Text to buy
‘Pay by text’ service Txt2buy is eyeing up the opportunities various markets, such as outdoors retail, provide, so operations director Daniel Rosenberg tells David Pittman.
xt2buy is a mobile commerce (m- commerce) system that utilises text messages (SMS) in a new way to allow consumers to purchase products instantaneously and let retailers capitalise on impulse buying behaviour.
The technology requires the consumer to send a SMS featuring a unique promotional code to a short number. After a one-off registration process, also done using a mobile, the consumer completes the purchase. In addition, once a consumer has registered their details with Txt2buy they can then purchase from any other retailer offering the service.
Text messaging has long been a viable method of communication since its introduction in the early 1990s, but has been superseded in recent years with the proliferation of smartphones and application-based services.
Daniel Rosenberg, operations director and one of the founders of Txt2buy, says this trend towards applications and m-commerce has resulted in simple technologies that already exist being overlooked.
For instance, while the smartphone market is growing, QR codes are becoming more commonplace and the use of mobile data is on the rise, they do not offer the same market penetration that SMS already does by being available on all mobile handsets. In addition, a recent consumer study undertaken by the BBC showed that 3G coverage is only available around 75 per cent of the time to mobile users and not evenly across the UK.
“The technologies that already exist are often overlooked,” says Rosenberg. “We have decided to take a step back and show brands and retailers another way of interacting with and selling to their customers.
“The pitch we are going to retailers with is why invest in systems that don’t reach your entire customer base when the Txt2buy system hits a much larger potential market?” Txt2buy was born out of a business called Unibutler, an SMS marketing service for local and national business to use to target university students.
“This showed us the potential in SMS, and the power it had to be used in purchasing via text when twinned with a card payment, as opposed to adding the monetary value to the phone bill.” Txt2buy was trialled in a university setting, a test that proved troublesome according to Rosenberg due to the demands of the market in which it was deployed, but did allow the company to develop its user profiling systems and sign-up model for potential users.
This has resulted in the service that is currently being offered to retailers. One of the first to use the technology was Maximuscle, with whom Rosenberg says Txt2buy had good success. Other early adopters include consumer brand JML and electronics retailer HMV.
Operationally, Txt2buy runs a commission model with retail partners, collecting funds on their behalf from customers and then forwarding the total, less the agreed commission, to the retailer. Retailers themselves provide Txt2buy a list of the products they wish to sell through the platform, which is then uploaded and made live for sale. In order to integrate the service with retailers’ operations, Txt2buy provides an application programming interface that links its platform into order fulfilment systems. As soon as a payment and order is placed, the order information is transmitted live directly into the fulfilment system for delivery.
Having launched in early 2009, Txt2buy is still feeling its way into the
market and finding which product categories it is well suited to, at what price points it achieves most success and which demographic responds most positively.
“We are now adopting an aggressive sales approach and are targeting all types of retail environments,” he said.
And while the primary function is to act as a catalyst for impulse purchasing, Txt2buy also allows retailers and brands to develop a relationship with customers over the lifecycle of the products they buy through maintaining an active channel of communication.
Rosenberg says this provides the market with an opportunity to maximise the value of each customer by offering upgrades, securing resales and upselling directly to customers via SMS. “It becomes easy to build a relationship with the customer database and manage their requirements. If you take Maximuscle, a product that has a shelf life, you are able to reconnect with the consumer when you know they will be looking to repurchase the product and provide them with a quick and simple means of replenishing their supply. All they have to do is reply to an outbound SMS marketing communication to make the purchase.”
Initially seeking tier one, two and three retailers, Rosenberg says Txt2buy can leverage any opportunity presented to it by retailers willing to invest in new technologies and try new things. “It is about striking the right balance on return on investment. We limit the initial cost at the start through our system and remove much of the risk.”
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