Merchant Exchange raises $1 million, launches upscale consumer loyalty platform
Merchant Exchange, a New York-based loyalty and rewards management marketplace focused on the high-end market, has launched its platform with just under $1 million in venture funding from a long list of angel investors. They include Richard Gelfond, the CEO of IMAX; Bradley Wechser, the Chairman of IMAX; Greg Foster, the Chairman and President of IMAX Entertainment; Stephen Abraham, President of The Becket Group and former SVP and Thomson Reuters; and a handful of travel industry executives. The IMAX connection is not arbitrary -- founder and CEO Michael Tolkin was formerly the director of corporate development at the company.
The New York-based company boasts an even longer list of advisors holding top positions at companies like The Body Shop, Sears, Providence Private Equity, Martha Stewart Living Omnimedia, TastingTable, Fahrenheit 212, HRG North America, and Oliver Wyman.
The company has been building its premium-brand focused loyalty and rewards platform behind closed doors for around a year now, gathering thousands of sign-ups in beta. Today it unveils its product to the public. The result is a classy-looking site where users can securely plug in their credit cards to manage rewards balances and grab discounts and perks from brands they follow. The idea is to help consumers learn about deals while taking full advantage of loyalty programs at their favorite brands and vendors.
Merchant Exchange, or Merchex, faces plenty of competition in the rewards and loyalty industry. But many, like Belly, focus on the long tail retailers like coffee shops and local restaurants. Merchex has started at the top with high-end national chains and brands (think Uber, Whole Foods and -- of course -- IMAX) and believes its tools will trickle down to local boutiques and shops.
The company's thesis is that top brands don't want to advertise any sort of discount on social networks -- that is not the place for transactional interactions between brands and consumers. Many of its competitors have tied their products to Facebook or Twitter; this is where Merchex hopes to differentiate.
People go to social networks to interact with each other. There, brands are forced to insert themselves into the conversation, often awkwardly. On Merchex, the only reason anyone is logged on is to interact with brands, which should, in theory, make the interactions stronger and more likely to convert. And it solves that pesky problem of luxury brands not knowing how to engage the unwashed digital masses. This way they can offer their discounts and perks discreetly. With class, even.
Right now Merchex has 100 brands on its platform in four categories (shopping, dining, entertainment and travel). Some of those deals were struck directly (thanks, I'm sure, to Merchex's rolodex of retail and business heavyweight advisors). Others, like Amazon.com, were done through affiliate programs.
Merchex is on track to hit 100,000 users in the next few months, Tolkin says. The company will continue to build out tools to hep users manage their loyalty programs while also offering white labeled programs to its brand partners. Aside from affiliate fees on conversions, Merchex also launched a white label program, (see this example for BSpa, the luxury spa at Soho Grand Hotel) so companies without existing loyalty programs can create and manage them within Merchex's back end.