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Where we are now. Let’s run through a couple examples of how this works on the ground right now. If you remember from last week, we covered: “how does it work? It’s a token-based mobile loyalty app for small businesses. Local businesses set up digital tokens on our mobile app, choosing each token’s price and reward. Customers redeem these tokens in-store for their reward using the app. Tokens can be bought, gifted, or received in a variety of different ways on Redkart.” You can read more about how it works here. There are a few ways that customers currently hear about and get the app. So in each redkart-enabled store, sitting on the counter or on their wall, is a small redkart poster with a QR code that links to our app. Customers can scan the QR code or go to (app.redkart.com) on their mobile device to install the app. They login with their email address (which is verified via code), and then it’s a quick one-time sign up, where they enter their name, number, and zip code. Right now, the app is only for people that live or work in the Cambridge area (as most of our merchants are based there). Customers can also get the app through invite. Redkart merchants have their own separate store app (store.redkart.com). From the store app, a merchant can send a customer a token by entering the customer’s email address or phone number. Customers will receive an email (or SMS text) saying “Store A has sent you a token on Redkart! Sign up to view.” Customers in the Boston area will soon be able to download the app from our website as well, and will also hear about us through social media (in addition to word of mouth) as we do more digital marketing. Once we get on the App Stores, they can discover us on there as well. Merchants are invite-only (since they need to be approved as a legitimate brick-and-mortar business), but they can also request access via our site (redkart.io/merchants).
What we’ve done. On the customer side, here’s what we’ve built so far. Once on the app, customers can buy tokens from local merchants in the area. This requires them to load money onto the app (currently processed via Stripe), onto what we call their ‘redkart wallet’. All token purchases are paid for directly on the app using funds in their redkart wallet. Customers can also receive tokens. As mentioned earlier, merchants can send tokens to customers at any time. For example, say that they’re a loyal customer or a long-time customer, merchants can send them a token as a ‘thank you’. Or say they’re a new customer or a recent lead, merchants can send them a token as a way of luring them in store. Or say it’s the holidays or a special occasion, merchants can send tokens to keep in touch with their customers and maintain good relations. Or say the merchant is doing a promotion or a special sale, sending a customer a token can give them a reason to come back. Lastly, customers can also gift tokens to each other. Say I have a favorite coffee shop in the area that I frequent, that I want to refer to my friend. I simply buy that coffee shop’s token on the app. And then, I go to the ‘gift’ tab, find my friend’s name, and send them that token. My friend can go to that coffee shop at any time and redeem the token to get their reward. Say for instance the coffee shop set their token up as ‘this token gets you 1 free coffee’. I can now digitally buy my friend a coffee via the redkart app, all with a few clicks. Customers have a real way to support local mom-and-pops in a way they hadn’t before. By creating simple, buyable, transferrable tokens, we’ve created a unique way for locals to partake in the local business ecosystem, and truly support small business.
What’s next. Our current product is a prototype, but hits the MVP (minimum viable product) criteria. As mentioned in our last update, there are a range of features that we plan on adding on top of this token redemption system. But right now, we want to focus on just making our core existing product better. First, we want to increase how frequently customers get tokens. Right now, the product is not yet integrated with in-store purchases (ie a customer can’t automatically earn a token the more they spend at local stores). So, Redkart plans on holding raffles and rewarding customers on the platform with tokens either at random or based on their app usage. There’s a variety of ways we can execute this, so we’re currently exploring and building out these processes. Second, our focus is on improving redemption verification methods for the merchant. Right now, when a customer walks in and wants to redeem a token, they find that merchant’s token on their app, and click ‘redeem’. The token turns green, and says ‘redeemed’ (and then disappears, to prevent future use). And the merchant gets an SMS confirmation saying “Customer X has redeemed Token Y”. In addition, the token redemption is recorded on their store app (where the merchant can track all token usage). This redemption process is simple (it’s all 1-click), but we want to improve this process even more to prevent any potential fraud or error. For example, adding either a push notification for the merchant, or some requirement on their end to ‘approve’ the redemption, might slow the in-store customer experience a bit, but prevent other issues down the road. Lastly, we’re working on getting our product on the iOS and Android App Stores. The product currently is a progressive web app. This means it is functional in every way, except for the fact that it can be discoverable and downloadable via the App Store. This isn’t necessary at the moment, since we’re targeting local merchants’ existing walk-in customers (so customers are hearing about the app physically in-store not online), and since the app only works in a particular geographic region anyways (we’re not really marketing the product nationwide just yet). But creating a downloadable mobile app will obviously make the user experience more seamless and glitch-free, especially as we scale.
What you should know. The value proposition to the merchant is multi-fold. Our merchant pitch is usually in the context of a ‘buy local’ campaign. The value this product provides is to the individual merchant (in the short-term), but to the local business community at large (in the long-term). We’re incentivizing locals to spend more at local businesses. As a type of rewards app, customers get rewarded by local merchants, and can share these ‘local rewards’ via tokens with others in the area, which all helps foster more local spending. Thus, the tangible value this app provides (like any other loyalty program) is in merchants 1) getting existing customers to spend more (say by offering them a token that gives a ‘percentage off’ sale like a coupon), and 2) getting new and existing customers to come in more frequently (say by offering them a token that gives a free reward with any purchase). But even more importantly, if you remember from our last update, the core problem we’re solving for is the ‘antiquated mom-and-pop’. By creating a token on our platform, the merchant now has a ‘mobile app’ or ‘loyalty program’ that they didn’t have before. Customers can not only find or discover them in the area (like they would on Google or Yelp), but can actually digitally interact with them by purchasing their token (in a way they couldn’t digitally interact before with non-restaurant businesses). Merchants can also begin to collect customer info and sales leads, ie from new token purchases via the app, and track referrals, by seeing whom their token is gifted to. Furthermore, our product basically allows a merchant to convert any physical coupon, gift card, punch card, promotion etc into a digital transferable token. The token can have a generic image, or a custom branded image (under our paid plan), and thus can be a digital brand identifier for local mom-and-pops. A local symbol for identifying that favorite spot in the neighborhood, showcasing perhaps a signature item or product the merchant is known for (ie a strawberry cheesecake token for that local joint that is known for its signature strawberry cheesecake). In our mission to reimagine Main Street, we’ve considered ways in showcasing what makes mom-and-pops different from national retailers. This unique branding of the otherwise ubiquitous nail salon, or hardware store, or antique shop, can help set mom-and-pops apart, and accentuate what makes them special.
What we believe. Our mission is to modernize, connect, and reimagine Main Street for the digital age. While our current product helps ‘modernize’ stores by giving them a digital presence and a mobile app touchpoint for their customers, the ‘connecting’ aspect is going to be our real innovation. We want to enable a new ecosystem where local small businesses can form a community or network, and essentially ‘work together’ for their greater benefit. Similar to how different franchises of a national retailer may each operate independently, but in many ways work in unison (under a larger umbrella), resulting in the obvious added benefit of greater resources, support, and marketing infrastructure etc when being part of a larger whole. As we get to scale, local merchants can operate almost as part of a ‘collective’, providing a sort of ‘joint incentive’ to the local consumer to spend more at all participating local merchants. To give one example, we envision our end-user being able to collect tokens the more they spend at any in-network store. The more they spend at the local shoe store, the more tokens they may get for the local ice cream parlor. The more they spend at the local music shop, the more they’d get at the local cafe. Unlike a credit card cash back point system, this would remain exclusive to local small businesses, and more importantly, merchants would be able to benefit by tapping into each other’s customers, creating a vibrant local consumer base. Local supporting local. We’ll discuss this in more detail at a later date, but this network effect can truly be achieved as we build out integrations with in-store point-of-sale systems and get more users on the platform. A key pain point in achieving this is the fact that merchants all have different PoS systems. Therefore, being able to create an interconnected network across all merchants becomes difficult. But hence, there lies the opportunity. This will be the next phase of our product and perhaps our most valuable proposition.
What we need. On the product side, we need 100 stores in tight proximity with a high number of token redemptions per store. The merchants need to be close together (ie within a single town) so there’s more choices to the local that downloads the app. If we then have multiple customers redeeming multiple tokens per merchant, then we have proof of concept, and can prove the value proposition not only to the merchant but also to investors. But right now, in order to get there, we need capital. We’re raising a $350k pre-seed round, which we aim to close by the end of the year. It’s going to take time as we prove out traction in the market. So we’re raising 50k (of that 350k) asap, to extend our runway. As I mentioned in our last letter, any contacts with angels or early stage investors in this space would be immensely helpful. You can also partake in our round via AngelList, or by getting in touch with me directly. ______________________________________________
Alas, this was by no means as short as I would’ve liked! But I think we gave a comprehensive overview of how this all works, and our value proposition to the customer and the merchant. In the following updates, we’ll try to tackle the variety of ways a token can be used by the business owner, and how it can be optimized to drive the most foot traffic in-store. We’ll also talk about our growth strategy, how we plan on hitting 1000 stores, and provide some updates on our conversations with merchants on the ground. As stated in our prior letter, we’ll have more details on our overarching vision and prior product iterations in our annual report. As always, feel free to reach out to me with any questions at neelan@redkart.com. That’s all for now!
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