Shopkick’s mobile shopping app tracks you in stores, delivers real-time deals

Palo Alto, Calif. startup Shopkick has attracted some high-profile investors, including Kleiner Perkins Caufield & Byers’ iFund and Greylock Partners’ Reid Hoffman, but it has been mysterious about its actual product. That changed today at the San Francisco Best Buy store, where Shopkick founder and chief executive Cyriac Roeding unveiled Shopkick’s app, and he announced a partnership with the popular electronics retailer.

Basically, Shopkick will offer a free iPhone app that rewards users for visiting partner retailers (and other stores as well). When users have the app open on their phones, stores can use Shopkick’s “Signal” technology to know when a user has walked through their doors, allowing shoppers to earn rewards called “kickbucks.”

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As Roeding explained, there are important distinctions between Shopkick and popular location apps like Foursquare. From the user end, Foursquare requires more work because you have to actively check-in by selecting your location from a list of options. From the store’s perspective, check-ins are a flawed signal of loyalty because they’re easy to fake. Shopkick’s app promises to be both easier to use and more accurate.

The Shopkick team handed out iPhones to demo the app. First, I walked into the Best Buy and the app immediately knew when I had crossed the threshold — I received kickbucks and saw a menu of possible deals and offers. Then we previewed an upcoming feature, where the app knows not only that you’ve entered the store, but also the specific section that you’re in, and tailors the deals accordingly. You can also earn rewards by scanning product barcodes, giving you more product details. Then you can cash-in on those offers when you bring your products to the cash register and provide your phone number. And there will be social features, such as a “wall” of most frequent visitors.

It’s a very rich shopping experience — certainly my friends who already complain that I spend too much time staring into my iPhone and checking into Foursquare are going to be even more exasperated once I walk around a store staring at Shopkick half the time.

The Shopkick app will roll out over the next few weeks, as well as implementation in specific partner Best Buy and Macy’s stores. (Shopkick wasn’t specific about locations, but obviously the San Francisco Best Buy will be one.) The app can also be useful in other stores, but it will be based on a more traditional, manual check-in model, where users will receive fewer kickbucks than they would at partner stores. It seems like Shopkick’s real appeal will only become apparent in partner stores and as it rolls out all the features previewed today.

“We might not have everything on day one, but give us a few weeks,” he said.

Shopkick’s business model will be the real-world equivalent of cost-per-click and cost-per-action advertising, Roeding said. Just as publishers can receive a certain amount of money whenever someone clicks on their ads, Shopkick gets a commission when users walk into a store. And just as publishers can receive a larger payment if the click leads to an action (like buying a product), Shopkick can also receive a commission on the sales that it actually causes. It sounds like the exact amount will be based on the amount of kickbucks the user receives, which will be determined by stores.

The company has raised a total of $20 million from Kleiner, Greylock, Hoffman (investing as an individual before he became a partner at Greylock), Citi Growth Ventures & Innovation Group, and Ron Conway’s SV Angel.