Retail Gamified: HotNow Cracks Groupon’s Model - Bitsonline

Retail Gamified: HotNow Cracks Groupon’s Model

Local businesses are more fragile than many understand, but for those with some experience, it’s always difficult to walk by an empty shop or café during peak hours. Though brave proprietors will keep a welcoming smile pasted on despite the knowledge that their business retains capital little better than a sieve, the desperation is palpable. One thing these merchants can do to supplement walk-in customers is to reach them where they spend most of their time and encourage them to stop by. The best place for these marketing efforts is online, but besides listing themselves on Google and posting on local forums or social media channels, small business owners don’t have many other options to turn to.

This is a sponsored article, provided by PPGrowth

Bringing customers from the web to the front door is challenging, but companies like Groupon and FourSquare recognized a huge opportunity in these struggles. With location-based advertising, these services help local stores to offer highly targeted discounts and coupons to relevant customers, who suddenly gain a new reason to try out that new restaurant that they’d previously only glanced at. However, like many other internet services built on the big data model, Groupon has its own bottom line to protect. The dynamic they create is inefficient at best, and at its worst simply hastens the decline of the small businesses using it as a lifeline.

The underlying issue is asymmetry of information and purpose. With one-off, single use coupons often redeemable only under certain conditions (or on certain items), Groupon creates a system that fails to align the interests of themselves with the businesses and customers using their platform. As the retail market wakes up to this reality, new solutions have emerged that look to be much more equitable. HotNow is one of services, and it employs decentralized blockchain technology to do away with many of the flaws hampering the traditional discount economy.

The Current Model Extracts Value

An imbalanced business relationship is the frequent result of Groupon’s centralized model. Like most internet platforms, Groupon must buy the data it needs to target its clients’ customers from sources like Google, Facebook, and Amazon. Therefore, Groupon’s priority is to cover these costs and maintain a profitable margin—often at the expense of their partners. It’s designed to deliver value to the intermediary above all others, which disrupts the flow of value between other participants in the model.

Any business using Groupon will attest to this. Optimizing a campaign amounts to little more than guesswork, and those that manage to get it right are often rewarded simply by breaking even. While bringing in new customers is a great cause, coupons restrict them by being redeemable during small windows of time. It’s not feasible for a small shop to deal with a horde of coupon-toting customers all on the same day. Moreover, these coupons tend to attract specific types of customers, who are unlikely to return unless they have another discount in hand. The stress of such a situation might temporarily impact the service quality of a young business, and could harm their image and brittle word-of-mouth reputation.

HotNow’s Solution

Contrasting with the traditional model, HotNow has created a value-added discount system that makes smart use of blockchain to benefit all stakeholders. Instead of coupons being purchased with cash, HotNow offers cryptocurrency incentives that embody the same transactional role, but with some extra utility. It allows merchants to encourage social participation with their brand by offering online customers paid missions like writing a review, posting an image, playing a mini-game or answering a questionnaire. They’ll receive HoToKeN in return, which will be redeemable for discounts at these merchants and is much more flexible than a coupon.

HotNow

Merchants in this system achieve what they can’t find in competing solutions: loyal, retained customers who bring more value besides the cash in their wallets. Customers enjoy that they have a special, discounted status at their favorite stores, and in return, need only to help the business’s organic marketing efforts. The blockchain ledger stores all HoToKeN transactions permanently, and can help show a business who their biggest advocates are. Consumers who use it to shop frequently at their local boutique have better ‘credibility’, and can even borrow tokens in bulk as a reward for being a significant contributor to the ecosystem.

Operating on blockchain means that HotNow can get its data from channels where users volunteer their demographic and geographic details, or sell it of their own accord. This makes it cheaper and more benevolent than large, centralized data marketplaces. The biggest markets for such an equitable solution are in Asia where HotNow already boasts impressive usage metrics and a long list of partnering brands.

Success Requires Participation

One caveat of the blockchain ecosystem is it strains to work without a high level of participation. Decentralized networks are very sustainable on paper, but like any peer-to-peer technology, each user is given a fraction of responsibility over the whole system. HotNow is already showing retailers how they can better compete, but it will need to continue to demonstrate this even as the competition begins to catch on.

Few can argue that HotNow’s retail discount economy isn’t effective, yet it’s unclear if the industry’s biggest players have even taken notice. If it continues its current trajectory, however, their ears will begin to perk up. Such a trend is only good for consumers and the local businesses they embrace.


Images via Pixabay, HotNow

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