with Dropbox or any other enhanced feature they will have to create an account (with or without Facebook). Additionally, we decided allowing users to immediately see the scan screen was a GREAT idea so in settings any user (even those with an account) can set the app to open on scan screen always (the default function is for the app to go back to the last feature requested).

We will be bringing a similar implementation to Android around the same time Apple approves the update (up-to two weeks from now).

One of the most common questions I’ve been getting at conferences and panels lately is around NFC and “is it a bubble” or where is it headed?  I thought it might be good to note some quick thoughts on the topic.

The last few years many large players in banking, technology and related industries have worked hard to push NFC related technologies to control the wallet.   The theory has been if you can control the wallet, you gain strategic advantages and marketing insights into the customer that are very valuable and can be leveraged across a much larger business.      This has resulted in the strategic groups at many entities engaging in a ferocious battle with carrier partnerships, talent raids/wars and other initiatives to try and push these efforts to gain the lead in the payments marketplace.

Those efforts are interesting, but what’s the value proposition for shoppers?

The problem with NFC is while the strategic benefit of “winning” is clear for large players in banking, technology and even the carriers, the value proposition to consumers  is not.  How does NFC actually make the shopping experience better?   This isn’t a developing country where no credit card system exists and you have to bring a pile of cash to check out at the hotel, you can pay a credit card and it’s great.

With NFC- how are you making the shopping experience better beyond what we have now with the credit card?  Is the credit card really broken? What’s the value proposition for consumers? What about for retailers?

People have charged ahead without answering these questions and as a result we have penetration rates on mobile phones in the single digits, and more alarmingly the same penetration rates at the retail point of sale (so even if phones catch up, not enough retailers support it yet).

This doesn’t mean NFC is dead- it just means the answers around payments will probably come from new players not yet in the game.  One candidate not often discussed—the retailers.  These retailers need to challenge their old business models and think of how they can actually improve the shopping experience using technology.   Restoring a sense of fun and wonder when I walk in the store using these portable computers in the hand could dramatically impact a retail business looking to “turn the tide”.   No question even if this innovation doesn’t come from the retailers, you are going to need to find ways that the value proposition works for them, not just the consumer.  What could the shopping experience look like in the next 5 years in terms of not just payment, but product and deal discovery?

We think the way you shop in 3-5 years will be completely different and at ShopSavy we are working to make this happen a little bit every day.   We know it’s a challenging time times for our retail partners but we believe it represents an opportunity for leaders in retail to really lead the charge and jump ahead of the competition (including Amazon) using technology.   Over the coming year we expect to introduce many of these technologies at ShopSavvy with our strategic partners—we can’t wait to help create the future of shopping.

The first annual RoundUp for Startups recruiting event is April 21, 2012. More than 40 companies (including ShopSavvy) will be recruiting more than 100 salaried employees at the event! Details:

April 21, 2012
4-8PM
Deep Ellum Brewing Co.
2821 St. Louis Street
Dallas, TX

FYI – you will need to RSVP…

The ShopSavvy team was in Spain this year at the Mobile World Conference. Check out John speaking at the Bubble over Barcelona panel, ‘Beyond Digital Goods’:

Are you part of the 99%? Our latest update is just for you. Last year we introduced the ShopSavvy User Account as an option for users. In our latest update we are requiring users to create a user account in exchange for using our free app. We knew this decision would be controversial, but given the direction our business is taking as well as some of the problems we are facing we decided it was a necessary step.

Most of our users (around 99%) are amazing contributors to the community. They submit product reviews, product photos, product titles and product prices several times a minute – this data is shared with other ShopSavvy users. Of course some of our users (around 1%) spend a LOT of time ‘screwing’ with the system. In some cases they are simply adding bad data – data that is shared with millions of users until some reports the issue. In other cases they are uploading obscene photos and/or product reviews – not very nice. One bad actor can impact millions of users before we rectify the issue. With user accounts when we find a bad piece of data we can flag a user to prevent their contributions from being shared beyond their device (feel free to continue to muck up your results, we just won’t share them with others). User accounts = better data and less bullsh*t.

In future releases of ShopSavvy for the tablet and the web we will using the account to link data across these devices. You will be able to create shopping lists on your tablet or computer and have them appear on your mobile device. You will be able to track your shopping, purchase and shipping history on all three devices. We might even be able to deliver you more relevant deals based on where and how often you shop – the sky is the limit.

At the end of the day, we get it, having to create an account sucks. We tried to make it as easy as possible, leveraging Facebook as much as we could. Give it a try. we know there will be haters, but hopefully the 99% will appreciate the change.

Millions of Shoppers + Scanning Millions of Product Barcodes + Millions of Retail Store Locations + More than 40,000 Retailers Delivering Inventory and Price Information = BIG DATA.

ShopSavvy is now three years old and during that time has become the largest mobile shopping community in the world. Delivering real-time pricing, inventory, reviews and product information to millions of users, for millions of products from thousands of retailers is hard work – perhaps harder than it sounds. Late last year we secured a $7M investment lead by Facebook Co-founder Eduardo Saverin with the goal of making our platform more social. Layering a set of social graph data over our existing product data entailed the creation of an entirely new platform that could leverage the latest ‘Big Data’ tools like Cassandra, Hadoop and Mahout – ENTER ‘ProductCloud’.

ProductCloud is ShopSavvy’s Big Data solution for real-time social product data. Before the release of ProductCloud we used traditional LAMP tools for data – tools like MySQL. By Black Friday we had more than 1 billion rows in MySQL – the realistic limit of the technology. Our team has feverishly been building ProductCloud and I am pleased to announce that it is going live as I write this blog post.

Using Cassandra with Hadoop for data storage and processing, ProductCloud is able to iterate over a MASSIVE dataset on demand while concurrently serving data requests and meeting our various internal and external SLAs for companies like CNET, About.com, PriceGrabber and Walmart. Cassandra’s built-in replication suite allows ProductCloud to maintain load during peek times (such as Black Friday or Cyber Monday) as well as during hardware failures across multiple machines, racks or even data centers. ProductCloud maintains HUGE histories of prices, products, scans and locations that number in the hundreds of billions of items.

These Big Data tools make it possible to leverage the massive amount of data we store in order to constantly create new analytics to provide actionable insights into the retail shopping business. ProductCloud’s open architecture allows our team to layer tools like Mahout on top of our platform to enable new features like price prediction, user recommendations, product categorization and product resolution. What sort of data are we talking about? Here are a few stats that boggle the mind (well at least ours):

-  More than 240,000,000 product pictures and user action shots
-  More than 3,040,000,000 product attributes (color, size, features and so on)
-  More than 14,720,000,000 prices from retailers
-  More than 100 price requests from ShopSavvy users per second

With the release of ProductCloud our team has laid the groundwork for the ‘socialization’ of ShopSavvy. Adding a social layer to such a rich set of data – data that must be accessed on a real-time basis wasn’t possible before the creation of the Big Data tools found in ProductCloud. Look for social features later this quarter.