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(Photos.com/Getty Images)
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Innovation

Shopping app snatched from jaws of failure Add to ...

Creating a mobile app is simple. Getting people to buy it is something else altogether.

"Technology is the easy part," says Ron Cheung, co-creator of ItSpot, a free iPhone app that tracks deals in local shops and lets users share opinions on purchases. "The business behind an app is incredibly hard."

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"The mobile space allows everyone to jump into the game as long as they can program," says Erik Peterson, owner of game developers Romper Games in Toronto.

Little wonder there is so much competition - the Apple store alone boasts more than 300,000 apps. Skyrocketing to success isn't as easy as it may seem, industry insiders agree.

Ron Cheung and his partner Desmond Leung have learned more than a few things about the competitive nature of the app space. Their experience with ItSpot goes back to 2008.

Both men launched their own Internet services company in 1995 before selling it off and investing in a number of other companies.

"We realized that the smart phone market was really emerging in 2008," says Mr. Cheung. "We thought, 'Wouldn't it be great to get into the market now?'"

So the partners came up with an app they felt filled a void. "We were two busy guys who didn't have much time for shopping," he says. "We wanted a tool on our phone that would allow us to see all the great deals at the mall."

Their idea may have had potential, but in hindsight, says Mr. Cheung, they made their first mistake right from the get-go.

"We approached it from a technology perspective," he explains.

The partners didn't think about their app from the point of view of their target market and, as a result, they moved forward with a system their demographic wasn't actually using.

"It was for BlackBerry and it was Web-based, so people had to start up their browser to access the app," he says.

"When we launched our prototype, we found that people hated it," says Mr. Cheung with a laugh.

"People would download it and delete it, or just wouldn't use it again. We realized we built the app for ourselves, not for any particular demographic."

They went back to the drawing board, and their first order of business was setting their target. They decided to go after 18- to 34-year-olds who spend disposable income on shopping.

But the pair needed more than that. They were thirsty for feedback from real people. "Developing an app can be a lot like being an entrepreneur," says Mr. Cheung. "It's about trying different things and listening to your users and modifying the app so that it's actually what people want."

In 2009, the partners took another shot at retooling their app. "We decided to develop the app based on the general framework for the iPhone, and then have our users help us by telling us what they want," says Mr. Cheung.

The partners took every opportunity to connect with users and potential users. "We were out there showing it to people and further developing it," Mr. Cheung says. "Whenever someone sent an e-mail about downloading problems or had a question, we took the time to phone them and find out what they thought about the app."

By 2010, they had rolled out the app in Toronto, Vancouver, Edmonton, Calgary and Ottawa, and now have volunteers in each area who feed deal information into the app. "In the beginning, we paid people to do it, but we realized that it wasn't passion-driven," explains Mr. Cheung.

In addition to offering shopping deals by neighbourhood and the option to print coupons, the site also lets people anonymously post items so that other users can vote on them. It also lets users upload pictures to their Facebook page, where they can solicit opinions from friends.

Today, ItSpot's biggest struggle is ongoing awareness, says Mr. Cheung. "We don't have a huge budget, so awareness has to be organic and viral."

Mr. Peterson stresses the importance of marketing for apps, noting that advertising isn't nearly as expensive as it was pre-Internet. "In the past, if you had to market something, you usually had to do it through TV or other larger forms of media," he says. "Today, app developers are spending a lot less, but they're still spending. Web ad placement is much cheaper than other advertising."

Mr. Cheung and Mr. Leung are focusing on word of mouth and personal endorsements.

"People who are early adopters and continue to go back and use the app are our best marketing vehicle," says Mr. Cheung. "And we've also found it effective to connect through bloggers." The partners have run contests on blogs offering people who download the app the chance to win gift cards.

To date, the partners have invested about $100,000 in the app, which has about 1,200 loyal users. They believe there will be an opportunity to monetize it once their user base grows. "If I have loyal users who are using our app to help them decide what they buy, and if I can influence their purchase, I could potentially strike a deal with retailers," says Mr. Cheung.

There are other shopping apps out there, but ItSpot differentiates itself in one critical way: "Shopping malls in Toronto are doing similar things," says Mr. Cheung. "But they're not socially enabled."

Mr. Cheung is the first to admit that instant success is elusive in the app world. "You have to have a three to five year commitment," he says. "The overnight success idea doesn't exist."

Apple apps by the numbers

350,000: The number of apps the Apple App Store offers.

20: The number of categories apps are available in, ranging from games to business, news, sports, health, reference and travel.

10 billion: The number of apps downloaded from the Apple App Store.

Source: Apple, January, 2011

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