Hey guys. So, I am back again with another interesting project, I am going to be having a look at Raincheck in this article. It is a very interesting project, in my opinion, one which runs on the Stellar network. Essentially what this project is, is a “decentralised peer-peer loyalty and payment network” (Raincheck, 2018).
Raincheck argues that there is no system of this kind in place, and all attempts to carry this out in a centralised environment have failed, citing the need to have value and flexibility, something only a decentralised platform can achieve. The Raincheck platform will solve this problem by incorporating rewards and loyalty via their “Rain token” with the aim of first attracting retail, airline, and the travel industries.
I have to admit this is a very interesting project, I will bring you through the whitepaper in this article, and hopefully, by the end, you will have a good understanding of the Raincheck Platform. I personally believe this to be an amazing platform, and a great use for blockchain technology.
According to their whitepaper, Raincheck is an established company which was formed in 2014, citing that over the last 3 years they have filed many patents and won a global innovation award. They further state that they “won the Visa Everywhere Initiative and also the Accenture Consumer Tech Award in Singapore in late 2017” (Raincheck, 2018).
From what I believe, I think this current platform runs via cloud-based computing. What I found interesting about this project, is that they are an established company doing real work within the space. The “Raincheck O2O commerce platform”, according to the whitepaper, has had a successful pilot phase. The purpose of their company is to measure online product research and link the findings to in-store transactions. Their “contextual commerce platform” allows the gap to be filled between these 2 activities, allowing consumers to save searches and notify them when products appear in-store.
What they are doing with this ICO, is creating the “rain token”, which will enable them to “close the loop on the online-to-offline (O2O) retail experience” (Raincheck, 2018). They are yet another example of a company realising the advantaged of blockchain to their business model. This will effectively make them a first mover in this space.
To keep things simple, the vision of Raincheck is essentially to “close the loop” I mentioned above, which means reaching all stakeholders (consumer, retailer, bank, payment service providers etc…). All stakeholders in the loop will be rewarded. People can earn loyalty and reward points by using the Raincheck platform. They state they are here to “decentralise stored value accumulated via loyalty programmes” (Raincheck, 2018). I believe this will ensure all parties receive benefits from loyalty programmes. Raincheck will take all of these reward programmes and house them on their platform.
Raincheck envisages capturing a huge market share, the chart above taken from the whitepaper shows the opportunity they have. Raincheck further stipulates that the loyalty rewards market is close to 500 billion dollars annually. Their vision is capturing this loyalty rewards sector and 15.8 trillion in digital sales. I have deduced from their whitepaper that they will target the direct-to-consumer market, from what I understand this is a new and emerging market.
Furthermore, Raincheck’s vision is to provide a platform from which developers or 3rd parties can develop their own apps within the Raincheck platform. This will be easily achieved via API’s and software development kits (SDKs). In their whitepaper, they also state that they already have some partners (Sky-Buys & Sellecte) using the platform. They state Sky-Buys utilise the commerce platform in the duty-free shopping area, and that Raincheck takes a large revenue share of these and are carrying out trials with other “major airlines, concessionaires and OTA travel organisations” (Raincheck, 2018).
The above chart, taken from the whitepaper further shows the partnerships they have with “platform and API providers”.
Raincheck tells us that most people search for products online but only a small percentage buy online. They state that this figure can be less than 10% (online buyers) in the retail sector. I suppose this is true, people like to see products in person before buying. Raincheck divides this into 2 categories, high-touch (Items such as clothes when people prefer to look and buy in-store) and low touch (products/service such as flights and hotel room where online purchases are popular).
Furthermore, Raincheck claims that the advancement of e-commerce has given retailers the capacity to make up their minds online and carry out in-store purchases, as people know what they want when they arrive. I find this interesting and never really gave it much attention, but I do this myself, we all window shop online these days.
Another interesting “pain factor” mentioned in the whitepaper is that online retailers often see healthy growth but this growth often plateaus to “slight growth” (Raincheck, 2018) once the novelty wears off. Furthermore, most online retailers fail to tell consumers of the huge return rates they experience, a figure Raincheck states can be upwards to 30%. This is staggering in my opinion.
Another fact one must consider is the advancement of mobile technology and the interactions these play in the “purchase cycle”.
Raincheck state that more emphasis should be placed on driving mobile use within the Omni-channel shopping experience. For those of you who don’t know what that is, it is basically “an approach to sales that seeks to provide customers with a seamless shopping experience via online (desktops, mobiles) and instore means (SearchCIO, 2018). Raincheck state applications such as “click & collect” don’t have the correct mix right now and cost too much. As can be seen from the above chart, mobiles provide a huge opportunity to influence sales. Raincheck state that e-commerce is still focusing on shoppers at home “Googling” rather than looking to integrate with other retailers and product services via mobile technology. I think the problem comes from the fact consumers don’t want to download numerous shopping apps on their phones and the ones that are downloaded are basically the same as the website version of that particular store. The pain points they want to solve is to make the omni-channel approach (search online & buy in-store) more efficient.
Another point Raincheck make is that the golden years of retail are gone now, an era where shopkeepers knew your name. Raincheck state that the consumer controls the retailer in today's age, but given the fact that nearly 90% of sales are still made in-store provides a chance for the golden era to return. The Raincheck platform will allow a return to this “behaviour “.
The biggest problem is that once somebody searches online, the retailer never knows if that person actually comes to the store to purchase, in essence, there is a gap in data, data which blockchain can capture and provide innovation to retailers, thus giving the power back to them to be able to close sales at “viewing point”.
Raincheck, (2018) state that customer loyalty is gone, suggesting that “70% of shoppers belong to a loyalty program but never redeem their points”. In my opinion, this is down to the fact that there are just too many loyalty programmes with various retailers and it's very hard to rack up points and often people never accumulate enough to cash in on worthwhile rewards; we have all experienced this.
Raincheck state, that these “unclaimed points” are viewed as liabilities on the balance sheets of companies as they are essentially owed money. Financial rewards are stated as the highest valued loyalty programmes for members of all ages, according to Raincheck. The problem with all these loyalty programmes is that often is the case, they take up too much wallet space (cards) and many apps from different retailers take up too much phone space. The Raincheck platform will provide a solution for all of these problems.
According to Raincheck, (2018), their solution will give people the personalised shopping experience they crave both online and offline and will allow retailers to measure the effects of their digital marketing process on in-store sales. What is more is that the platform will allow users to link payment cards to loyalty programmes/offers, but at a “Stock Keeping Unit” rather than merchant level. What I find fascinating about this solution, is that it is a solution already; this has come about after a period of 18 months of platform development. It is not often we get an ICO with a solution at hand and not just a promise. They do state the last phase will be linking offline purchase transactions to the corresponding online discovery. The image below shows a case study within their whitepaper on 3000 people in Australia:
This shows the solution works, people saved searches, and the researchers concluded that physical stores are still the most important channels for sale closes. The study shows the real need to provide data to showcase in-store purchases come from online discovery, a solution which blockchain can provide. Raincheck state this “loop close” will be finished by the end of 2018 once card linking and payment authorisation are integrated alongside product information at SKU-level (Raincheck, 2018).
Raincheck, (2018) state that this platform will utilise “Stock Keeping Unit (SKU)”; which is patented, as the means to calculate loyalty rewards rather than a more common “merchant/spend level”. This means that the platform can track when somebody finds a product online and when they purchase it offline. So essentially what this platform does is calculate all the data between these 2 events. Again, and again I state that large data is what blockchain can solve, this is another example of it being utilised in such a manner.
Raincheck will run on the “stellar DLT protocol “. In the whitepaper, they state this was because Stellar was designed specifically for the frictionless global payment industry and cite the fact that Ethereum is too slow, expensive and insecure. Stellar run off what is called the “Stellar Consensus protocol”, I am not going to discuss this, please check out my article on consensus algorithms if you wish to learn more, but simply, it is the engine which runs the Stellar blockchain.
I suppose they have a point, Ethereum is being over utilised, I do personally feel Ethereum is an amazing project and will be even more attractive when it implements scaling/Casper, but I also acknowledge the fact that these other platform coins can do a similar job, and eventually the market share of Ethereum will be eaten up by its competition.
When we consider Stellar, it is easy to see why Raincheck chose it, Stellar was designed to connect bank and payments systems around the world, so this would signify to me that they are thinking huge scale. I also believe it was due to the fact that the Raincheck platform will use “Stripe” as its payment gateway, which plans to support Stellar down the line, according to Raincheck. What is also amazing with the Stellar network, is that it solves a huge pain point many projects experience today, which is “listing their token”. As some of you may not be aware Stellar feature an in-built decentralised exchange, which means this project does not need to depend on 3rd party exchanges from the get-go. So, we can assume liquidity won’t be an obstacle.
A great comparison Raincheck make about Stellar vs Ethereum in their whitepaper is “it costs 1 cent to make 10k transactions on Stellar vs Ethereum’s 0.20-1.45 dollars per transaction, furthermore, confirmation takes 3-5 seconds vs 3-5 minutes respectively”. I also believe Stellar is a lot easier to develop on which would aid projects on the Raincheck platform.
Source: Raincheck, (2018)
According to Raincheck, (2018) the platform, as depicted in the above image, comprises of many elements:
Product Feed: Handles all product information data such as stock levels from many e-commerce platforms.
Inventory feed: Handles in-store inventory information from ERP systems.
02O Wishlist: This will allow users to save searches they find.
Payments: This is the centrepiece of the platform allowing payments and connectivity with banks and APIs of other 3rd party apps/wallets.
Location/Proximity: This is an interesting feature as it will essentially allow users to find shopping centres in their vicinity.
Connected POS & card-linked offers: This will be the vehicle required to enable SKU offers. Raincheck is developing this to enable payments and POS to be matched, which will provide valuable information and allow for marketing at a product level.
Push notifications: These will be essential and will self-execute to handle delivery options.
Data analytics: This is essential also, Raincheck will collect data from hundreds of data points and can show these visually via dashboards.
Developer API’s & SDK. Raincheck will allow others to continue their own development on the platform.
Raincheck tells us that to reach this milestone and close the loop, it will be essential to link up to the payments ecosystem. I believe this would involve tokenising one’s payment account number as it holds the data required. To keep the platform secure, the primary account number (PAN) will be replaced with a randomly generated token, according to Raincheck. This would ensure no sensitive information about the cardholder would be forfeit if hacked. This tokenisation is essential to close the loop between online searches and offline purchase.
This platform will allow users to use their payment card to enter loyalty schemes because loyalty cards will no longer be required. The platform will do everything automatically because the card will act as both a payment & loyalty number. This would ensure it does not matter if products are discovered online or offline, rewards will be the same. Tokenised payment cards will solve all of this according to RainCheck, (2018). The next evolution of this will be tokenisation of specific merchant purchases, so “consumer A can receive reward Y for shopping at merchant B or for purchasing Product X” (Raincheck, 2018). I believe these cards will be virtual and used in registered Raincheck locations.
There are a lot of potential users of this platform. As discussed in the whitepaper the main ones are:
Shoppers: Raincheck suggests shoppers will be able to “save” items they wish to purchase. This is then linked to their payment method, from which a user will be rewarded for either carrying out the transaction online or offline.
Retail brands: They get the benefit of knowing where the point of discovery is for their products and data tracking it to the point of purchase. Raincheck states this will now allow for “points of attrition” to be exposed and acted on. They state digital marketing call-to-action (CTA) can be used to track everything now. Raincheck reckons the data generated will be sufficient enough to influence sales, this additional revenue will offset any costs for cashback and reward offers.
Payment service providers: This works as follows, traditionally fees are charged by these once an online transaction is completed. Raincheck will capture data on payment cards in order to track offline transactions which occur after cart abandonment. Once a transaction occurs in-store the rewards will be issued. The value here is additional revenue from O2O sales.
Financial institutions: Raincheck suggest benefits will occur here because they will be able to bring a shopping experience to their customers and track O2O via their own apps/wallets on the platform.
Channel partners: Raincheck see the potential of this platform and feel it can translate to other industries, they cite the publishing, travel and telco industries in their white paper. They state that the opening of new revenue streams will be of benefit here. I believe Raincheck are carrying out various proofs of concepts here to showcase the potential.
Raincheck, (2018) further tell us in their whitepaper that revenue will be generated via subscriptions, transaction fees, loyalty marketing and data service, from these users. The commerce platform is designed as a Service as a Service (SaaS) model. The end result is a 2-sided platform from which shoppers essentially just register their card via the wallet and shop at any retail brand and receive the corresponding loyalty rewards. They plan to offer all of this at a mobile level.
What I like about this project also, is that this whole platform will be designed with user-friendliness in mind. At the end of the day the masses don’t care about how blockchain works, for the most part, people don’t care about how technology works, granted we are here at the early stage investing in blockchain, but most people just want a product that works. Raincheck will provide the phone apps free of charge and will link them to card payments, which is all people want, the technology will do the rest.
So now to the most important part of the article, as with all projects, a vision is only as good as its token economics. The “Rain Token” will be the utility token which runs this ecosystem. As already mentioned the token runs on the Stellar network, which makes it much faster and cheaper to use than any ERC-20 token.
As this platform centres around loyalty programmes and rewards, this token is needed in my view. According to Raincheck, (2018) users will be rewarded with rain tokens for signing up and registering, referring, checking products online, purchasing in-store etc…. All of this will facilitate the platform gathering data for reverse marketing for brands as the “loop will be closed” and brands can for the first-time work with meaningful data. Brands will use the token to stake rewards for users also.
This will be a full 020 shopping reward platform, all facilitated with the Rain token. Brands will be for the first time, able to personalise individual needs, as they know who they are now. Raincheck will allow loyalty schemes to create their own smart contracts via their model which will also be facilitated via value transfer in the Rain token.
Furthermore, I believe it is possible for organisations to pay the licence, setup and maintenance fees with rain tokens, according to Raincheck, (2018). This will ensure significant discounts, but one should note fiat currency will still be accepted. I do however feel the discounts using rain tokens will be enough to push its use. They even plan to allow rain tokens to be used to make purchases (if regulatory approval is granted), which would be huge.
According to Raincheck, (2018) users will be able to combine points from different loyalty programmes and aggregate them into the “rain token”, thus ensuring it remains the gold standard on the platform. There will also be a buyback and burn system implemented from profits, which is something I always like to see.
I feel the distribution of tokens is fair. I would like to see more tokens distributed via the sale (currently 35%) but this is explained with a further 25% being held for rewards which offsets this concern. 15% of tokens are reserved by the team for 3 years for incentivising strategic partners, which is great to see. I also believe the team and advisors tokens are subject to large vesting periods (12m-24m). Overall, I am happy with these figures.
The token sale is due in Q4 of 2018 and will run over 4 weeks. I further believe they plan to offer a max 15% bonus during this sale, which will gradually decline over the 4 weeks.
I believe this roadmap to be a well laid out one. Again, when considering projects as potential investments ensure you read their roadmap as it really is the only aspect of the whole process which will release value to investors as milestones are met. We see here that this project began back in 2014, and nearly 4 years later we have an ICO. This alone shows us this project has been well designed, furthermore this roadmap extends out to early 2020. I like projects with long roadmaps, I am a long-term investor and feel these will be the projects which trump all. After all, only the projects which cater to a real-world use when the masses arrive will be adopted.
Raincheck reminds us that the loyalty programme space will be a battleground for competition, but feel their project trumps all major competition. I am going to leave the above chart to speak for itself.
Overall this seems like a project with a lot of substance and it really excites me. This project has been in development for years already, so it is not your average project seeking a quick ICO. I believe the team behind this project have put an extreme amount of hard work into their platform over the years, and it is only now they are ready to take the leap onto the distributed ledger. They state themselves in their whitepaper, that the distributed ledger (blockchain) is the final piece of the puzzle to fill in the missing loop in the O2O process.
This platform will provide retailers and other organisations access to the much sought after “who is buying my project” question. For the first time, they can see when product discovery occurs and track the process via data points right up to purchases in store. Raincheck has showcased to us within their whitepaper that they are experts in this field, and they know how to deliver this amazing project.
As you know by now, I am a huge believer in the power of blockchain, I think it is going to revolutionise most industries. I now feel that Raincheck will be the leaders within the online to offline (O2O) commerce industry. This amazing 11-person team and 12 advisors can deliver this project, which will not only bring untold benefits to consumers in the way of rewards but also give businesses a means to track and influence the whole purchase process. This process is from the moment of discovery right through to the final purchase. The benefits of reverse marketing alone make this a winner in my mind, this is a huge industry and one which I feel blockchain can truly revolutionise.
Lastly guys, I just want to stipulate to you that you should not take any of this as investment advice. I am not a financial advisor and urge you all to do your own research when considering any investment, this space can be very unforgiving and is very speculative in nature. Never follow somebody blindly; my job is to showcase projects I see with real potential that is all. I hope you enjoyed this article and I will aim to find the next amazing project in due course. I thank you all for your support and ask for you to share my work. I would be more than happy to discuss any questions you may have in the comments section.
