Swarm Tracks You While You Shop–And That’s Actually A Good Thing

The new startup, founded by two ex-Gannett executives, uses customers’ in-store free mobile Wi-Fi usage and offers them steep discounts in exchange.

Swarm Tracks You While You Shop–And That’s Actually A Good Thing

In a former life, Swarm executive vice president Ryan Denehy was one of Gannett’s youngest executives. Now Denehy is embracing location-based marketing with a new company called Swarm which tracks in-store customers via their smartphones–and saves money for both retailers and users. Instead of utilizing tracking features inside iOS and Android apps, Swarm uses in-store Wi-Fi services to offer customers coupons, spot (and offer discounts to) customers who price-check items on Amazon, and to track Internet activity and in-store movements.

“Every customer we talk to, from small retailers to national chains, has the same problem. None of them actually know what’s happening in their stores in real time; we can help with that,” says Denehy.

Swarm is part of a wave of new firms embracing the discovery economy and using smartphones to conduct deep analysis of customers. The company’s primary product is a cloud-based mobile web platform that integrates into a store’s public Wi-Fi network; retailers are then given access to extensive analytics via a dashboard. Analytics include in-store web traffic information, which section of a store a user is shopping in, and information on which items customers are price-checking or researching. In exchange, customers are given real-time coupons, discounts, promotions, and loyalty points via their web browser. Via the company’s home page, Swarm offers HTML5 toolbars that mimic the performance of a standalone app while users enjoy the store’s complimentary Wi-Fi.

The company is expected to announce a $3 million funding round later this fall. Swarm formally launched last week; 100 stores will be using Swarm by the end of September and an additional 300 are planned to deploy the technology before December 31. According to Denehy, Swarm’s first customers are primarily electronics, apparel, and sporting goods retail stores.

Denehy and CEO Rudd Davis are both former Gannett executives who previously sold BNQT Media Group, a network of owned and affiliate action sports websites, to USA Today Sports Media Group in 2008. They also developed Eastern Front, a content production studio, which was later acquired by BNQT. Financially troubled Gannett has been aggressively positioning themselves in the mobile marketing space, and recently purchased mobile loyalty card firm Mobestream Media. According to Denehy, Gannett is not an investor in Swarm.

For consumers, Swarm’s emphasis on consumer tracking to defeat showrooming and price comparisons means that conspicuously turning on their Amazon barcode scan app inside retail stores might just be a good way to save some money. The company’s dashboard also offers deep analytics on websites viewed by customers on in-store Wi-Fis.

Flight Club, a sneaker store popular with the collector “sneakerhead” community, uses Swarm at their New York store. According to John McPheters of Flight Club, the store uses Swarm to offer free Wi-Fi to customers–and to track customer price comparisons. “As a consignment store, our prices are typically high and consumers often check online to compare prices of items we sell. While we’ve only been using Swarm for a short time, this is where we hope to see real wins as we experiment with new ways to capture people that are price hunting on the web while in-store,” McPheters told Fast Company.

While it is easy to become concerned about possible invasions of privacy or excited about revolutionary new retail possibilities, it is important to put Swarm’s product in context. Augmented reality shopping has still not reached mobility, and use of smartphones in conventional retail is analogous to use of the Internet in 2000–a rapidly growing market, but not yet integral to the shopper’s experience. Moreover, loyalty cards and tracking information such as credit card numbers and email addresses have been used to create dossiers on millions of retail customers for years. For companies such as Swarm, the real potential is three or four years down the road once the integration of location-based services like Facebook, Yelp, and Foursquare into the shopping experience becomes routine.

For more stories like this, follow @fastcompany on Twitter. Find Neal Ungerleider, the author of this article, on Twitter and Google+.

[Image: Flickr user Redfishingboat (Mick O)]