PayDragon is a different breed of mobile payment application. First launched this spring, PayDragon initially rolled out remote ordering and payment capabilities enabling restaurant and food truck customers to purchase meals prior to arrival, skipping register lines and avoiding long waits. PayDragon 2.0, introduced earlier this month for Apple's (NASDAQ:AAPL) iOS and Google's (NASDAQ:GOOG) Android, extends the app's emphasis on simplicity and efficiency to the supermarket shopping process: A new Checkout feature enables consumers to buy snacks, household goods and other non-perishable goods from their home, office or wherever they are, without ever stepping foot inside their local store. Users simply search the app for the item they want or scan the package barcode, and once the one-click checkout process is complete, PayDragon sends that exact brand and variety directly to any non-P.O. box address in the continental U.S. via free, two-day shipping.
PayDragon is a spinoff of Paperlinks, which offers QR code-based customer engagement services for a host of business customers. FierceDeveloper contributor Jason Ankeny spoke to PayDragon Founder and CEO Hamilton Chan about the new Checkout feature, mobile's impact on impulse shopping and the lessons to be learned from others' success.
Hamilton Chan on PayDragon's origins: Paperlinks is still around, and we're still growing every single week. We've created QR codes for close to 20,000 customers, including some major international household names. But over time we realized the most interesting part of the user experience is not advertising that leads to more advertising--it's about completing sales. So we started experimenting with restaurant menus that let people order food by scanning a QR code. To our surprise, it was very successful, and the light bulb went off: Scanning codes should be about letting people complete commercial transactions. We realized we could help them cut through the tedium of life, and get through tasks faster.
With PayDragon, everything is streamlined. The original version of the app lets you order food from food trucks and restaurants without waiting. You hit the 'Pay Now' button, and your order is directly routed to the restaurant. It saves you the time of waiting in line. If you use Square or Google Wallet, you have to wait to pay when you're at the front of the line, but with PayDragon, you pay before you get into line.
We're all about simplicity. Each PayDragon merchant offers a very short menu--instead of giving people 30 or 90 things to pick from, we keep it all above the fold. There's no ability to add or subtract things from an item or even to change quantities. If you want something special, you have to wait in line. Merchants love this because it caters to their regulars who know what they want. It's a front-of-the-line pass for their VIPs.
The problem is that it's not in every single restaurant across the country. I felt like it's a shame we didn't have a solution to help everybody. So now we're going back to our QR code roots with PayDragon 2.0. Every product in stores has a unique barcode on the back--you scan it with your smartphone, and we know exactly what item you want to order. We bill you and send it to you with free, two-day shipping.
Users scan the barcode to order move of an item like shaving cream.
We currently offer more than 5,000 products--all non-perishable, things you find in your pantry, your bathroom cabinet or your laundry room. There are so many things in life that you need, but you're not always at the store when you need them. PayDragon solves that problem. If you are running low on shaving cream, you scan the barcode and we send you more before you run out. It's a total no-fuss system. If you're the kind of shopper who goes to the store for one solitary thing, PayDragon satisfies that. There's also a point system--each time you make a purchase, you earn points towards discounts on future orders.
I built this for me and the way I shop. Some of the women on our team accused me of making a "dude app." I hate shopping, but PayDragon makes shopping fun.
Chan on how PayDragon works: We offer a cartless experience. We wanted the consumer to not have to think about the user experience. When we let people order this easily, then they order other stuff and we can stick it all in same box. When you aggregate items, shipping costs go down.
All product fulfillment is handled internally. That's very important to optimizing the customer experience. We have staffers who take their iPad into the supermarket, and they assemble a giant shopping list as orders come in. Once we get enough orders, they bring all the items back to the office, and we pack it all up and ship it out. I used to run a printing company, so I'm used to fulfilling orders, and I know how to ship products.
The secret sauce is our curated database. It's a separate functionality within the app. We're building a database of items we think people will like. Our whole team knows this market extraordinarily well.
PayDragon offers free two-day shipping.
This has been a labor of love. We started coding on the first day of 2012, and the more we built it out, the more we had fun with it. Scanning all the products into the database has been a ton of work--at one point, I even had my wife and kids adding things. But I have a singular mindset. I like doing things differently.
Chan on PayDragon's business model: Right now, we're focused on customer adoption. We want to build a platform customers are comfortable on and we want to show advertisers that we know how to take advantage of impulse shopping. As the platform grows and people become more comfortable making purchases, it's going to be very easy to say to advertisers "Would you like to target ads to our users?"
We process all payments. You log in your card and associate it with your PayDragon account. We feel like the critical relationship here is getting consumers to trust our system, so there's no setup fee for our vendor partners and no monthly fees. However, there is a transaction fee based on each order customers place. We don't disclose how much we charge, but it's a very low percentage.
For PayDragon 2.0, we are the vendor. There are some margins to be made on making discounted purchases and selling products at MSRP. But, we're going to worry about cool ways to monetize later on.
Chan's best advice for aspiring mobile app developers: It's important to look at the winners. There are now about 700,000 apps in the App Store, and making something that stands out is extraordinarily difficult. The winners are a small, elite group. If downloads is what you're focused on, look at what has succeeded and follow those tactics--then try to put your own spin on things.
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