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Growing digital coupon market needs consistency and interoperability to realise full potential, says GS1 UK and the GSMA

London, 18 March 2015 – A whitepaper released by GS1 UK and the GSMA, who represents the interests of mobile operators worldwide, sets out a best-practice framework to support a consistent and interoperable approach to the mass acceptance and distribution of digital coupons. 

With no such framework currently in place, the digital coupon market - and by extension the mobile coupon market - is highly fragmented with a myriad of proprietary solutions in use. This fragmentation makes it difficult for merchants and brands to distribute and accept digital coupons cost effectively and on a large scale, ultimately restricting their engagement potential with consumers.

David Smith, Head of Digital at GS1 UK, said: “Consumers are increasingly using mobile devices when shopping online and in store. Recent research found that 40 per cent of UK online retail sales come via smartphones and tablets* and there is evidence of exponential growth in the next three to five years. 
Merchants and brands are taking advantage of this trend and looking to use mobile devices to distribute and accept coupons and award loyalty points, but using a multitude of individual platforms and distribution methods. This isolated approach makes it very difficult to create a mobile coupon offer that can be easily accepted or redeemed in multiple merchants or geographies. The framework we are launching with the GSMA seeks to address these issues and make redemption easier for the industry and the consumer”. 

By utilising existing GS1 digital coupon standards and defined application programming interfaces (APIs), the four-step framework provides a practical way for brands and merchants to use the mobile channel to distribute and accept digital coupons across an entire market, reaching both their existing customer base and a much wider audience than is possible using existing methods. It also provides consumers and store staff with a consistent experience whilst redeeming branded coupons at the checkout across multiple merchants.

The four standardised elements proposed in the paper are:

  • A coupon data pool - registers a unique identifier for a specific coupon and records the associated parameters.
  • A coupon event repository - holds a record of all the events for a single digital coupon instance and the total number of coupon offers accepted by consumers and redeemed at merchants. 
  • A campaign management interface - enables a coupon issuer to interact with coupon data pools and event repositories to set up a campaign, track its performance and refine it.
  • An online marketplace - enables the efficient matching of coupon issuers with distributors and acceptors, encouraging the rapid adoption of digital coupons. Using real-time auctions, this marketplace would establish the price for the delivery of the offer.

Using an interoperable approach creates significant benefits for merchants and brands - from more timely and accurate collection of customer data and real time flexible campaign control, to the elimination of distribution costs and faster and more accurate validation and redemption. Most importantly mobile coupons allow consumers greater opportunity to redeem their offers with every purchase in an easy and convenient way. 

The solutions recommended by GS1 UK and the GSMA aim to minimise the complexity and cost of implementation, by leveraging the technologies and business processes already adopted by brands and merchants.

Next steps

This approach has already been successfully implemented in markets including Belgium, Luxembourg, Germany and Spain. GS1 UK has plans to continue to work with the sector including proving the framework through pilot implementations.

“Implementing this framework will require organisations to provide coupon data pools, event repositories and marketplaces on a commercial basis. Brands and merchants need to commit to this open approach in order to gain the benefits that the mass adoption of mobile coupons could provide.

“The next step is to bring this proposed solution to life and to follow-up with the development of commercial services in the UK. We are speaking with organisations to support a proof of concept in the next six months”, concluded Smith. 

The framework and accompanying processes were presented to the industry through the publication of the ‘Digital Commerce in Retail: Mass Distribution and Acceptance of Mobile Couponing White Paper’.

* IMRG Capgemini Quarterly Benchmarking Report, November 2014/January 2015