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40Tasks, the Singaporean company behind hyperlocal flash deals app Loco, is on a roll. Four months after raising seed funding worth US$357,000, the company told Tech in Asia today it raised a pre-series A round of S$400,000 (roughly US$285,000). The round was led by 500 Startups’ regional fund 500 Durians and existing investor Tri5 Ventures.
40Tasks founder ZP Lee says they will use the money to expand into Malaysia and Thailand.
Loco allows brick-and-mortar stores to advertise deals to shoppers passing by.
“So you can be walking around a mall with Loco installed, a shop owner may want to target users to sell their products,” explains ZP. “This might be to clear their perishable stocks before the end of the day, or to spike up sales on a quiet day. Using Loco, they are able to create a deal listing instantly and the notifications will be pushed out to everyone in the vicinity.”
That means Loco is different from struggling daily deals companies like Groupon and LivingSocial in that stores take control of their own deal campaigns. In other words, Loco allows store owners to react to different situations and set up different offers to users. “The traditional deals market focuses on listings and driving impressions. The merchants have little control over the deals they are able to put up or limit. Conversion rates are low so merchants are starting to be more resistant to such platforms,” ZP says.
Loco also capitalizes on the principle of impulse buying. “Because of the nature of the deals, the push notifications which Loco sends have a much higher conversion rate of 10 percent than the industry’s 0.1 percent rate,” he claims.
The notifications Loco sends out are targeted, meaning consumers receive them based on their proximity to the shop, their shopping behavior in the past, and their demographics.
Unlike Groupon and LivingSocial, which sell vouchers to people, Loco users show up at stores and all redemptions are done over-the-counter. Loco doesn’t take a commission off the sales, but charges retailers based on the number of notifications sent out. Its packages start at US$30.
“Our unique merchant pay-per-use pricing strategy has proven to have high penetration rates, which could potentially unlock the whole market in this region,” ZP says. “This investment round is a strong indication in our product’s potential and that of the deal industry as a whole.”
New markets
40Tasks will use the follow-on funds to add more features to Loco, including a digital wallet and a social referral system that can help deals go viral.
The wallet will allow Loco users to redeem deals without the need for cash. It can be topped up using credit cards or PayPal. The wallet also serves as a loyalty stamp card where stamps are added based on the number of redemptions per store. When users have collected enough stamps, they can redeem better deals from merchants.
The referral system, on the other hand, allows users to invite friends or strangers nearby to join them in purchasing items to avail of bigger deals. For example, a store may allow two users to buy items at a 15 percent discount, versus only five percent if it’s just one user redeeming an offer.
ZP says it plans to take Loco to Malaysia and Thailand – markets that are familiar to them.
“Having extensively studied these markets, we see similarities in terms of problems and opportunities such as increasing mobile adoption and decreasing sales in physical shops which Loco was able to address in the local market,” he tells Tech in Asia.
He adds, “There’s a geographical factor as these markets are near to our base of operations. We see them so close to home, it’s a logical decision to quickly move in. Our synergy with our investors will also give us access to new markets in the region.”
By next year, 40Tasks plans to transform the app into a marketplace where merchants can take preorders, accept payments, and arrange deliveries.
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