How Fetch Rewards Is Turning Loyalty Upside Down to Bolster Data Strategies

Embarking on a data journey that satisfies not only the retailer, but also the brand and consumer is truly a unicorn. Being able to do this by putting control in the hands of consumers via a mobile app, while still garnering invaluable insights, is too good to be true… or so it seemed. Enter: Fetch Rewards. Fetch Rewards is a leading consumer rewards app that allows shoppers to save and earn rewards simply for buying the brands they love and uploading their receipts. In this edited webinar transcript, Fetch Rewards’ Wes Schroll shares how the company creates unique, rewarding experiences for shoppers, while providing brands and retailers with differentiated market and loyalty insights. Albert Guffanti: Hello, I'm Albert Guffanti, publisher of RIS. I’m glad you’ve joined us for “Master Rewarding Shoppers to Glean Superior Loyalty Insights.” It's a mouthful, but representative of today’s discussion. We have two seasoned executives with us who have a lot of experience. They're here to help you figure out your journey. You're going to learn how to discover a treasure trove of loyalty insights. As in most things, this discussion centers around data. If rewarding consumer loyalty isn't translating into valuable data rewards for your business, there's probably a missed opportunity. We'll dive into this topic by first discussing, at a high level, the idea behind a loyalty rewards program and the value proposition for all involved. Then, we'll drill down into the actual technology platform that is used to support it. Finally, we'll explore the data and the insights that are able to be leveraged as a result of the initiative. First, I want to introduce to the panel: Wes Schroll is the CEO and founder of Fetch Rewards, and Justin Honaman is the head of worldwide consumer products and retail go-to-market at Amazon. These two guys who have been at it for a while in various capacities. Wes, it's worth mentioning that some of these numbers are staggering for Fetch Rewards. You capture more than 120 billion in annual gross merchandising revenue, which essentially makes you the fifth largest retailer. Those are pretty impressive numbers. Why don't you tell us a little bit about yourself, your background, what you're focusing on, and a little bit more about Fetch Rewards? Wes Schroll: We have Amazon represented here, also — talk about high growth and representing a lot of dollars. I'm in really good company trying to hold my own, but we are super excited by the product that we have and more importantly, the product-market fit. It resonates with everyday Americans right now to have an easy way to get savings from the brands, retailers, or anyone who's making value off of the consumers to share back rewards with them. That's resonating right now. I started the business while I was going to school at University of Wisconsin, Madison. I was between my freshman and sophomore year when I'd moved out of a dorm and into an apartment for the first time ever. I found myself going about doing all the shopping, as you would for the first time ever, and was amazed that if I wanted my dollar to be able to be stretched and help me to be able to save up for the weekend, then I would have to jump through a lot of hoops — everything from virtual, weekly circulars that were out there, being able to sign up for loyalty programs that a retailer or brand was asking me for. It was a ton of work that was being put on me, the consumer. That frustrated me because these same companies were out there telling me how much they wanted to earn my loyalty. We set out to change that dynamic and flip it on its head. We wanted to create a platform that consumers would flock to, would love to engage with, and that companies would use to prove that they want to earn the loyalty of those consumers. Then, we could help them see the consumer shift their purchases over time via a mechanism of rewarding those consumers. We launched that product in 2017. I dropped out after my sophomore year to start the business. Since 2017, in just over five years, we have scaled up to more than 17 million monthly active users, and almost 6 million daily active users. As you mentioned, even though stats continue to be outdated very quickly, we're now up to $135 billion worth of GMV that we capture on an annual basis. Over the next two years, we have a shot at getting to half a trillion dollars worth of annual GMV that we will capture. We have about 790 employees now across the U.S. and are excited to continue to figure out ways to reward consumers. I'm very much looking forward to this conversation. Guffanti: Quite impressive. As Wes mentioned, also impressive is Justin from AWS. Justin, tell us a bit about your background and what you're focused on. Justin Honaman: Today is all about Wes and Fetch. I’m Justin Honaman, I lead AWS’ worldwide retail and consumer goods go-to-market team. I have the opportunity to work with amazing people like Wes every day, as well as many other big brands around the world as they're looking to leverage the broader Amazon capabilities to advance their business and engagement with consumers. My background, as most of you know, is heavily in CPG and retail. It's interesting, the last 6-12 months, we've seen more and more interest back on the consumer and understanding the consumer buying CPG brands. The focus has shifted heavily into supply chain manufacturing as you can imagine, but we've really seen an uptick in that. Fetch Rewards is this perfect intersection of retail, consumer goods brands, the consumer, and the power of data. There aren't many companies out there that do this well, but engaging these different parties is an interesting challenge that you'll hear from Wes. Guffanti: Wes, can you give us an idea of how it all works? How does the Fetch Reward program work and how has it evolved over the years as well? Schroll: The best digital companies out there always have a mindset of wanting to deliver products that are consistently delivering on a couple of key principles. For us, the key principle that we are always working on is that we believe customers all know they should save money, but no one actually likes doing it. Yet, everyone likes having fun, feeling rewarded, and feeling smart. Our product was built to sit at the intersection of those two things: combining something that everyone knows they should do with something that you actually want to do. The app is the technology that we chose to bring this to life because that is the extension of the consumer, right in their hand. Their third brain, as I've heard it called, is their smartphone. Once you download the free Fetch app and sign up, the basic premise is to take a picture of any receipt you get from any retailer across the country — you can also link your digital account or email so you can pull in any digital receipts as well. We reward you with Fetch points, which is a currency we created for every transaction that you submit. Now, the consumer will get into that habit. They start by submitting all those transactions, but the nice part is, we're able to look at those transactions and capture everything — where you're shopping, what you're buying, all of that key information — which enables us to go out and partner with those retailers or brands, and issue incremental rewards when you go and spend dollars on partner products. As an easy example, you buy Old Spice deodorant. However, we are partnered with Dove for Men deodorant. We would let that customer know that if they buy Dove for Men, they’ll earn 1,000 bonus Fetch points. What we see over time is that consumers learn that and begin to consolidate spending to be with those brands or retailers that reward them. Then, you earn points across the 100s of different partners we have. You can redeem those on everything from virtual gift cards, donating your points to charity, or a turn at sweepstakes — there are all different things you can do with it. That's the basic premise: scan your receipts, we fetch you rewards from retailers and brands that are wanting to win, and then you can redeem. It's completely free for the consumer. They always enjoy that aspect because you're leaving money on the table if you're not using a product like Fetch. Honaman: I love that — you're an entrepreneur. We jumped right into what the product is today, but it wasn't that maybe 10 years ago. How did you go from buying stuff and being the shopper to deciding this is going to be a business? Then, how did you create the marketplace? You need people to submit receipts and you need value to be delivered. Talk about the early days. Schroll: Rewind back to 2013 when I first created the business plan for what would eventually become Fetch — I was still a sophomore student. The idea looks very similar to what it is today. It was this concept of having all these disparate loyalty programs that are broken and needing to centralize that. The problem that we ran into very quickly was how do you confirm purchase of a product so that a brand, retailer, or anyone feels comfortable to issue and pay for those rewards? At the time, phones, their cameras, and the actual horsepower on the phone wasn't good enough to take a picture of receipt to read it and be able to identify everything you bought in real-time. We couldn't do that as a solution. We pivoted and launched our first product, Shop Fetch, which partnered with local grocery stores and made it so you could use the camera on your phone to scan the barcode of every item you were buying as you walked through the store. That way, as you walk through the store, you basically build your basket. Then, there was a single tablet at checkout that you could use to checkout. It was like a very early version of Amazon Go — except much more clumsy and clunky. What it allowed us to do, though, was confirm purchase and be closer to the consumer and POS system. For the first four years, we ran that product. The problem that we ran into was that it required us to install a bunch of hardware and do a lot of training at every individual store. That meant the only way to expand was going store by store, which was too slow because a lot of the manufacturers and large retailers wanted to see scale for them to give us time and attention. Our scale was inherently limited by the fact that this was an intensive operational process to run the product like the initial one we had. In 2017, we shut down Shop Fetch and launched Fetch Rewards. Again, Fetch Rewards is the base idea that we had originally started with, but we were finally able to go back to it because we had cracked the code on the technology piece. We were able to utilize the camera on the average smartphone available in 2017 to be able to process them in real-time, and pull off that information. We had some foresight, but there were a lot of people who had identified this problem before. We were relentlessly focused on testing the technology and not waiting around for it to happen. Because of that, we were on the forefront once the tech was there, ready to be the first to launch a solution that was end-to-end, ready to go. That's why we were first to market with that type of technology in 2017, which allowed us to capture the growth and become the clear leader in the space. There were lots of ups and downs throughout that period. Lots of times where we thought the company was going to go out of business, but we did not accept that as an outcome and continued to find a way to get to the point where we could bring the original vision to fruition and get into the hands of millions of consumers. Honaman: It's always fun to hear a story of origination in entrepreneurship. How did you get people to download and start scanning? How did you build awareness? How did people even know about it in 2017? Then, how did you get some of the brands on-board in the early days? Guffanti: And then, when did the flywheel start happening too? Schroll: Early on, you could think about the original Shop Fetch days. We had a three-sided model where we had to go out and partner with retailers who had let us launch in their store. Then, we'd have to partner with brands who would fund the point. We had to convince consumers to utilize the app. Two-sided marketplaces are hard, but three-sided marketplaces are next to impossible. When we launched Fetch Rewards, we loved that it removed the need for the retailer because the consumer was taking a picture of the receipt — we didn’t have to be integrated into the POS system or anything like that. We were able to instantly be available to be used anywhere. From day one in 2017, that drastically reduced the amount of work we had to do because we were down to a two-sided market now. Even two-sided markets are tough because you're faced with the chicken and the egg. How do you go and get a brand to be on board if you don't have a customer yet? Being scrappy, we decided we could fake it. We knew there was one side of the equation that we could fake. We could pretend we have brand partners. If we could say, "Anytime you buy Pepsi, you get rewarded from Pepsi," does not mean we're actually working with Pepsi. We were funding it ourselves, but it was enough to pretend that we had 100-plus brands on the system. That was enough to get us outside of friends and family — people started to use the app and get excited about it because they were getting rewarded from these great brands. The other genius thing our product team did was to build in a referral loop. As consumers would use the app, they would get incentivized to refer friends to it. Even today at 17 million monthly active users, more than 60% of them came from organic and referral — actually, it's closing in on 70%. A massive portion of our consumer base comes from people talking about it. As it started to grow on its own, we got large enough where we could go and partner with real brands who would actually pay for it. But early on, over the first year, that's how we hacked the system to get it started. Guffanti: Great intro to this conversation. Wes, to build on what was just discussed. We're going to talk about leveraging the data part in a minute, but when you were generating traction in the market, what was the value prop in the early days, and has that evolved, or has that been the same? Schroll: In the U.S., the market dynamics have been interesting because it's so fragmented that no one has a complete view of who a household is and how they shop across the different channels. Everyone knows that a household shops across a lot of channels, but it's hard to understand at any meaningful scale where they are actually going. What are they buying at these different places? If you don't have that understanding, how are you supposed to know what products are relevant to them? What price is the right price to offer? The first thing that we helped to solve, for brands and retailers alike, is because our average monthly active user submits 28 transactions a month, that's more than $14,000 per year of spend that we're capturing at an item level from our consumers. All of a sudden, we have rich insight into what categories that customer is interested in, what flavor profiles, what new products they might be interested in, and beyond that, data is just one aspect of it. It’s interesting how big data, five years ago, was such a buzzword. Everyone was talking about it, but it started to fade away because even if you collected all this data, what do you do with it? The second part of the equation that we are also able to deliver on is having the attention of the consumer and the intent that when they open the application, they are looking for advertisements that will tell them where they can earn more points. Forty percent of our monthly active users open the app daily, which means we can take this data to curate the right brands and retailers that would be interesting to Wes. When I open the app, every single day, I'm getting presented with them in the form of a currency that I care about, and therefore, we can then influence the behavior. When we've been out on the investment trail and everyone asks, “what do you do? What does Fetch do? Is it a data company?” I say we just sell sales, we help people to quantify the potential LTV of a household within any category of spend. We help optimize their brand or company within that category to win an unfair share of the market with that specific household. We do this in a way that has high attribution, like you would expect online. It’s omnichannel, we do both online and offline. At a high level, whether it's a brand or retailer that we're working with, we're helping them identify potential customers that we know are spending in their category. We help them run programs that will increase the share of the market that they're winning at a household level. We also do ongoing programs to help maintain it, making sure that they can retain those consumers over time. Data is a huge aspect of what we do, but it is more of the oil that's running our machine versus being us a company out there selling oil if that makes sense. Guffanti: I would imagine, at some point along the way, you came to that epiphany of how rich your data is and what the next step should be. Is that how it happened? Or was this the grand plan from the very beginning? Schroll: No, no, definitely not that smart. No way I was able to figure that one out. I really liked my head of product and technology, he has this great analogy that looking at what the consumers are submitting and the dataset that we have, it is uranium. A lot of our partners originally wanted the data, so we would back up this dump truck and put a bunch of uranium on their lawn. The thing with uranium is that it's dangerous if you don't have a nuclear power plant to go ahead and turn it into energy. What we realized is that since we are the aggregated layer of technologists working across 100s of different partners, we're the ones who need to build the nuclear power plant. Then, we can safely harness the power of that uranium and sell the energy to our partners. It was absolutely something that we learned through having made the mistake, had some radiation poisoning, and those types of mistakes first. We realized that that's what we were in the long haul. Guffanti: Very interesting. Justin, how do you partner with Fetch on the technology side to make all this happen? Honaman: In terms of the interesting value of the consumer or shopper insights, earlier today we were talking about this in terms of what's been trending the last two or three years. There was this explosion, e-commerce, etc., and then there was this shift and a heavy focus. Everything seemed like it was supply chain manufacturing because of the sourcing issues and out-of-stock issues. Over the last six months, we've seen a huge resurgence across the CPG brands we work with around desire for better consumer and shopper insights. I can't wait for my syndicated data to get here. Are there other sources? What do I do with all of that? That's something really cool about what Fetch Rewards is offering now. Wes, I'll let you talk about how Fetch has grown through working with AWS. After that, we can talk about a couple of use cases. Schroll: From very early on, when we were building our platform, we were looking at all the different technology partners that we could partner with, and AWS was on every measurable dimension. We determined it was the best solution out there, not just for the cloud infrastructure that they provided, but there are dozens of other bespoke solutions they provide that we're able to use, whether it's on the ML front or AI front. It was a no-brainer and it's been able to scale really, really well. We've gone from zero users five years ago, to more than 17 million that are generating this type of usage. Anytime we have outages or anything like that, it's typically our fault. It's never been the AWS infrastructure that we've built on, which is great. I'll always take it when it's us making the mistakes because it's frustrating if it's a partner. In this case, it's almost always been us. That's been our growth to date. What I've been excited about through our partnership with AWS is that Amazon has many other business units that are interesting for us to work with, whether it's Whole Foods, Prime, or Pantry. Fetch can provide value to them and they can provide value to us and our consumers. We've pulled together a pan-Amazon group that is able to engage and uncover what the future of a partnership could unlock for both companies. It’s exciting when you have something like that. When it's built off of this core partnership on a piece of technology that's crucial to us. Then, to be able to also have a client relationship in both directions is powerful and is what leads to some of the best partnerships long-term. That's been our experience thus far. Honaman: What’s cool about that is it's like the Cloud plus — you've got a digital-native brand that's growing and growing, and what else can be brought from an innovation perspective? That's what makes it exciting, thinking about use cases and working backwards. Wes, you mentioned earlier some references to analytic capabilities and whatnot. A couple of weeks ago, I realized that if I go to Publix and have my receipt, what if I scan it and give it to someone else for them to scan the same receipt? Or if I grab a bunch of receipts and scan all of them. Can you share how some of the analytics were helping with fraud protection, but share some of the use cases, our audience would enjoy that. Schroll: You'd be amazed at what we call the fingerprints on a receipt, how many unique data points there actually are — everything from the obvious ones, store location, date, time, checkout lane, cashier, loyalty card number, etc. There's a lot of unique data points to look at. If duplicates are submitted, we can quickly flag them. There's a lot of different ones that can use these validations on it. All of our systems that do that are running in real-time. You can scan it, then hand it to your friend and have them scan it. Two seconds later, it was identified as the same receipt. That's only possible because of the infrastructure we built in the cloud which is also being percolated across the entire network of phones out there in real-time. There's tons of fascinating things that this dataset helps us do, not only for our partners that we work with, but also internally for fraud cases and things like that. There's a lot of interesting technical challenges because there's plenty of bad actors, but more often than not, it's just the person trying it. No one's trying to intentionally hurt us, they’re just seeing if they can bend the rules. We've also gotten good now at giving a light slap of wrist to say, "Hey, we know you're trying to do something that's probably not great," and coaching them back onto the right path. Guffanti: Wes, you were dead-on before when you said, a few years ago everyone was talking about big data and how to get as much data as possible and so on, but no one was really using it. This might go into your case study portion, but what are some examples of insights that retailers have been able to use through engaging with your platform? What are some of the business benefits they've gotten out of you using that data? Schroll: One of the things I always hear from our retail partners is that it's so exciting for them, especially the ones that are in both the online and physical world. When they go in, we can cross-reference the group of consumers who seem to be very loyal to your retailer vs. a group that maybe were loyal, but have now lapsed and moved away vs. a bunch of people who are in your geography, but haven't been shopping with you. We can then fill in the gaps — even for the people you thought were most loyal — with did you know they're actually buying X, Y, or Z across all these other channels? We've had cases where we identified cohorts where, because of what one store saw, they would not have known that there was a family being represented by that shopper because that shopper was buying all their family items, diapers, etc. elsewhere. Because of that, they weren't correctly merchandising to that household. With our more complete dataset, and the reality that no one in the U.S. is 100% shopping at one retailer, we're able to give that insight to partners and help them optimize — not just through Fetch, but their own channels — how they bring their merchandise to life to be relevant and make sense to the consumers. Our consumers also submit things like restaurant receipts, which allow us to identify people's changing taste profiles that are often picked up at restaurants. We’re then able to identify and help them bring that back to their house or be merchandised correctly to see that they've been shopping for Hispanic spicy food and that begins to appear in their grocery purchases too. There are lots of different examples that our partners are excited about, which a dataset like Fetch is enabling them to see for the first time and action off of. It's not just an insight that leaves them wondering what to do with it — it's insight they can actually turn around and do something with. Guffanti: I would imagine you're now having other conversations with retailers that involve trying to figure things out and helping them along that journey sort of thing. Schroll: Absolutely. Some of our retail partners are actively promoting Fetch to customers because they know if that customer starts using it they will have a better insight to that customer. It's been cool to see the mutual benefit that we're driving, where if Fetch is capturing these budgets from retailers and brands, who are you hurting? That's a logical question. Who are you most competing with? The reality is there's so much inefficiency that's built into this industry right now, and that's what we're capitalizing off of and where our benefit comes from. It's not like we have to let the retailer win, the brand win, or this restaurant win. No one has an understanding of who the household is. Everyone's doing things that are really inefficient. If we can tighten that up and give them a channel of communication to their consumer, variable-based pricing across 17 million people, there's a lot of efficiency that can be gained, and that will more than fund all of these different things. Guffanti: It certainly expands the conversations that you're having with the market. Does Fetch Rewards enable retailer and brand collaboration through your platform? We all know there's a focus on collaboration and working together for retailers and their brands. Do you play a role in bringing those two cohorts together? Schroll: We were recently part of a joint business planning session with a large retailer and a large brand. In fact, where all three of us are at the table working to optimize how they were going to bring the brand to life at that specific retailer, utilizing Fetch as this middle platform. It's like the customers at the table with you, the actual consumer, that all Fetch represents. In the long haul, we would love to be a part of all those conversations. Again, we are representing the consumer in that three-way conversation that's happening and giving them a channel of communication to that consumer to bring to life, maybe collaborations that they're doing unique things. We've also worked with retailers and brands on pricing to ensure that instead of having to drop a huge buy one, get one free — that may or may not be discounting to people who are going to purchase two of them anyways — we can instead be inserted to help you target the right customer with the right discount. Some people may need the buy one, get one free, some people might not need it, and some may need even more than that. It becomes another technical tool for them to use. Guffanti: It's like you're adding another dimension to the traditional trade promotion management conversation as well. Justin, how about you? Any other insights that you have and working with the team? Honaman: Wes, you've progressed rapidly, you're on this incredible growth tier. What are the keys to success for you guys, as you look at the next 6-12 months, what are you pursuing? What relationships do you need? Where are you engaging? How are you thinking about that? Schroll: First and foremost, the only thing that ever keeps me up at night is: are we obsessing enough over the consumer experience? Are we delivering a product that is delightful, that is rewarding, that a consumer is excited to tell someone else about? That is what we focus so much of our time against. Even when we're talking with our brand and retail partners, it is always centered around how we are bringing the brand or retailer to life for these consumers in a way that's delightful, exciting, and helps you win. Whether we're building internally from a product or working with our partners, it's always centered around that. At the end of the day, Fetch has zero value if we don't have consumers using it. We understand that and try to live by that as being our number one focus that we have. That's one area that we continue to focus on. There are a ton of different retailers, restaurants, and brands that we would love to talk with. When we look at all the receipts that are coming through, we know that there's still huge portions of those receipts that we don't work with the companies represented on them. For us, that's a failure because that's a consumer submitting a transaction that they wish they could get points for and they're not. Our job is to go out and get those brands, retailers, restaurants, gas stations, etc. on board and allow them to start rewarding consumers, and the consumer to be generating rewards off of all of those. Those are the key things that we're focused on right now over the next 12 months. If we can do those things, then we can keep up this growth rate and have an amazing next 2-3 years of continuing to capture more and more of the U.S. Guffanti: What a fascinating story. What strikes me is, and not everyone can pull this off, but it's the old saying that if you can deliver joint value to everyone involved, you are playing a critical role in your space. You continue to develop tools and insights for consumers, benefits for consumers, insights for retailers, and additional tools for the brands that engage. I look forward to what else you will do in the future. Honaman: Wes, thanks for the great partnership. It's cool because you're leaning into all these different places, some that we didn’t even talk about today, and that makes it exciting to work with you and your team — trying new things and experimenting. Again, being customer-obsessed is a big deal for us on the Amazon side. Schroll: We've taken a lot of inspiration from the companies that have come before us and done it in a way that has resonated with consumers. Amazon's a perfect example of that. We're excited to continue and work with the gold standard players in this space, and to keep carrying the torch forward towards what the consumer of the future and their engagement looks like. We’re excited for the path that we have in front of us. Believe it or not, even though I'm almost 10 years into this journey, it still feels like we're just getting started — I'm excited for what's yet to come. We're still relatively small. The U.S. isn’t the only place in the world where people want to feel like they're saving money and having fun while doing it. There’s a lot more to come. I’m excited for conversations like this that help us highlight how this is able to drive value for everyone in the industry, make it more efficient, and help the consumers to share their fair sense of the rewards too. Guffanti: Wes, Justin, thank you for sharing your insight today. It was a fantastic conversation, and thank you to our audience for joining. I hope you found it to be insightful. Have a great rest of your day, we will see you soon.

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