Add one more startup to the hopefuls looking to corner the market for location-aware offers for shoppers: Swirl Networks today exits stealth mode with a website and free iOS app to help people find the best fashion deals closest to them, lead them to physical stores to make purchases, and then share that experience with others. It may be a crowded space, but Swirl is one to watch: it is hitting the ground running with 220 deals in place with major brands like Macy’s, Nordstrom, and Old Navy, covering 30,000 stores and 100,000 items in the U.S.; and a first round of funding totaling $6 million from Softbank, General Catalyst, Longworth Venture Partners and the founders of GSI Commerce, the e-commerce company that sold to eBay last year for $2.4 billion.
While a lot of mobile commerce startups are about mobile-based transactions, the distinctive point of Swirl is that it is squarely focused on offline shopping. Founder Hilmi Ozguc — a serial entrepreneur that sold Maven Networks to Yahoo! for $160 million and Narrative Communications to @Home Networks for $100 million — describes Swirl as “zigging while everyone else is zagging” because that is where the money, and existing pain points, are. Fashion is currently a $400 billion business, he says, but over 90% of it is purchased in store, with only 3% online (and even less so on mobile).
In Ozguc’s mind, there is a clear opportunity to improve on the offline experience using mobile: even though many people now using smartphones, they are not necessarily using them to get the best, most real-time and accurate, information about where to shop for what they want, when they want it. Instead (and this may sound familiar to you; it does to me), there are a lot of offers sent, largely by email, for products you may or may not need.
Ozguc describes Swirl as a “personal shopping assistant” — something that can accompany you when you are on the move to help you get to what you need and maybe save some money and time in the process. In that sense, Swirl is right on the money with how mobile seems to be developing. Not only is Apple increasingly enhancing the functionality of its own personal assistant, Siri, but others like Google are also looking to increase the functionality found in handsets to make them more integrated and useful to your everyday life (this will be a key focus for Google with Motorola, the company has said).
In the meantime, the huge rush of individual brands to develop their own apps has left users unable to keep tabs on all of them, and looking for something that will provide a more integrated experience.
In the case of Swirl, the personal shopping assistant will learn over time what it is that you like and what you do not, and suggest products accordingly. Using Facebook integration, it will then share what you buy with your friends, and let groups collaborate on shopping lists. That will help the app remain relevant to users, even on those days when they are not shopping.
With its big-backers, and a founder who has already had two successful exits, Swirl is thinking many steps ahead for how it sees itself growing and making money in the future. Ozguc says Swirl wants to first “nail the experience” with fashion, which he says is the third-largest commerce category, but the aim is to move into other areas like housewares and more. For now, Swirl is staying away from the two biggest commerce areas — gas and groceries — because the experience for shopping for these is so different from fashion. “But never say never,” he says. For now the focus is the U.S. but international will come, too.
And — as you would expect with a company striking deals with national brands — there will be a central, big data element to Swirl. The company is currently developing a dashboard for retailers and brands to be able to see how their promotions and products are playing with consumers. “They have a ton of detail on how people shop online, but brands dying for information on what is happening in stores,” he says. This part, Ozguc notes, is still in development but will be a “big part of the Swirl platform.”
And there are plans to add a mobile commerce element to Swirl eventually, even if it remains one that you use in a physical store. The idea, he says, is to “make it easy to complete the purchase right there, once you’ve tried something on.”
“We have plans to incorporate payments on the device but right now it’s about going into the store and driving sales there,” Ozguc notes. “We didn’t want to put too many things into the app.”
It is this combination of big data plus consumer services that attracted Softbank to invest. “We had been tracking mobile-centric strategies for influencing offline purchases. Hilmi and his team came to us with the most technically robust solutions we’d seen,” noted Nikhil Kalghatgi, a partner at SoftBank Capital.
Still, what about all those other companies converging on this exact same space? They are numerous and include big companies like Groupon, Google and Foursquare, as well as a raft of smaller startups, from Shoptiques and Lyst to Shopkick. “I don’t think there is any company that does what we do,” Ozguc explains. Fancy does a similar thing, he notes, tying the purchase to a picture that is posted, but merging this with the location element and deals with so many large brands is pretty unique right now. Those deals, by the way, will also translate into some interesting marketing activities to help spread the word about Swirl, although Ozguc did not want to go into too much detail yet about how that would work.
“There is a lot of noise right now in the mobile commerce space. But Swirl is built by people who have done this before, and the noise level will be lower in a couple of years,” Ozguc says. “People will be successful with different techniques but we’re on track to be very focused on the consumer, and right now the female consumer.”