Merchant Loyalty Platform Startup Spoqa Raises $3.9M To Expand In Japan

Spoqa, the Seoul-based mobile loyalty platform that won the special prize of the jury at TechCrunch Disrupt Tokyo 2011, has raised a total of $3.9 million in funding to date led by Daesung Private Equity group and Bokwang Investments to fuel its expansion in Korea and Japan.

Spoqa operates Dodo Points, a tablet-based loyalty platform for local merchants, and claims 2.5 million customers in Korea. Since launching in April 2012, Spoqa says that 1,500 merchants in Korea have signed up to use Dodo.

Customers use Dodo by entering their phone number into a tablet when they check out with a purchase and can redeem their points for reward programs at each store. Dodo seeks to differentiate from other loyalty programs by not requiring customers to sign up or download a new app. Dodo also offers a targeted SMS text coupon service for merchants. It monetizes by charging merchants monthly license fees.

Richard Choi, founder of Spoqa, says the company decided to expand into Japan first instead of larger Asian markets in part because “there’s higher local merchants to franchised stores ratio in Japan. That means less systemized loyalty solutions for individual mom and pop stores. That means a bigger market for us.”

“While other markets might be larger than Japan, we have internal metrics screaming great opportunities in Japan,” he adds. “We have partner merchants in Japan who are already paying us for our services even before we had a properly translated version of our services. From what we saw in our pilot testing period, we are certain of market opportunities and product-market fit in Japan.”

While companies like Rakuten and Kakao are taking a mobile-first or online-first approach to online-to-offline (O2O) transactions, Choi says that Spoqa is taking the opposite tactic.

“Our goal is to dominate¬†‘offline traffic’ collected via our tablets at point-of-purchase in stores, so we can connect this offline-traffic to relevant online/mobile content and services linked by phone numbers,” Choi says. “We are here to pioneer the O2O scene in Asia. It took us two years to get to where we are, but we are finally getting the J-curve growth of users and merchants.”

While Spoqa also has to compete with plastic magnetic loyalty cards and paper punch cards, Choi says Dodo points offer a better alternative because customers don’t have to remember to bring cards with them when they go shopping.