Daily Deals Manifest Destiny - Can One Live On Deals Alone?

By Randy Smith, Mobile Wallet Media
Thursday, August 30th, 2012

Daily Deals are indeed not dead, but must evolve and transform if they are to survive the mass adoption of the Mobile Wallet. Daily Deals as we know them will continue to exist, but they will need to reduce fees and discounts drastically to reach their 'Manifest Destiny.'


So just a couple weeks back I wrote about how Daily Deals are perhaps too dysfunctional to survive. I wrote the article in response to the slew of bad earnings and news reports about Daily Deals companies. This is the first article in our 'SuperCommerce Series.' Tighten your belt it's going to be a wild ride!

Daily Deal companies will need to change their revenue, distribution and redemption model to survive the coming 'Mobile Wallet Revolution.' In my previous article on Daily Deals, I spoke much about Daily Deals limiting their market with high fees and discounts. I'll add a bit to that here and now.

If Daily Deal merchant fees are reduced drastically and allow merchants to set lessor discounts or rewards, more like LevelUp, they will have a chance to provide deal vouchers for just about anything. That's right, I said anything! So yes, it will be possible for "One to Live On Daily Deals Alone!"

Well, perhaps not anything, as we know money can't buy many things.

I see this as a new "Mega Trend," one that will completely transform not just mobile commerce, but all retail commerce! This trend itself could be every bit as disruptive as mobile, the web and the mobile wallet itself. The implications of this transformation will alter all retail marketing and advertising! If you think hard about this, you will realize the spending and purchase decisions of consumers will be altered once Daily Deals are in the Mobile Wallet. With the consumer armed to carry as many deals as they want, this will prompt the consumer to buy more deals as they are easier to manage than the current, 'Clunky.' and non-seamless, redemption methods. Therefore, if the purchase cycle is moved forward to "Lock-in customers and future sales," then marketing and advertising will need to redraw their lines around this.

So is what I'm saying here that Daily Deals will become like a new virtual currency? Yes! If this new breed of Daily Deals is convenient enough and enough brand name retailers adopt this model, consumers should scoop them up like crazy. So rather than a high-discount and costly coupon or voucher to drive consumers to the store, a deal with a lessor discount, say a $110 voucher for $100 in cash. LevelUP has already shown us a glimpse of this type of offer. Convenience is traded for larger discount. Consumers will take a "Good Deal," and so may merchants, if it is easy to obtain and redeem. This model I believe will be a powerful force to direct, not just traffic, but lock in loyal customers and sales in advance. If one goes down the rabbit hole deeper, if a consumer has spent their funds on "Mobilized Daily Deals," then the decision to where they shop is done.

These types of deals have long been available during the holiday season via bonus gift card offers and consumers may purchase gift cards online at a discounted rate. But the inconvenience of carrying multiple cards has made it impractical at scale. With the Mobile Wallet, such barriers are removed.

OK, now onto distribution. If you are a Daily Deal company, you are ripe for disruption if you are not plugged into and integrated with the major Mobile Wallets. Why? Because the convenience associated with receiving and redeeming offers via the Mobile Wallet will demand it.

Imagine if redeeming a Daily Deal was just like making a purchase using the Starbucks Card Mobile or LevelUp app. This is the future of Daily Deals and really offers period. Mobile Wallets will make getting great deals easy, simple, convenient and fast! Deal companies, merchants and marketers should get on board this "train of thought" or be left behind with a worthless ticket to nowhere.

So with, Google, PayPal, ISIS, MCX, Square, LevelUp and more Mobile Wallets launching this Fall or 2013, don't you think they might be interested in offering a high-margin, Daily Deal service of their own? Well, one may say it may be easier to just partner with Groupon or Living Social or another of the myriad of the high-volume, Daily Deal companies. On the other hand, with the stock hit Groupon has taken as of late, perhaps they are ripe targets for acquisition by Mobile Wallet companies. Via acquisition they may lock in merchant relationships, a sales force, a platform and revenues, all in one fell swoop. Or perhaps Daily Deal platform infrastructure companies will be ripe acquisition targets? Mobile Wallet companies are all armed with a massive customer base and billions of bucks. Buying infrastructure alone could make for an exellent investment. Of course some of these companies may already own a Daily Deal platform.

Amazon, which has a large investment in Living Social, may stand the best chance to stand firm and negotiate deals with all major wallet players. Amazon, has yet to make a move or tip it's hat with regards to it's plans for a Mobile Wallet, even though they are very adept at processing payments.

Apple, with it's much anticipated launch of it's iphone 5, with or without NFC and possible announcement that Passbook will become a complete mobile wallet, is news we are all eagerly waiting to hear.

First Data launched a new service named "OfferWise" at SXSW this past Spring. To quote First Data from their YouTube page "First Data's OfferWise solution is a revolutionary product that allows consumers to electronically link offers and deals to any payment card or mobile wallet." The release by First Data in June,  is titled "First Data OfferWise Solution Enables Universal Commerce for Offer Publishers and Merchants." First Data, if you are not aware, processes an estimated 60-65% of all retail transactions. If OfferWise can be a "platform in the cloud that seamlessly ties offers to Mobile Wallet," they could prove to be a platform of choice for Mobile Wallets and one not to ignore. 

Daily Deals in the Mobile Wallet, for clarity's sake, will not actually be a "gift or prepaid card," but will be a voucher, that may be redeemed via one's Mobile wallet, at a specific set of retailers, for a limited time. The other side of the equation to enable Daily Deal to be processed has to do with the integration to Point of Sale (POS), which I've touched upon in recent articles, and hence will not belabor again now.

How Mobile Wallets, Daily Deals, POS vendors and processors all decide to work together to build the future of Daily Deals and mobile commerce will be interesting to watch, but rest assured and God-willing, I will be here to comment upon it or be part of building it.

To wrap it up, and set up my 'Shameless Plug of the Day,' as a brand new journalist and as a FIRST-TIME EXPECTING DAD, I'll leave some meat on the bone for a later discussions and paid consulting. Just remember to tell others you heard it here first, refer others to read my articles and hire me to consult. I'm also open to offers I cannot refuse.



Mobile Wallet Media is a news media, analyst, marketing and consulting firm focused on the future of mobile: payments, commerce, daily deals, security, loyalty, marketing, prepaid cards, virtual currency and the convergence of them all with social and local. Randy Smith, the Founder and Chief Editor of Mobile Wallet Media, was also the primary founder, inventor and former CEO of MobilePayUSA, a TechCrunch Disrupt Startup Alley Winner in 2010.

The 7 S's Required for Success in Mobile Payments - Week 4 - Social

By Randy Smith, Mobile Wallet Media
Monday, August 20th, 2012

Week 4 of 7-Week Series

The media focus seems to have been mostly on enabling technology, security and savings, but retailers need a 'Clear-Cut Vision' on how Mobile Wallets will drive more traffic to their stores.

Social will be a key driver of traffic.

Social networks provide the reach retailers are looking for, and one of them is a Droid (please tell me you got that joke referencing Star Wars - Episode 1 + Google's phone). Yes, I know if I have to explain it, it only makes it worse. Welcome to my world of humor. My friends still love me, despite this.


Social has no borders or boundaries and all channels connect to it and serve it. Social networks provide, other media channels, the ability to interact with their customers. Social also has unparalleled depth of data on it's users. Of course each channel each has it's own unique data analytics.

TV, radio and even websites can gather information about their customers to better know and serve them, but this data is limited. Social data is 'Organic Data.' Facebook 'Likes' pinpoint what each 'Social Surfer' is interested in. Try that with any other marketing channel. You want to communicate and allow for 2-way engagement with your ALL of your customers at once. Just post a poll, pic, video, promotion or contest on your Facebook page. Now, I don't want to leave out 'Social's Super Side-Kick' Twitter. One without the other is definitely less engaging in reaching your total audience. Nor should one ignore any of the other prominent Social Networks such as Youtube, FourSquare, Pinterest and Yelp. 

Other media channels freely and without choice promote social networks. Why? Because in the end the 'Customer is King.' If any advertising channel wants to run on all cylinders, it has no choice but to engage social with all it's heart and might. Marketers must do it with passion and purpose or quickly be exposed or ignored as not being 'with it,' or worse becoming irrelevant.

Last week I shared that a 'Heat Seeking Missile' is required to hit our target. To make this missile fly it requires social and the right kind of social. If you ever have seen the movie October Sky, you would know that launching a rocket requires a perfect mixture of fuel. This fuel must burn smoothly and not be full of 'Hot Air Pockets' or the rocket will explode in flight. So am I saying you must be a rocket scientist to carry out social? Yes, but it will require those proficient at Social Media and communication in order to conduct reliable, safe and successful social engineering.

Placing a 'Social Badge' on ones website or ad does not make one Social. Brands must be social, like nice and extroverted people. Customers may come for your product, but will return if a relationship is built. Social Media is about relationship building and adding value to your great product or service.

In a world where customers have a multitude of choices of where they may buy a product or service, they will not as often be so stingy on price or buying elsewhere if they enjoy their shopping experience. This is a key part of brand building and being profitable and via Social, you have the opportunity to take your brand and the relationship to a deeper level. You may share about what, as a brand, you care about besides your product and services; be it saving the planet, feeding starving children or funding college scholarships. But be careful to be very proactive and collaborative with customers and non-profits to achieve the right results. The last thing you want to do is have a 'Cause Marketing' program lacking in real sincerity and purpose. People will see right through this.


In order to accomplish and carry out a successful Social Media campaign companies must hire social, friendly, fun, funny, rational, realistic, intelligent, talented, mature and very creative people that understand their product and their customer. These representatives must also care about what your customers care about and they must care about the causes you partner with. There is no going backwards here! Just like there is no reverse gear in technology, such is the case with social.

Social is most assuredly moving and trending with mobile technology. Mobile of course is changing everything as well (By the way, very soon we will examine in depth how these trends parallel).  Merchants and advertisers must meet their customers where they are at and this is where social and mobile meet. If a marketing channel fails to do this, it would have been like the auto industry saying no to fuel injection or Hybrid Electric Vehicles. Social, along with mobile, are media channels that are in hyper drive and will drive growth wherever it is properly plugged into.

Speaking of 'Hyper Drives,' let's tie in social with the Mobile Wallet. Social is also one of the core suppliers of 'the gasoline' that will enable Marty and Doc's Delorean to reach 88 miles per hour. If you remember from week one, the 'Flux Capacitor' for the Mobile Wallet is the connection between mobile to POS and is what makes mobile payments possible. So if Social in the gasoline, what is the uranium to power the Flux Capacitor?

Retailers, of course, are the 'Uranium.' Without retailers participating, the mobile wallet will be stuck in neutral and really serve no purpose. But thanks to Starbucks, Dunkin Donuts, upcoming ISIS pilots and the 'new' Google Wallet, the prospects are looking good for the supply of uranium.


Social is the 'Gasoline' to drive forward mobile payments!
Retailers are the 'Uranium' that power the 'Flux Capacitor.'
Mobile Wallets provide the Flux Capacitor > POS Technology.

So, let's venture back into the 'Data Goldmine,' that the Mobile Wallet will soon be the 'Mother Load' of them all. We know that social without retail, without mobile, is a Lose-Lose-Lose proposition. And now with the addition of the mobile wallet, the data loop may be made complete, well sort of.

Up until the mobile wallet, the transaction data of customers, for all their purchases at various stores, was exclusive to networks and banks. Each retailer has exclusive SKU data and thus purchase history data, but not necessarily, if rarely ever, tied to card data. With the mobile wallet, the transaction data for all purchases is not limited to just one card brand, but will be expanded to include all payment methods; cards, ACH, gift, daily deal vouchers and virtual currency. Mobile Wallets enable customer tracking without loyalty cards. With Mobile Wallets, retailers can now track customer purchases and thus deliver personalized offers.

Also, as the wallet is paired with shopping carts, and perhaps filled with UPC codes, it could contain the entire data chain. Retailers also parse out their data archives to data aggregators in exchange for gaining even better data so as to market with more precision and better ROI. These data aggregators will also want to buy data from mobile wallets so they may complete their data chain. And last but certainly not least the product OEM's may finally be able also tie sales to individual customers, also enabling product personalized product promotions and even 'Automated Product Registration.' We'll complete this conversation in coming days or weeks in an upcoming article on data analytics and the Mobile Wallet.

So, we strayed a bi into data analytics today from the focus of Social, but that is because Social is the 'Prince of Data and Reach.' The bottom line is retailers can not afford not to embrace Social, wherever it goes. Retailers tune into, as do we all at times, WIIFM Radio: 'What's In It For Me' and tune out if the song playing on the radio is not "Show me the Customers or Money.' There is nothing wrong with this of course. Making a profit is the main goal of any business and without ample traffic coming through the doors, it will not matter if you have the best products and the coolest and most contemporary looking store in the world (well this alone could drive traffic via word of mouth - but we'll leave that to another discussion), if you have failed to build an off-ramp and display bulletin boards along the busiest digital and mobile highways and byways, your best customers will be crickets and the bill collector.



About Mobile Wallet Media
Mobile Wallet Media is a media, analyst and consulting firm focused on the future of mobile commerce. The company mission is to highlight industry innovation and provide insights and opinions that will be relevant and forward-looking. The author, Randy Smith, is the primary founder, inventor and former CEO of MobilePayUSA, a TechCrunch Disrupt Startup Alley Winner.

Retailers Stepping Up To Build Own Mobile Wallet Network

By Randy Smith, Mobile Wallet Media
Wednesday, August 15h, 2012

It has always baffled me as to why retailers have not banded together to form their own mobile wallet network. The benefits are too many to not engage in doing so.


Today with the announcement of Merchant Customer Exchange (MCX), leading retailers Wal-Mart, Target, 7-11, Best Buy, CVS, Darden Restaurants and more, a much anticipated 'Retailer Mobile Wallet Network' focused on serving their customers has formed. MCX has not revealed the technology to be used to enable their mobile wallet, nor have they hinted as to when the service will be available.

In the release Mike Cook, corporate vice president and assistant treasurer at Wal-Mart said “MCX will leverage mobile technology to give consumers a faster and more convenient shopping experience while eliminating unnecessary costs for all stakeholders. The MCX platform will employ secure technology to deliver an efficiency-enhancing mobile solution available to all merchant categories, including retail stores, casual dining, petroleum and e-commerce.”

Over the past several years, the goal to create a standard format enabling simple, fast and secure mobile payments, via a mobile wallet, has proved to be a long and drawn out process.

NFC tech, long used in Japan for conducting mobile payments, has been the leading choice of Google Wallet, ISIS (Carrier network), Visa, MasterCard, PCI (Payment Card Industry - card data security rules) and payment terminal manufacturers such as Verifone. NFC tech has been slow to gain traction because retailers have not wanted to pay for the replacement of existing terminals, that may end up needing replacing again if they jump too early. Alternative methods have been introduced by Square and LevelUp that use scanning of 2D bar codes displayed on
mobile wallet smartphone apps.

No matter how you slice it, it seems there is always a 'chicken and egg' problem that will not go away. But now with the retailers 'flexing their mobile muscle,' it is beginning to look like there is no clear favorite to dominate as a single format (I already went over in depth in my previous article). But just like retailers must embrace Facebook, Twitter, Google+ and accept all four major payment brands, they will also need to accept other payment networks beyond their own. This is about consumer reach.

The retailers should most definitely maximize their marketing reach, but the bottom line is they still have to get their customers to return to their stores. Reaching customers through various and many marketing channels has always been a winning strategy, and nothing will change here.

In the release, Mark Williams, president of financial services at Best Buy said “As merchants, no one understands our customers’ shopping and payment experience better than we do, and we’re confident that together we can develop a technology solution that makes that experience more engaging, convenient and efficient".

A key advantage for MCX is the cost savings to deliver mobile payments, offers and loyalty through their own platform. I imagine that the retailers themselves have hired a consulting firm to work with them on this to deliver and manage the solution. If so, they will still need to 'put their pants on one leg at a time' and have to pay someone, but the costs are likely to much lower. Their are a ton of moving parts and various POS systems that need to be integrated and connected to a single platform.

I know very well this model is a very real possibility, as the company I founded, MobilePayUSA, has a 'Universal and Patent-Pending Solution' that sounds much like the MCX solution. The retail network proposed by MCX brings added disruption not only to the payments space, but also the mobile loyalty and advertising space. I am writing two series (The 7S's Required for Success in Mobile Payments and SuperCommerce) this Summer and Fall that speak directly to this upcoming disruption and merging of payments, marketing and mobile.

Mobile Wallet Media is a media, analyst and consulting firm focused on the future of mobile commerce. The company mission is to highlight industry innovation and provide insights and opinions that will be relevant and forward-looking. The author, Randy Smith, is the primary founder, inventor and former CEO of MobilePayUSA, a TechCrunch Disrupt Startup Alley Winner.