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Pokemon The Surprise Retail Sizzle Of The Summer?

Some weeks, there’s just more clouds than sun, and this week is one of them. We found one gigundo sizzle and three moderately-sized fizzles. We’ll let you decide whether our one Sizzle made up in sizzle factor for the other two we just couldn’t find this week.

SIZZLE

Amazon Sellers 
When Amazon, the largest retailer by market cap, says that it had its best day ever, it’s hard not to call that a sizzle – and then some. That best day was Prime Day 2016, and you all know the stats. Sales volume rose 60 and 50 percent, respectively, worldwide and in the U.S. For those of you keeping count at home, that means that something like 51 million products – including two million toys, one million pairs of shoes, 90,000+ TVs, and 200,000 headphones – flew off those Amazon shelves and into the arms of those Prime-loving customers on Tuesday, July 12.

There are also an estimated 63 million Prime customers now in the U.S. – with some reports suggesting that Prime membership accounts for about 50 percent of all of Amazon’s customers. (It also seems like a sizzle when half your customers belong to your loyalty club and spend 2x the amount of non-loyalty club members – just saying.) Amazon also said that more than one million customers used Amazon via mobile for the first time to make a purchase.

It was also, obviously, a sizzle for the Amazon marketplace sellers who were the benefactors of the “Christmas in July” promotion and were able to tweak their own inventory and pricing to attract Prime buyers looking for good stuff. Even Amazon competitors like Macys, Target and even Best Buy reported that their sales rose that day by 13 percent or more – as they rode the Prime Day raft and put their own offers in market.

But there are always those who, even when a sizzle is staring them in the face, want more.  There were media reports of marketplace seller “disappointment” over seeing their sales increase by “only 55 percent over last year” or “only 30 percent in some parts of the world” and complaining about their inability to market to those buyers since “Amazon owns them.”

Our heart bleeds for those sellers. But, they can, of course, always skip next year.

FIZZLE

Twitter
We understand that sometimes brands do things in an effort to get a little boost so that people notice. We’ve noticed that it seems quite prevalent as part of the bitcoin merchant acceptance MO  – or at least it was at the beginning. Remember when  Overstock made headlines when it accepted bitcoin? So few bitcoin transactions, so many headlines and probably so many sales afterwards – using everything but bitcoin to pay for them.

We’re seeing it again with the launch of iPayYou yesterday. iPayYou is the “only” P2P bitcoin payments method on Twitter. For all of those curious Twitter users out there, chafing at the bit to send bitcoin to their friends, this new payments method is for you. Using Twitter handles only and after setting up an iPayYou wallet, you too can be send the 10 bucks your friend spotted you for lunch in bitcoin that, of course, he can’t spend until he converts it to dollars.

Twitter has had its challenges of late as analysts have downgraded the stock over growing concerns that it might have maxed out its options to monetize its base and its vulnerability as a result of increased competition from other platforms. But we really do have bad news for Twitter: bitcoin P2P using the convenience of Twitter handles won’t help. Maybe not even from a PR perspective either.

The FDIC

Cover-ups are great when they’re discussed in the context of what to wear to the beach over a bathing suit. But when it comes to a tactic that plays rope-a-dope with the facts about something, say as serious as whether or not China hacked into the FDIC, then it is not at all cool.

A new Congressional Report states that Chinese hackers gained access to FDIC’s systems via 12 computers and 10 back room servers, including the Agency’s top officials. Top as in the very top: the FDIC chairman, his chief of staff, and the General Counsel. But the big boo-boo/no-no was that FDIC employees knowingly and intentionally provided false information to investigators in an effort to confuse regulators, including putting forward “a narrative” intended to sway investigators from continuing an inquiry.

Mum’s the word over there at the FDIC, but FDIC leadership acknowledges that it “did not accurately portray the extent of the risk” to Congress and have promised – and we are sure pinky sworn – to improve their overall record keeping.

Lending Club Algorithms 
It is truly not our intention to call out Lending Club week after week in this column as a fizzle. They do hold the record for being mentioned in every one of these columns since we started. But as someone said just the other day about Lending Club, just when you think there are no more shoes to drop, more shoes drop – and that there will always be more shoes.

The latest size 12 to fall is what was touted as the online lender’s secret sauce – the algorithms that crunched data, they reported, better than anyone ever had done, ever, in order to make lending decisions to consumers that would mitigate investors’ risk and maximize their return – have turned out to be not too smart. Remember, Lending Club’s claim to fame, as all of the online lenders, was their technology’s prowess at building systems that could take data and mash it up and make better decisions, faster.

As was reported earlier in the week, it seems that the secret sauce has turned sour. Charge-off rates at Lending Club are up 38 percent while charge-off rates for loans made by traditional banks, according to the Wall Street Journal, are at their lowest levels since the 1980s. The article also reported that Lending Club had verified income for only 26.8 percent of its loans, down from 49 percent in 2013 – citing that validating income wasn’t essential to making a lending decision. (Really, since when?)

And, when it comes to how loan proceeds are being used, it was discovered that borrowers were using their cards more, rather than paying them off, which was typically the stated reason for taking the loan in the first place.

Some secret sauce.

But then, secret sauce is hard to cook up – you never quite know what people are going to like. As proved by…

Pokémon GO: Pet Rock or Opportunity To Rock Retail?

While there are serious divisions in America these days that ought not be made light of – there is at least one major division that practically begs us to make light of it.

As of today there are two types of Americans:  Those who are actively playing the Pokemon augmented reality game on their smartphones – and those who can not comprehend for the life of them why everyone around them is running around with their faces in their phones.

If you are not already up to date on what Pokémon Go is or what the goal of the game is – we’re sorry, we can’t help you. So far, the only thing we’ve been able to figure out about the premise of the game from the several dozen explanations published over the last few days  is that the goal is to collect magical creatures and then make them fight each other. Or maybe trade them. It sounds like some kind of three-way mashup of Mortal Kombat, Harry Potter and a Fantasy Sports league.

But more interesting than what people are playing is how the game is played.

Pokémon Go is an augmented reality game that sends its players out into their real local neighborhoods following real street maps that have been enhanced so that that players can “see” the magical creatures in the environment around them and capture them.

It has proved in the week or so on the market to be a phenomenon as millions of Americans have suddenly developed an indescribable yearning to catch them all. It may also qualify as the summer’s biggest surprise – which is an achievement in and of itself considering the Brexit happened three weeks ago.

But unlike the Brexit, which has introduced mostly chaos, Pokemon – whether you play or not – has injected a fair amount of fun into the ecosystem and also a lot of possibilities.  After all, if the players are already out, why not try to sell them something?

 So How Big Is Pokemon?

Pokemon is not the first game that is played both on one’s cell phone and in the real world. Ingress, Niantic’s (the firm behind the Pokemon Go) other game runs on an incredibly similar premise. And let’s not forget that what is now LevelUp started life as SCVNGR – a mobile-driven treasure hunt that had people running all over their neighborhoods collecting items on the list to win prizes at retailers.

But what Ingress didn’t have was a virtual army of millennial adults with warm and fuzzy feelings in their heart about a cartoon and beloved video game remembered from their own childhood that could be combined with a virtual army of actual literal children (many of whom are the offspring of aforementioned millennial adults) ready to conquer the next big thing in gaming.

Pokemon Go, however, has both of those things plus a truly unusual X factor – the concept itself has been quietly brewing the back of the American collective unconscious since Google (the former owner of Niantic) first rolled the idea out in 2014 as part of an elaborate April Fool’s day joke. There was even  a promotional video that show combatants around the world fighting for the title of Google’s Pokemaster.  And John Hanke, chief executive of Niantic, took that mandate literally and decided to build that April Fool’s into a real game.

Given the breakout success of Pokemon, it is hard to argue that Hanke has not earned the title of Pokemaster. In the last week it is hard to gauge exactly how many people have started playing Pokemon Go – but the low end estimates start at around 10 million per day – with the upper limit clocking in at 21 million – and most media favoring c|net’s 15 million estimate.  And other than topping the top of the download charts – Pokemon Go seems to be doing the almost impossible of late and eating into the time smartphone users are paying with the core apps that have come to define mobile usage over the last 18-24 months.

By any of those counts, Pokemon is already more popular than Tindr, headed quickly toward outpacing Twitter and has even started taking a cut of Facebook’s heretofore unbreakable hold on mobile users. This means a large swath of America’ most mobile using consumers would rather  try to “catch them all” than find love, complain about things in short bursts or look at pictures of their friends’ children or pets.

Let’s not forget that it’s added something like $9B to Nintendo’s market cap in a week.

Many ideas have appeared, rocketed to the top of the app store only to disappear a week or two later when the collective mood moved on, and Pokemon Go could certainly loose our collective attention just as fast as it found it, but with highly demanded features still to add and a global audience mostly waiting impatiently – the experts seem to agree that barring a catastrophic failure, the augmented reality game has room to grow.

And that could be very good news for some.

 The Summer’s Best Retail Opportunity? 

An app with the power to get millions of Americans out and running around hunting invisible monsters and admit to it in public clearly has some strong retail potential.

A fact not lost on Niantic’s CEO.

In an interview with Financial Times, John Hanke hinted at his company’s plans to potentially allow retailers to sign onto partnerships within the game. Pokémon GO players have tended to congregate around what the game refers to as “PokéStops” and gyms — real-world locations that attract the digital creatures players try to catch or offer experience-boosting activities.

When asked about the game’s monetization plan, Hanke responded that, alongside traditional in-app purchases of power-ups and extra Poké Balls, “there is a second component to our business model at Niantic, which is this concept of sponsored locations.”

And early location sponsoring has already been on evidence in the early days – the New York Post reports L’inizio Pizza Bar in Long Island City in New York spent $10 to have a dozen Pokemon characters placed in the location with a “lure module.”  According to the store manager, sales jumped 75 percent.

And given Pokemon’s ability to move players “all over the board” marketing experts are expecting big things from it going forward.

Marketing experts said small businesses may increasingly turn to Pokemon GO – and redirect some of their marketing spend – as the mobile game racks up a bigger user base.

“With Pokémon GO, you are seeing it as bypassing a lot of digital (marketing) channels that the brick and mortar shops have been relying on for the past few years,” said Christophe Jammet, director of social media and mobile at consultancy DDG in New York.

“There hasn’t been a geolocation social platform that can lure so many people all at once.”

And some think it is only a matter of time before big retail players start moving in on the Pokemon experience. A report on Gizmodo earlier this week claimed an Australia student had uncovered code in the game’s workings that indicated a sponsorship system and mentioned the name of McDonald’s.

McDonald’s has no comment.

So Pokémon GO itself is clearly a sizzle – and for retailers hoping to draft on its success a little it certainly seems like a sizzle in the making.  It has the power to get customers into their stores -without any sort of discount – and already actively interacting with their phone.

“Virtual monster hunting” is probably not a context anyone was thinking about when the term “contextual commerce” was in invented.  But if it turns out to be the context that gets people back into physical stores this summer – we can’t imagine physical retailers will much care how it’s labeled.

 

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