Last summer, a receipt purchase app One was released in the app store. The app aims to provide retailers with shoppers’ offline purchase behaviors by gathering data from offline buyers promising to buy all your receipts at 10 yen (approx. SGD$0.12) per receipt. With the option to make money out of what one would normally throw away, word started to spread and users flocked in, and within half a day, the service was halted. Turns out, the CEO had originally expected to get around 10,000 receipts per month, which would bring their cost to about $1,250 a month. However, when the service launched, the company received close to 250,000 in less than a day that came up to over $30,000.
Last month, digital payment service PayPay backed by Yahoo! Japan and Softbank launched a 10 billion yen (approx. SGD$125 million) giveaway campaign that promises to hand out 20% cashback to all purchases with a limit on up to 50,000 yen per person per month. Lucky buyers can stand to get the full sum of their purchase back (up to a max of 100,000 yen per purchase). This campaign scheduled to run till the end of March 2019 also ended prematurely with the company using up their 10 billion yen within 10 days of their launch.
This seems to be the new trend in acquiring users: buying them. But I wonder how many of these users will continue using the app after the free money campaign is over. Because I see LinePay now offering the same 20% cashback and it’s not hard to imagine how many people will start using it over PayPay.
For One, they have relaunched with partnerships and receipts for limited categories of shopping again although I haven’t actually downloaded the app. Less because I’m not interest, but more because I can’t seem to find it on the app store. And for PayPay, they’re still running their businesses at a loss with 0% handling fees for businesses who accept payments using their app until October this year.
Anyhow, apparently this doesn’t just happen for app developers but also social network users. A few days ago, Zozotown’s billionaire CEO Maezawa Yusaku who had 500,000 followers on his Twitter account sent out a tweet to give away 100 million yen (approx. SGD$1.25 million) in total to 100 people (approx. $12,500 each) as a thank you gesture for the company’s New Year Day sales. To win this money, one just has to follow his account and retweet that post by the end of Monday and as of today, he already has 5.6 million followers. Now, talk about buying fake followers, this guy buys real ones. And it’s easy for him to retain these followers because after all, one has nothing to lose by leaving it as is and following him. Besides, who knows when he’s going to give out money again, so why not just continue following him? And that makes him a huge influencer suddenly.
That’s the problem with startups. It’s one thing to expect quick, explosive growth. But it’s a problem when you resort to unsustainable methods of acquiring users as such and destroy your own market. Being in the tech industry, I’ve seen how some businesses ruin their own industry by buying users. After some time, the market gets used to such offers, they start to expect money to choose one company’s product over another’s not because of each product’s merits but because of how much money they can receive. At the end of it all, what’s the point in developing your product? Where’s the love and pride in releasing something good for users if you’re just buying them because you can’t beat competition?
I have to admit though, after trying PayPay once and finding it extremely quick, easy and convenient to use, I may continue using it although I have some concerns. But that aside, with LinePay offering 20% cashback now, I could simply switch to LinePay, and when GooglePay or any other -Pay offers cashbacks, I may just try them.
This is what happens: the loyalty is no longer to the brands that offer the services but to the discounts that consumers can get. Let’s see who survives the battles down the road.