July 28, 2011
Imagine a merchant’s paradise. Here, stores and restaurants extract as much money as possible from customers, rather than driving them away with exorbitant prices or settling for heavy discounts. Here, business is steady, rather than alternating between lulls and lines stretching around the block.
ThinkNear, which just raised $1.6 million in funding in a round led by IA Ventures, is working to make that dream a reality. Part of the 2011 TechStars New York class, ThinkNear allows merchants to offer deals to nearby customers that vary based on factors like weather, traffic, and local sporting events.
“Merchants leave a lot of money on the table,” says cofounder Eli Portnoy, a former product manager at Amazon. “We’re smart about when we help small businesses get customers.”
That smartness takes the form of an algorithm that tries to estimate how busy businesses are and adjusts time-sensitive deals accordingly. Merchants simply input their slow hours and the maximum discount they’re willing to offer, and coupons show up as ads and alerts in apps that have integrated with ThinkNear, such as Socialite. The service launched in New York City and is headed to Los Angeles next.
ThinkNear’s own pricing scheme shows just how confident they are: merchants can try it for free for three months, then pay $99 per month thereafter. And in contrast to some traditional advertising, ThinkNear sends daily data reports on coupon redemption, which they use to craft better ads and which merchants can use to modify their discount settings.
As far as competition, Portnoy says, ThinkNear is facing off with everyone helping merchants attract more customers. That includes daily deal sites, and especially Groupon, which recently partnered with Loopt to send instant-deal alerts to nearby subscribers. But merchants are ambivalent about daily deals, and ThinkNear could have an edge—merchants may save money by targeting fewer customers with smaller discounts, and they definitely save the time normally spent negotiating with deal sites. And while Qcue has brought dynamic pricing to sports and entertainment, few services seem to be available in other industries.
In location-based advertising and deals like ThinkNear, one big differentiator will be user experience. I, for one, wouldn’t want to be constantly receiving text messages for nearby deals from dozens of sites, but I wouldn’t mind ads appearing on my mobile browser. Winning companies will reach customers without barraging them—making the merchant’s paradise the customer’s paradise, too.
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