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Analysts love the phrase "First Mover Advantage", but first is not always best. The first mover in the online coupon world has been highly publicized and controversial Groupon (NASDAQ: GRPN).
The company had humble beginnings. It started with a small email distribution list. It offered a "Flash Sale" discount. What was offered? A half price pizza at a restaurant located in the fledgling company's office building. Lots of people showed up for pizza, and a new concept was born.
The concept expanded in the Chicago area, and Groupon looked to go national. With $1 billion in financing from a Venture Capital group, Groupon started buying up Daily Deal services in larger cities all over the world, and became the fastest company is history from its birth to achieve $1 billion in annual sales.
Groupon has first mover advantage and a global footprint. But first is not always best. The best is always the one consumers like the most. Do they have the best model for the consumer?
Consider the history of First Movers in the internet space. How about the early behemoth AOL. AOL was able to swallow up Time Warner in the rah rah days of the 90's as the market believed the AOL model would dominate online browser, shopping, and communications.
However, AOL only allowed users to see what they wanted you to see, and there were subscription fees. This closed community failed miserably, and AOL lost its dominance and retreated into oblivion.
AOL was knocked of its pedestal by Yahoo! (NASDAQ: YHOO). Their open community and free services destroyed the AOL model. The Yahoo! community grew rapidly, and opened access to a lot more content on the internet.
However, as it turned out, Yahoo!'s model was flawed as well. Yahoo's! search service only allowed users to find content if the content provider paid Yahoo! an advertising fee. Yahoo! failed to see this approach was vulnerable.
Google (NASADAQ: GOOG) came along, and with its completely open search features and superior technology, wiped out Yahoo!'s dominance in search.
The ever growing population of internet users doesn't want their experience to be controlled by anyone or anything. Consumers of goods, services, and information want what they want, not want they provider wants to cram down their throat.
They say one picture is worth one thousand words. I say one chart is worth millions of dollars. Here's a chart that says it all. This chart shows the relative performance of AOL, Yahoo!, and Google since the 2008 market crash.
AOL, the "First Mover" with the most flawed model, is depicted in blue and clearly the worst performer. Yahoo!, the upstart that wiped out AOL, is shown in Black. This stock has done poorly as well.
Google is depicted in red, and its by far the best performing stock of the group. Google was last to the party, but has the best model for the consumer.
This chart provides definitive proof that early entrants with a new business concept don't necessarily offer the best model for consumers.
Look out Groupon- there's a new kid on the block about to knock you off. Read on.....
Data, when properly used, is powerful stuff. Data, simply defined, is information. Websters defines "DATA" as individual facts, statistics, or items of information.
iTraker (IRYS) has lots of data, and therefore lots of power- IRYS has 15 million items of information in one category, and 200 million in another category. The company intends to marry the two, and provide consumers with the discounts they really need and want.
200 Million is the number of records IRYS has already obtained on individual consumers. The data includes names, email addresses, street address, demographics, and spending preferences.
15 Million is the number of records IRYS has on businesses in the US. The IRYS service officially launched this past weekend, and you can go to www.itrackr.com, set up your username and password, and start negotiating your own deals with your local merchants.
iTrackr has introduced the first web based platform that allows consumer to interact directly with local merchants onlne.
The screen shot on the right is the home page where you can go to register. Merchants and consumers alike can set up their profiles, and the platform can join the two together.
Merchants will have the ability to reach to local consumers with a special offer.
Consumers have the ability to ask for a discount from businesses on the site.
Unlike Groupon, the merchant collects the money from the customer, rather than Groupon collecting the money and stretching the merchants out 60 to 90 days to get paid.
As an example- let's say you want to take in your dry cleaning tomorrow. You log in to the site, go to your map, click on the proper service button, and all the local dry cleaners in your area come up with icons.
You simply click on the ones you want to do business with, and ask for a discount. The merchant can then respond by accepting, declining, or making another offer.
With Groupon, only Groupon wins. With iTrackr, everybody wins.
I wanted to show you one additional screen shot. This is the interface that allows you to try to make a deal for a coupon with a local merchant.
This is a map of my neighborhood. The icons on the map show some of the local restaurants. I clicked on the icon for my local Ruths Chris Steak House. I now have the option of requesting anywhere from a 25% to a 70% discount on my next visit.
Once I've decided on my offer, the interface will send a message directly to the restaurant on my behalf.
Ruths Chris then has the option to decline my offer, accept it, or counter with a different offer.
Ruths Chris now knows I'm a consumer interested in their restaurant, and they now have the ability to reach out to me through the iTrackr.com interface with future offers.
From the current levels, if the company makes money, there's little doubt you will make a lot of money on the stock. So, how does IRYS generate revenues?
Lest you think differently, IRYS is no start up. In order to introduce their platform, this company needed to have deep seated roots in internet marketing.
The first generation of the iTrackr.com model allowed consumers to find local merchants with hard to find items in stock. That version of the service was spun out in the 2008 recession, but eventually was developed and sold to eBay for $90 million.
The company is building its new platform off a rich heritage of behemoth customers that currently pay IRYS in monthly fees. Saveology, a $1 billion digital marketing company you never heard of provides customers for companies like:
An IRYS application is embedded in online marketing sites for all these companies, and this service generates significant revenues and allows IRYS the leverage to launch a platform robust enough to manage the records and transactions for 200 million consumers and 15 million small businesses in the US.
Once launched, IRYS will generate revenues from the businesses- not from consumers. Businesses who enroll in the program will pay a nominal monthly fee to be included in the interface. Fees will range from as low as $14.95 to $39.95 per month depending on how pro active the business owner wants to get with IRYS and its local customer base. It's far cheaper than a Yellow Pages ad, and allows for direct contact with local customers. This could end up being the most cost effective advertising any local merchant has.
I suspect IRYS is going to explode between now and the end of March. Why? The company is focused on uploading the most valuable parts of its 200 million record consumer database, and 15 million record business database. IRYS will focus on businesses with the right SIC codes for local merchants, and consumer in certain high density parts of the country.
The site went live this past weekend, and a look at the chart gives you an idea of how market investors feel about the upside potential of this new platform.
I suspect the chart and the useage level of the site will track each other. So, as local businesses and consumers all over the country slowly realize there's a win/win competitor for Groupon, buyers are likely to flock to the stock as they adopt the service.
Consider that IRYS already has hundred of thousands of sign ups from the first version of it's online service, and people are now coming to the site in droves and signing up.
The key to making the dream returns of a lifetime in a situation like this is getting in early- getting in before the crowd realizes robust nature of the service and the substantial growth potential.
By the summer consumers will be telling all their friends about a web site that allowed them to ask for a discount at 5 different local dry cleaners, and how they got a 25% discount from the one that replied.
The platform is still in development, and won't be finalized and really robust for several months. There's going to be a major initiative to enroll businesses as subscribers.
This new service is what the Internet is all about. It's getting information and saving money and time quickly and efficiently. It's surprising no other company has launched a service that allows consumers to negotiate discounts with local merchants, but perhaps no other company has ever had access to the data that can marry both sides of the equation.
Today, IRYS only trades in the $.70 to $.80 range. There's massive upside as the company grows and the stock moves higher. This is the kind of stock investors want to accumulate before the word gets out.
I believe the stock has the potential to easily trade into the $1.50 to $2 range over the next 2 to 3 months, and a $5 target price is possible long term as iTracker's service gets widely adopted by consumers and merchants. The possiblity of 100% to 500% returns on this stock in 2012 are very real.
Get into this stock ahead the millions of other investors who will learn about over the coming days.
Full disclosure- I am a shareholder in this company, and I invested in a substantial number of shares with my own capital. You should view my ownership in shares of IRYS as a potential conflict of interest. Beyond that, I have no business relationship with IRYS. I simply believe we can make money on this idea.
I could be buying and/or selling shares at anytime, so keep that in mind. I'm hoping to see the stock well over $1 with plenty of volume in the next several weeks.