Location-aware mobile savings app Shopular gets $6.4M from Sequoia to help save brick-and-mortar retail

By Michael Carney , written on September 26, 2013

From The News Desk

Shopular, the company behind the intelligent mobile shopping concierge app by the same name, has raised $6.4 million dollars in a Series A round led by Sequoia Capital. Sequoia’s Tim Lee will join the company’s board of directors. The company previously raised a $1 million Seed round that included former Facebook CTO and Quora founder Adam D’Angelo.

Shopular is noteworthy for its desire to solve fundamental problems facing both consumers and brick-and-mortar retailers today. First, the company aims to make discovering the best opportunities to save money an effortless and delightful experience. The company does this by automatically notifying its users of available discounts whenever they are in the vicinity a store that matches their personalized profile.

The app also helps drive foot traffic to brick-and-mortar retailers at a time when they are increasingly losing attention to online retailers and fighting profit-zapping trends like showrooming. By delivering proximity-based, personalized notifications, the company is able to significantly increase the likelihood that a consumer visits a given retailer and, ultimately, buys something.

For example, a regular Gap shopper who receives a limited time “40 percent off one item” coupon while within blocks of the store may alter their plans and stop in to see if there’s anything worth buying. Similarly, that same Gap store could offer a coupon while a regular customer is in the neighboring Macy’s store, and potentially win an increasingly large share of that consumer’s daily spending allotment.

Shopular is still in the early days, having launched into beta in November 2012. It’s been a busy 11 months, however, as the company has grown its reach from 1,000 mall-only locations at launch to over 40,000 storefronts today, including 150 of the nation’s top brands. The next phase is to expand into regional brands, says co-founder and CEO Navneet Loiwal.

Loiwal who was the first engineer at Google India and the co-founder of Google Finance, later worked at mobile shopping startup Shopkick. He then founded Shopular with Shopkick’s first engineering hire and former Loopt engineer, Tommy Tsai. Together the pair brings extensive mobile shopping and mobile location experience to the company.

This experience has proven key to Shopular’s success. The magic of the app is that it always knows a user’s proximity to the nearest shopping locations and uses behavioral analysis to deliver notifications only when the user appears to be in “shopping mode,” rather than when they’re driving by a mall at 80 miles per hour on the freeway. More impressive is that the company has managed to do this with little to no impact on a user’s mobile device battery life, Loiwal says. It must be voodoo.

Shopular was downloaded more than 250,000 times in its first three weeks, according to earlier reports by the company, although its founders declined to update this figure today. The company’s iOS and Android apps have a 5 Star rating across more than 10,000 collective reviews.

The founders were equally hesitant to share specific engagement figures, only saying that the automated notification mechanism is leading to “engagement levels so off the charts that most people wouldn’t believe us if we told them,” Loiwal says. “Suffice it to say that Sequoia took a good look at our numbers and were confident enough to decide to invest in us.”

Loiwal and Tsai have gotten Shopular to this point with just two other employees but plan a significant hiring push based on this latest funding. The company will look to expand its engineering, marketing, sales, and customer service infrastructure, the founders say.

Shopular has yet to monetize, although it’s not difficult to envision ways it could justify big dollars from retailers. The key monetization mechanism is likely to pay per performance advertising, meaning the company gets a fee when a user visits a store location and/or completes a purchase after being shown a proximity-based discount. The ability to target these notifications to users at the “moment of truth,” aka when they’re already shopping nearby and possibly in a competitor’s store, will be worth a premium.

The challenge, however, for this engineering heavy team will be to build a business development and sales workforce capable of inking deals with the nation’s largest retailers. While the app appears to offer plenty of value to justify such partnerships, enterprise sales can be a tricky nut to crack.

Surprisingly, there has been very little direct competition around the Shopular idea even a year after the company first launched. There is plenty of noise in the couponing space, but no one to date has offered an analogous proximity-based experience to consumers and retailers. Competition is inevitable, but according to Shopular’s founders, it will need to come from companies dedicated to solving this problem, rather than more multi-faceted mobile platforms like Foursquare, Facebook, or Yelp, or general couponing platforms. Whether there’s another pair of razor sharp founders in a garage somewhere hacking away on this very problem remains to be seen.

Retail is undergoing a rapid evolution. No longer is it enough to open a store and trust that consumers will come, or that they’ll buy when they do. Retailers that wish to survive the onslaught of ecommerce challengers need to do a better job anticipating the needs of their customers and delivering delightful experiences on-demand. But unlike their online counterparts, offline stores have rarely had the data from which to deliver these experiences in the past.

It won’t be easy to reverse the reported demise of offline retailers, but to the extent it’s possible it will be technology like Shopular that makes it a reality. Shopular is helping to close the loop between mobile device usage and brick-and-mortar shopping. It's hard to think how the company could be more in the right place at the right time in terms of addressing the needs of the market today.

[Image via Thinkstock]