Many of our readers are likely familiar with Shopkick, a popular smartphone app that rewards customers as they enter a store. Well, Japan has very similar service called Smapo, which provides a smooth combination of in-store hardware and a free smartphone app for both iPhone and Android.

I recently had spoke with Yo Shibata, the CEO of Spotlight Inc. (the company behind Smapo) to find out more about this service.

With Smapo, all that a user has to do is to download the free app, and turn it on when walking into a participating merchant — exactly like Shopkick. Every time the app is turned on, users receive about 30 yen (about 30 cents) in points which can later be exchanged for gift certificates to be used at participating stores.

What differentiates Smapo from its US counterpart is that it uses a sort of inaudible audio signal to detect users walking in, via the required in-store hardware which is about the size of a matchbox. There are so many small shops in Tokyo, and many brands decide to set up within crowded departments where in many cases, there is no proper store entrance. Smapo’s technology is valid as long as the user is in the store space (the inaudible audio signal does not go beyond the store’s walls) so wherever they are, the system works.

Finding new faces

Many notable merchants have already joined Smapo including mega electronics franchise Bic Camera, department stores Daimaru and Marui, as well as popular fashion retailer United Arrows. All of these merchants wanted a new way to attract consumers. Because many people do their product research in advance on computer and on smartphones these days, there is less of a need to actually visit the stores than before. Newspapers are one common place where merchants advertise, but the number of newspaper subscibers have dropped to half of what they used to be 15 years ago.

The user demographic for Smapo is half male and half female. And in an effort to satisfy the younger female generation, Smapo recently launched 58 more merchants targeting young women, including The Body Shop, and Amo’s Style (a lingerie brand). Early adopter male users are still fans of the app too. At Bic Camera, which can be a heaven for tech savvy geeks, Smapo can bring over 10,000 people to a store monthly.

But how effective is Smapo in actually attracting new consumers? Shibata-san cited Marui as an example. Their problem was that people perceived their brand as one specifically for young people, and they wanted to make an effort to bring in customers who shopped there in their youth, but may be a little older now. By bringing users to a specific part of the store such as the men’s shoe section or the women’s bags floor, they managed to land many new customers.

When they run a TV commercial, of all the customers who arrive at Marui, only 10% are new. With Smapo, that number rose to an impressive 40%. And of those 40%, about half the people ended up buying something.

Besides the chat application war that’s famously going down in Japan, O2O is another sector that’s going to generate some heat this year. NTT Docomo have adopted the exact same model as Shopkick and Smapo for their newly launched Shoplat. The system works in the same manner, but it seems that their speciality is restaurants and bars for now.

Ever since their launch in September of 2011, Smapo has seen no significant competitor, which also meant that they were essentially wholly responsible for developing the market. With the largest mobile carrier in Japan now in the game, we expect that this space is going to get far more competitive in the coming months. It is not very often we see such a young startup butting heads against an internet giant in Japan. Stay tuned, because this is going to get interesting.