Kout.io is a London based e-commerce startup where customers play free games for a chance to win their shopping. They have over 30 retailers partners including Amazon, Unilever, Nike, Samsung, totalling millions of products. Customer play free lottery games to win. If they don’t win, they get a time limited offer to incentivize impulse purchase and increase conversion for the retailer. As of February 2017, Kout is generating £20k MRR and growing 30% m/m.
Kout believe that games are the best way to drive engagement. For online retailers, engagement translates to sales. Kout helps retailers and brands to: Speed up sales funnel and increase conversion rate; Increase incremental revenue from long tail customers; Capture data to predict customer behaviour; Dynamically optimize the discount needed to guarantee customer conversion!
Kout is building discounts from the commission they receive, meaning they can discount any product without negotiating discounts with the retailer. Retailers also have the ability to white label and embed Kout’s technology within their own shopping process.
For customers: have fun and pay less for. Kout helps people discover new products and access items they wouldn’t normally not be able to afford!
For retailers:
1) through game mechanics and incentives, Kout increases retailers’ conversion rate and incremental revenue (revenue from users who wouldn’t buy in the first place). Kout is converting 4.5% of their users into buyers vs average of 2.7% on e-commerce like Amazon.
2) Kout processes the data collected through the game to establish predictive profiles of customers. They can capture how people spend their credits, what they are trying to win, and feed that information back to the retailer, to help them with customer profiling.
1. Direct brand revenue (Saas model). Kout charges brands £1k/mo for customised games and £2k for adding the embed option. This allows to retarget the brand’s traffic at no cost (brands act as acquisition channel). The only costs of running this is sales and development (80% margin).
2. In app purchase. Customers can buy power ups for more chances of winning, or play longer (100% margin).
3. Affiliate revenue. Commission on every product sold (average 5% margin). This revenue stream is just a way to create the incentive (‘free products’) without losing money, not the actual money maker.
Sale to strategic acquirer in the next 3 to 5 years.
Potential acquirer:
– Webgains, EU leading affiliate network (already in discussion).
– Competitor (Quidco, Groupon)