Customer data harvesting practices by retailers are coming under increasing scrutiny as shoppers become more aware of the value of their data – value that they generate but never see. Web3 solutions such as Shping are now demonstrating their ability to transform the user data model by allowing people to choose which data they share – and get fairly rewarded for it while enhancing their relationship with brands.
Most people are aware on some level that their shopping data is collected and used, even signing on for customer loyalty schemes as a way of being more involved in the transaction, earning discounts and benefits for the increasing insights into personal spending habits.. However, most people probably aren’t aware of the sheer scale of the business that goes on behind the scenes with their data. In fact, selling customer data has become a notable source of side revenue for supermarket chains.
A Lucrative Hustle
In late 2022, US grocery giants Kroger and Albertsons announced plans for a merger, requiring them to make certain mandatory disclosures to the government as part of the antitrust filing. The papers revealed that Kroger has cultivated two “alternative profit” business units for the monetization of customer data, expected to yield over $1 billion.
However, the issue isn’t just limited to the US. In December 2023, reports emerged that UK supermarkets Tesco and Sainsbury’s make around £300 million ($376 million) each year from selling customer data. This news comes as supermarkets are under scrutiny by regulators for operating a “two-tier” pricing system, which has been criticized as a ploy to compel people into loyalty program participation.
There is also little transparency over what kind of data is sold and to which entities. However, it’s generally understood that this kind of data is hugely valuable to advertisers and brands since our grocery shop can reveal a huge amount about our individual preferences and habits – and not just on a superficial level.
Algorithms can use masses of this kind of data to predict our behaviors before we may even be aware of them ourselves, blurring the lines between advertising and human decision-making in such a way that the individual involved has little agency and receives benefits worth far less than the value they are generating to brands. The concept of “data fatigue” is now being coined by researchers to describe the lack of control that users are feeling over how their data is harvested and used.
But if anything, the problem could get worse. High inflation and a rise in shoplifting have led to supermarkets seeking new surveillance methods in an attempt to stamp out theft. However, privacy campaigners have expressed alarm at the invasive nature of these technologies and how the data they accrue will be used.
A New Way with Web3
Web3 technology offers a groundbreaking new way to manage the entire customer data transaction. Blockchain operates via peer-to-peer connections, which, in the context of loyalty programs and user data, enables customers to interact with all kinds of stores and online brands and choose where and when to share their data. Furthermore, thanks to the direct nature of the relationship, they can be rewarded for it.
The model is exemplified by the Shping app, a user-centric Web3 loyalty and rewards program that brands can implement straight out of the box. Anyone can download the app and immediately begin uploading receipts from any shopping activity, including groceries, fuel, clothing, restaurant bills, or more, in return for rewards paid in Shping coins, an ERC20 token listed on several exchanges. Shping also allows users to write product reviews and interact with product content, such as video testimonials, nutritional information, or price comparisons.
Along with the direct rewards, it’s also easier for users to maintain a single app for all their shopping-based rewards, rather than the cumbersome nature of store-focused loyalty schemes. The app is integrated with Coinbase, facilitating free transfers of rewards to the Coinbase wallet for cashouts and trading.
More Buzz for Brands
Brands participating in the Shping app have a direct connection to consumers without needing to purchase data from the open market and can tailor their offerings to those shoppers most likely to engage with their brand. Furthermore, as an out-of-the-box solution with low barriers and costs to setup and operate, Shping is accessible for brands of all sizes.
Thanks to a more transparent and democratic approach to customer data sharing, Shping is attracting a growing user base, with over 350,000 downloads and buy-in from household name brands such as Cola-Cola, Lavazza, and Heinz. One case study demonstrated a 136% increase in new shopper growth month-on-month and an 8.9% conversion rate from ad to purchase.
The current approach to customer data is extractive and requires retailers to constantly find new ways to extract more data from customers. As such, it’s not sustainable in the long term. Web3 offers a viable alternative that can better serve the relationship between consumers and brands while providing people far better control over the way their data is collected and used.
