Recap from OST LIVE with Carry Protocol’s Grant Sohn: Blockchain for Offline Retail and Benefits of Branded Tokens
Carry Protocol’s Grant Sohn joined us on Episode 35 of OST LIVE. Sohn started his career in business consulting, but soon found he was driven to build his own product. He left Seattle behind and moved to South Korea, where he developed a customer-loyalty app called Spoqa. His experiences with Spoqa convinced him that an essential layer of technology was missing — and that led to his current position as co-CEO of Carry Protocol, a blockchain-based company that has developed a technology stack for implementing loyalty programs and other applications for brick-and-mortar offline stores.
First, a Few Words About Spoqa
Spoqa is a platform that lets offline stores create the kinds of loyalty programs customers expect online. Customers check-in with their phone numbers, which lets store owners enhance marketing efforts by sending targeted coupons based on past purchases. With a user base of 17 million — three million active monthly — and a merchant network of 10,000 shops, Spoqa is Carry Protocol’s first partner and will be its first case study.
Introducing Carry Protocol
Credit card companies have made a business of capturing the rich data associated with offline transactions. “They sell that data and we actually consent to it without really knowing,” Sohn says. The type of shoes you buy or the neighborhood stores you visit — those are important data points that financial institutions are monetizing, often without our knowledge. Carry was created to give small and medium businesses — and their customers — control over this information. It also lets SMBs create digital loyalty programs easily and inexpensively.
Carry helps businesses create their own branded tokens. The tokens can be used as currency, to load up prepaid debit cards, to serve as coupons, or to give users rewards for frequent shopping and sharing transaction information. For SMBs, Carry functions as a sort of ad platform that connects marketers directly to local consumers. Carry removes the need for an intermediary because advertising revenue is sent directly to the consumer in the form of rewards. Carry created the CRE token to serve as a universal credit that can be traded freely on exchanges in addition to serving as a value medium for offline stores and their customers. Customers who earn CRE tokens can use them to pay for products at participating locations.
Loyalty Matters
The vision for Spoqa and Carry comes from Sohn’s seven years of experience with business loyalty programs. Repeat visits account for 80 percent of a customer’s lifetime value, he says, which makes loyalty programs strategically important. Traditional brick-and-mortar shops try to acquire new customers with antiquated strategies like flyers and local magazine advertisements. It is very difficult to calculate ROI for these marketing efforts. Even with Facebook ads, SMBs cannot determine how many of the customers they targeted actually visited the business.
Carry uses two tokens, the native CRE token and the store’s branded token. Sohn says the two-token approach is necessary because small businesses need people to come back to their shop (hence the branded token) and not spend their points elsewhere (hence the universal CRE token). Branded tokens support loyalty programs for small businesses. The key factor is that they are not traded on exchanges — because if they could be exchanged easily, the loyalty aspect would disappear.
How It Works
Sohn says Spoqa is compatible with most of the POS systems in South Korea. This makes it easy to capture data and monetize it with the Carry Protocol. Carry is a complement to a point-of-sale system today, but will allow merchants to accept cryptocurrencies as payment in the future.
Marketers who wish to use Carry start by staking CRE tokens, much as one stakes ETH to run smart contracts on Ethereum. Marketers need additional CRE tokens to give as rewards to consumers. Customers receive targeted offers such as coupons as well as CRE tokens. The CRE tokens are also necessary for staking branded tokens for SMBs that choose to create their own digital economies.
Once there is a link between the user application and the user’s public ID, transaction data is given to users after every purchase at a participating shop. Users who choose to upload the data to the Carry network receive CRE as a reward. Users receive additional tokens when the data is accessed for advertising campaigns.
Blockchain for Small Business
“The beauty of blockchain is trustlessness,” Sohn says. “You don’t need to spend money on banks arbitrating the trust factor among various parties.” Brick-and-mortar sales involve the store, the customer, and sometimes the advertiser. Sohn says that any situation where middlemen take a large cut of revenue is a situation ripe for blockchain-based disruption. In the case of offline retail, there are many different middlemen, especially in advertising. Merchants who are living month-to-month have to pay large sums to middlemen. Sohn is certain blockchain technology can slash those costs.
Coming Up Next on OST LIVE: Glen Hendriks
Glen Hendriks is one of the most passionate OST community supporters, highly active in the official OST Telegram community and one of the principal organizers of the OSTonians — the unofficial OST Telegram community. Be sure to subscribe to our YouTube channel or listen to the audio anywhere you listen to podcasts, including iTunes, Stitcher, and Spotify. We’re also available on Alexa — simply add “OST LIVE” to your flash briefing.
About OST
OST blockchain infrastructure empowers new economies for mainstream businesses and emerging DApps. OST leads development of the OpenST Protocol, a framework for tokenizing businesses. In September 2018 OST introduced the OpenST Mosaic Protocol for running meta-blockchains to scale Ethereum applications to billions of users. OST KIT is a full-stack suite of developer tools, APIs, and SDKs for managing blockchain economies. OST partners reach more than 300 million end-users. OST has offices in Berlin, New York, Hong Kong, and Pune. OST is backed by leading institutional equity investors including Tencent, Greycroft, Vectr Ventures, and 500 Startups.
