A relatively small e-commerce start-up Tagtile, co-founded by two IIT graduates, was acquired by Facebook last week.

An innovative start-up founded by two IIT alumni in the U.S. is the latest acquisition of the social networking giant Facebook.

Tagtile, an e-commerce start-up with a focus on helping retailers build customer loyalty, was founded by Soham Mazumdar and Abheek Anand in March, last year. And for a company that launched its pilot project across some stores in San Francisco and other parts of the U.S. as early as November last, recognition has come knocking at their door real fast.

The acquisition, coming close on the heels of the big Instagram takeover, has received relatively less coverage. But make no mistake, the big technology websites, of the likes of U.K.'s The Register, are saying it could herald new avenues in e-commerce in the mobile space for Facebook.

An irony?

The company's co-founder Abheek Anand, currently in New Delhi, says there could have been no better partner than Facebook for Tagtile. And while the obvious benefits are there — the ‘undisclosed' sum Facebook paid and the fact that Abheek and Soham are now Facebook employees — there is also some irony in the acquisition of a company that was started to focus on customer loyalty. Its current service is being “phased out” now, ostensibly to be re-launched in a new avatar with Facebook.

The story of Tagtile, Abheek said in a telephonic interview to The Hindu, would be traced back to 2004, when he and Soham went to work in the Bay Area in the U.S. Soham was a graduate from IIT-Kanpur and Abheek from IIT-Delhi. They had known each other for a long time and wanted to start their own company. Even if it meant quitting secure jobs.

The Tagtile idea took shape last year when Soham was an engineer with Google and Abheek was working for cloud computing start-up Engine Yard. “We decided to work on a solution that combined the ‘tap the phone' technology that was gaining some traction and use it in a smartphone shopping scenario,” says Abheek.

The ‘tap the phone' technology, Abheek is talking about, is the ‘near-field communications' (NFC) technology Google has been working on for a few years. Smartphones that have the NFC chips will be able to communicate with other NFC devices, such as shopping check-out counters, and can be used instead of credit cards. But smartphones that have NFC chips are way costlier than the average mobile phones, and hence this technology has a cost factor.

“The technology was always the ‘two years-away' phenomenon. It was so a few years ago and is even now so,” says Abheek. His reasoning is that NFC has a very small penetration. Smartphone users often buy their devices on contract from service providers in the West, and for all practical purposes, a breakthrough in NFC is still some time away.

So what Abheek and Mazumdar developed was an alternative that worked similar to NFC but without the bells and whistles. The Tagtile consists of both the software service and a hardware device — a cube — that stores need to put up at their cash counters. Mobile phone users who have the Tagtile App on their phones can ‘tag' a purchase on the cube. And there are rewards for a specific number of tags, say eight tags of coffee purchased at a café could entitle the buyer to a free coffee.

Instead of using the radio waves communications model of NFC, the Tagtile communicates to the user's smartphone through a combination of technologies already available in most smartphones, including low-frequency sounds. This makes the technology accessible straightaway to millions of mobile phone users. Abheek and Soham claim to have patented the technology.

There are advantages in the system for retailers too. With it, shops will be able to keep track of their customers, something that other, more ‘static' coupon solutions do not do. It takes customer loyalty couponing a step further, according to Abheek, and also makes it a social activity.

While Abheek is under obligation not to disclose any more details about the Facebook deal, there is no stopping us from speculating that pretty soon there could be some kind of social e-commerce-related solution from Facebook. And maybe just some of us will realise there was an Indian story in that.

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