DiscountIF
A different take on e-commerce, offering cashback on everyday items, based on the outcome of an event.
- Location
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Valletta, Malta and London,
United Kingdom
Categories: Advertising & Marketing Digital B2C
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Investment
sought: - £150,001
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Equity
offered: - 10.71%
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Investment
amount: - £202,642
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Valuation
(pre-money): - £1,251,032
Idea
Introduction
DiscountIF is a different take on social e-commerce, offering consumers cashback on every day items, based on the outcome of a sporting event. We call it “The Power of IF”. A classic example is: “Buy this Samsung 47” TV and get 100% cashback IF Chelsea win the Champions League”.
Backed and staffed by a number of ex-Betfair colleagues, DiscountIF was launched in the summer of 2014 with a low-risk strategy of “minimal investment to test and learn”. We are now ready to take the product to the next level with a fresh band of investment capital.
Intended impact
Our idea has been to take this attractive and emotive promise and build a technology and promotions platform to enable any retailer to offer promotions of this sort. Our starting point has been to prove the model with our own brand to understand customer behaviour.
Having understood how our customers engage with our platform directly, as well as the commercials behind it in terms of both converting customers and enhancing algorithm accuracy for profitability, we are now ready to scale the number of transactions that are going through the DiscountIf platform
In order to do this, we are adopting a B2B strategy whereby we offer our solution to other ecommerce brands. Our B2B reach out campaign has been positive and we’ve seen commitment for trials for Q1 2016 with sports ecommerce sites.
Substantial accomplishments to date
We've been recognised in and chosen as finalists for several innovation awards. We were recently Semi Finalists in the Start-Up category of PitchtoRich. Over 1,000 start-ups applied and we were in the Top 10 companies.
We've reached over 6 million people on twitter and we've acquired a small user base of very engaged customers. 37% of customers have bought more than one offer on our site. We've also had some early beta tests of allowing customers to create their own offers with significant conversion rates of over 30%
Monetisation strategy
We have two revenue streams for our business.
The primary one that we shall be focusing on, is our business to business revenue stream. We shall offer our promotional technology as a widget for other ecommerce sites. Every time a sale is made through our widget we shall earn a commission.
We also have a business to consumer site, which will earn us a margin that is lower than other e-tailers in the first instance. Each sale is directly linked to an offer which is similar to a direct marketing cost. Our current suppliers allow us to make low margin profits on our sales, and we believe that we can substantially increase that over time as we establish a core userbase.
Use of proceeds
Our technology has been driven by our CTO who has managed an external resource team in eastern Europe. This gives us flexibility and scalability as well as a good range of skills on which we can call.
This finance round will enable us to scale our development team in the near term, in particular rolling out our technology across other ecommerce sites. We have identified roles which will allow us to scale the technology in line with our growth expectations.
Market
Target market
Consumers
We believe there is an opportunity to engage any e-commerce consumer with an interest in sport or entertainment, which is a broad category.
Within that, there are specific audiences that we know we resonate strongly with, including a female audience who are very much underserved by “risk” brands, which are mainly dominated by betting companies. Young males with a strong correlation with the football fan and gaming audience have been early adopters. Like many discount sites however, we expect to win consumers across multiple demographics.
The intention though is to create our own segment - people who like the idea of winning cash from a sporting event, but whom would never dream of entering a betting shop or betting online. We believe this is a substantial USP, and has already caught the attention of a number of betting brands. This is a market that they have notably failed to address, with the possible exception of the Grand National weekend.
Finally we are currently restricting ourselves to the UK market, but we are conscious that the scope of this product should not be limited as such, so we will pursue other markets aggressively once we have proven increased traction in our home market. There are obvious opportunities in markets where gambling is either grey or explicitly outlawed where we could offer a non-betting form of sports-risk entertainment.
Characteristics of target market
The e-commerce market is well established and is growing at staggering rates in the UK and across Europe. In the UK the market is estimated to grow by over 16% in the 2015 with online sales of over £52bn.
We believe that at present no portal exists that offers the customer proposition that we’re outlining.
Marketing strategy
We believe our B2B campaign will bring us the ability to scale in terms of number of transactions, without having to spend top marketing dollar. We hope this will lead to an increase in immediate cash flow without the requirement to increase burn rate or effect customer acquisition costs.
We’re onboarding ecommerce partners through trials in Q1 2016 with a focus on sports ecommerce sites in the UK. We are aiming to target ecommerce sites that use platforms such as Magento, that would then enable us to approach other ecommerce sites using this technology.
We plan to scale the number of ecommerce sites by Euro 2016, which is a big sporting event starting in June 2016 with a lot of brands seeking to gain exposure and sales.
We shall utilise our B2C site as a demo site to test customer behaviour and also marketing channels that can be used by ecommerce partners that we onboard.
Competition strategy
We have already enjoyed interest and early stage trials with e-commerce brands who wish to partner with a multi-channel retail platform, and we are looking to grow that marketplace aggressively with several brands expressing interest already. This approach naturally serves us in expanding into new markets and geographies where we can rapidly grow networks of trusted local shipping partners.
Additionally we have a longer term intention to establish white-label products and APIs for brands to integrate DiscountIF into their own shopping cart solutions.