Canada: mobile startup Drop takes on the "loyalty mafia"

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By: RickFerguson |

Posted on July 14, 2016

Canada: mobile startup Drop takes on the "loyalty mafia"

Betakit.com, a publication covering the Canadian startup industry, reports on the ambitious plans of Drop, a Toronto-based loyalty programme startup that aims to disrupt the consumer loyalty programme market with a merchant-funded coalition application. And that's not all: Drop CEO Derrick Fung has already set his sights on a bigger prize: The United States.

Drop is essentially a merchant-funded reward programme with a mobile skin. The app, currently available only on iOS, allows users to link a credit or debit card to the app and then earn points funded by Drop's merchant partners. The company has raised $1 million CAD in venture capital, and has attracted merchant partners in Canada such as Wealthsimple, Foodora, Chef’s Plate, Urbery, Thirstie, Carnivore Club, and FanXchange. The app's Millennial-themed marketing promises rewards that "appeal to our generation."

Fung sees his opening in the moribund technology of Canada's still largely card-based loyalty market. Money quote from Fung:

"Our vision is to change loyalty as it is today. If you look at some of the programmes in the market today, they haven’t really evolved as tech evolved. You still have to bring a physical card to stores, and a lot of programmes require you to swipe a card and checkout.”

While a merchant-funded reward model is nothing new, Drop is attempting to provide a frictionless mobile-based experience for coalition customer loyalty, which is something that older card-based coalition programmes have been slow to accomplish. So far, Drop seems to be hitting a sweet spot for Canadian Millennials; a recent beta test saw beta users connect an average of threee cards to the app and collect over 1 million reward points.

The article also has Fung humerously referring to Canadian loyalty behemoths such as Aimia and LoyaltyOne as a "Loyalty mafia" against whom he is determined to do battle. Fung is nothing if not ambitious; his ultimate prize, he says, is the US coalition market:

“In the U.S., the concept of Air Miles doesn’t even exist. One in three Canadians, or 10 million, are part of Air Miles. In the UK, you have half the population that’s part of Nectar, but in the U.S. there’s not one programme that spans the country.”

According to the Betakit article, the Drop team aims to enter the US market some time in 2016. We'll keep you posted as to their progress.

Read the Betakit article here.

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