A Japanese coffee shop will give you free coffee in exchange for your data
For some customers, free coffee is worth giving up some personal data.
Japanese coffee chain Shiru Cafe, which has 21 stores located mostly in Japan and India, launched its first U.S. location in Providence, Rhode Island, at the Brown University campus earlier this year. To access free coffee, customers have to be students or faculty members who provide personal data including their names, dates of birth and work experience through an online registration process. The company is now planning to expand to more U.S. locations by end of the year.
“I’m giving tons of organizations my data and not getting any goods or services back,” said Jacqueline Goldman, a Brown graduate student and Shiru customer. “Shiru is being transparent.”
Shiru’s business model is one which treats personal data as a currency to be exchanged for goods. Revenue is generated from corporate sponsors who advertise on site and reach out to potential hires through hosted events. In Japan, Shiru cafe’s sponsors include Nissan, Microsoft and JPMorgan, according to parent company, Enrission. It’s a twist on loyalty programs which offer customers points for purchases and the right to track purchase behavior. For Shiru Cafe, which is still trying to secure U.S. sponsors, the data informs which types of sponsors it’s seeking. The company said it doesn’t share customers’ personal information with third-party companies.
“Our goal is to help students make the transition [from academic life to the workplace] easier and empower them to make better decisions,” said Shiru’s North America general manager, Keith Maher.
The Brown University location draws 800 customers a day, according to the company. The “pay with data” business model is gaining more interest from marketers, but it’s an approach that also has risks, given customer concerns about privacy since recent breaches at Facebook and Equifax.
“‘Pay with data’ has been around for years in various, subtle forms,” said Greg Portell, lead partner in the global consumer and retail practice of consultancy A.T. Kearney. “Retailer loyalty cards are an obvious example. The retailer value proposition has roughly equated to ‘let us track your personal shopping preferences and we will offer you discounts.'”
Retailers and financial institutions are increasingly looking to personalize offers based on customer preferences gleaned through data-gathering efforts. Loyalty programs, including branded credit cards, let companies market to customers based on their habits. The logic is, if the brand is transparent about what the customer gets in return for the data and how their data is being used, they’ll be more likely to share personal information.
Data privacy regulations are also a hurdle to overcome when using customer data as a currency. Regulations such as the E.U.’s General Data Protection Regulation, which requires companies to seek customer consent before collecting and using personal data, imposes additional requirements on brands. It’s a concern Maher said Shiru is taking seriously. He said the company is complying with laws and regulations regarding data privacy, which will be top of mind as it looks to expand to the U.K. It’s a risk that discourages some sponsors from buying into this approach.
“For this model to be truly scalable, you need access to at least one demographic and their data at some scale,” said Jonathan Smalley, CEO of Yaguara, a data analytics company that serves e-commerce brands. “With the potential for serious regulation, potential sponsors may just decide to go more traditional routes or invest in their own efforts.”
Shiru plans to expand to Harvard, Yale, Princeton and Amherst before the end of the year.
Subscribe to the Digiday Retail Briefing: A weekly email with news, analysis and research covering the modernization of retail and e-commerce.
Cheat Sheet: Shopify’s Shop Pay integration will share customer purchase data with Google
Allowing retailers to sell for free, and adding more payment options, makes Google itself more of a shopping tool.
LG kicks off series of live stream shopping events produced in-house
If a consumer sees something they like, they can click on the product and will be taken out to the LG website to complete their purchase.
Loyal and App-y: How QSRs are leaning into rewards programs to boost mobile orders and sales
Brands were forced to find ways to reach customers in their homes and fast-food restaurants, including McDonald’s and Burger King, found answers by investing in loyalty programs.
SponsoredHow retailers can be ready for holiday shoppers this year
Suchi Sastri, managing director and partner, Boston Consulting Group As the holiday season approaches and the pandemic continues to evolve, retailers want to know what to expect. Will e-commerce continue to grow at the rate it did last year? How big of a role will in-store shopping play in holiday shopping? While it’s still early, […]
Cheat sheet: Etsy beats earnings, turns focus to adding more revenue sources
Etsy is still growing beyond a blast of mask sales last year and now needs to manage 4.7 million sellers and 90 million buyers.
Member ExclusiveDespite hungry VCs, DTC brands are rethinking their fundraising approach
This is the latest installment of the DTC Briefing, a weekly Modern Retail column about the biggest challenges and trends facing the volatile direct-to-consumer startup world. Join Modern Retail+ to get access to the DTC briefing–as well as all articles, research and more. Before 2020, some founders and investors were starting to warn that most consumer […]