BEACON TECHNOLOGY: WHAT S IN IT FOR RETAILERS

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1 BEACON TECHNOLOGY: WHAT S IN IT FOR RETAILERS Beacon Technology: What s in it for Retailers 1

2 INTRODUCTION As retailers embrace omnichannel engagement with consumers, the line between online and offline shopping is blurring. Today s always on, always connected shoppers want real-time, engaging, relevant shopping experiences at home, online, on the go and in the store everywhere, on any device. Beacons are one of the ways leading retailers are looking to enhance in-store experiences by connecting with customers through their mobile devices. Apple has already launched its own beacon technology called ibeacon to send push notifications to customers as they walk around its 254 U.S. Apple stores 1. Shopkick deployed the beacon technology in 100 American Eagle locations and two Macy s locations 2. Major League Baseball is also planning to introduce the ibeacon technology to 20 ballparks across the country to tailor fans experiences by delivering personalized content to them in stadiums 3. Beacon technology has the potential to revolutionize the custom retail experience. But it s new, it can be complicated, and it raises some significant security and privacy concerns. This paper is an introduction to the technology, its uses, risks and rewards. Source: Pew, January Beacon Technology: What s in it for Retailers 2

3 WHAT IS A BEACON? A beacon is a small transmitter that s designed to exchange data with mobile devices that come within its range. It s essentially an electronic tripwire that sets up a connection between a customer s mobile device and a backend server of some kind. Once the connection is made, you can accurately determine the customer s location in the store, and present personalized information or offers. Integration with payment systems can make it possible for customers to do self-checkout authorizing payment for items through their own mobile devices. HOW DOES IT WORK? Most beacons transmit signals using Wifi, Bluetooth Low Energy (BLE) or RFID. When a customer comes within range of a beacon, their mobile device can detect the beacon s signal and send a query. The beacon responds by sending back an invitation to the mobile device to establish communication. In a retail setting, the beacon might ask if the user wants to receive in-store notifications. If the user accepts, an app is installed and the store can use it to send special offers, coupons, or offer other services. The beacon uses signal strength to determine location, so offers can be relevant to your exact location in the store. Most new Android and Windows phones support BLE. Apple first put a BLE radio in the iphone 4S, and has since added the capability to the ipad, ipad mini, and ipod Touch Beacon Technology: What s in it for Retailers 3

4 BEACON USES... MOBILE PROXIMITY MARKETING As shoppers browse through stores, they can be sent messages from the beacons that are closest to them. For example, as a shopper enters the footwear section of a store, the local beacon could share shoe-related special offers, interesting facts, targeted promotions and more. As the customer moves to a different location, a new beacon in the area will alert the customer to offers on products they re now close to. Using mobile beacon technology, customers can be contacted and kept informed while in-store to enrich their experience. Over 45 Australian shopping centers and retail precincts are set to beef up their proximity marketing with Apple s ibeacon system 5. inmarket, an in-store marketing platform, deployed ibeacon Proximity Beacons in more than 200 grocery stores including Safeway and Giant Eagle locations in Seattle, San Francisco, and Cleveland under the Mobile-to-Mortar program. MICRO-LOCATION & USER TARGETING Retailers can use micro-location information in a variety of ways. In some instances a retailer may just want to know traffic patterns in the store. When customers enter the store, how many turn left and how many turn right? The information can be used to determine the best placement for end-of-aisle displays and promotions. Knowing a customer s exact location also enables the retailer to deliver information that is relevant to them at that precise moment and context. This targeting can go well beyond simple proximity marketing. By tracking a consumer s behavior, interests and location patterns within a store, we can obtain a clearer picture of the individual. Not only do we know what they purchase, but we know what interests them judging by how long they stay in a section, and we can identify the factors triggering a purchase. The information collected can then be analyzed for a truly personalized, relevant and engaging in-store experience. INDOOR MAPPING With micro-location targeting, you can help customers navigate big stores and shopping centers. A beacon at the entrance to a large department store could welcome the customer, direct them to the department they re interested in, and then help them find a register when it s time to check out. In a shopping mall, beacons and mobile apps could be a huge improvement over the few, scattered, hard-to-find mall maps, and give retailers opportunities to push special offers and notifications. Walmart recently found that, on average, its customers spend more than 20 minutes in its stores each time they visit. This is great. But the study also revealed that most of the time they leave without getting all the items on their shopping lists because they can t find them 6. Walmart now has a mobile app that provides indoor search and navigation to help recoup those lost sales. Macy s, Walgreens, and Home Depot have introduced similar solutions Beacon Technology: What s in it for Retailers 4

5 BEACON USES... (CONTINUED) MOBILE HANDS-FREE PAYMENTS 73% of shoppers think long checkout lines are the most annoying aspect of in-store shopping 7 (Really? Only 73%?). PayPal s Beacon is a Bluetooth Low Energy USB module for stores and other businesses that allows consumers to pay hands-free. Users have to install the PayPal app on their mobile device, set up their preferences for automatic check-out and approve being charged for any goods they purchase or consume. Once the customer enters their preferred business, a vibration notifies them that they ve been checked in and their photo appears on the merchant s POS. Verbal confirmation of payment would complete the transaction, and a receipt is automatically sent by . TRACKING & BUSINESS INTELLIGENCE The most controversial but also the most common use case of Wifi beacons today is using the data collected by the Wifi hotspots for business intelligence in retail. Without users giving permission, the owner of the Wifi nodes can use them to answer questions like: How many people walk by a given location each day? What are the busiest hours throughout the day/week? How long is the average person spending inside the venue/location? Where in the store are people spending most of their time? This can be used for everything from choosing locations and planning store layouts to understanding who the customers are and using those insights to come up with new sales strategies. With user opt-in, the data becomes even more accurate and valuable. Best Buy rewards its customers with points for walking into the store and then gives special deals to customers shopping via the ShopKick app. Each of its stores is verified by a unique beacon. As the customer scans the bar code at the store, as guided by the app, s/he earns points, which can be redeemed for real money rewards. Not only does this help in increasing the foot traffic within the store and gain higher ROI on the marketing spend, but also it helps the brand to track a shopper s buying journey from browsing and walk-ins to considerations and purchase Beacon Technology: What s in it for Retailers 5

6 HOW DOES IBEACON COMPARE TO OTHER TECHNOLOGIES? We ve been comparing technologies for some time now and although we believe ibeacons have the potential to be great, we don t think there is a clear winner yet. *Cisco, Navizon, Meridian, KAIST, WirelessWerx, GISi Indoors, Euclid THE MAIN TECHNICAL APPROACHES There are three basic approaches independent of the technology (Wifi or BLE): DEVICE BASED: This is the most common approach for an outdoor location (or to at least locate the building you re in) as it can easily be implemented without permission/support from the network. INFRASTRUCTURE BASED: This uses e.g. the existing Wifi infrastructure (if supported) or dedicated Wifi or Bluetooth nodes. HYBRID (DEVICE & INFRASTRUCTURE): Combines all available location information (Wifi, Bluetooth, GPS, sensors, etc.). There is no one size fits all. The requirements for indoor positioning and customer engagement need to be assessed in each case before a recommendation can be given. Even if BLE beacons are the hottest trend right now, Wifi can often fulfill the same requirements cheaper and more easily. Beacon Technology: What s in it for Retailers 6

7 CHALLENGES & RISKS COMPLEXITY Retailers should be careful not to think of this as a stick it on the wall and it works scenario. Stores need to be surveyed. Beacons need to be installed maybe a lot of them, depending on your store. Mobile apps need to be built to capture the right information and present offers. These must be integrated with back end systems. And to really be compelling, analytics need to be in place to understand captured data and drive personalized offers. It s not a small investment. It s best to proceed with caution. Consider starting with beacons to understand traffic patterns and shopping behavior first, and then move to proximity marketing. PRIVACY Customers have to really want to opt in before they re tracked by beacons. They have to download an app, turn Bluetooth on, turn on location services, and give permission. And research seems to support the notion that consumers are willing to give up all sorts of private information if there s a tangible benefit (finding your way in the mall or superstore, getting discounts, etc.). Still, privacy advocates raise legitimate questions about the fact that this is a new kind of data that s being collected and there are no commonly accepted guidelines about how it s used. We have yet to see what could be done with detailed location information in the wrong hands. SECURITY Recent testing by Mobiquity Labs 9 indicates that beacons are fairly easy to clone meaning that unique identifiers can be linked to malicious hardware which could be used to collect users information or to accomplish other mischief. This is of particular concern when it comes to applications where payment information is being exchanged. SUPPLIERS OF BEACONS Since Apple announced ibeacon, hundreds of companies have positioned themselves as Beacon and indoor location and marketing providers. Here are just a few relevant industry players: BLE BEACONS: Entimote, Qualcomm, Roximity and indoor.rs WIFI POSITIONING AND TRACKING: Cisco, Ariba (Meridian), Navizon and Infsoft PROPRIETARY WIFI NODES: knock.io WIFI LOCATION DATABASES: Skyhook Wireless and AlterGeo 9 Beacon Technology: What s in it for Retailers 7

8 CONCLUSION Beacons are emerging as useful tools retailers can use to push relevant, targeted offers to shoppers, and create more engaging shopping experiences. But the technology is new, and not without its challenges and risks. By all means, experiment, but take care. If you set up a simple pilot for proximity marketing, for example, make sure you re not pushing the same offer to a shopper each time they pass through the same area. You don t want your new experiment to annoy customers. Beacons can solve real problems: helping shoppers find what they re looking for, getting great offers, even self-checkout. As long as you re delivering real value customers can be pretty forgiving, and are likely to appreciate your efforts. Beacon Technology: What s in it for Retailers 8

9 ABOUT DMI DMI One Rock Spring Plaza 6550 Rock Spring Dr. Bethesda, MD DMInc.com DMI Sales Team U.S. Sales: Int l Sales: sales@dminc.com DMI IS THE WORLD S LEADING PROVIDER OF ENTERPRISE MOBILITY SERVICES AND SOLUTIONS. We build enterprise class mobile solutions that generate results for the world s top brands and businesses. Our mobile solutions combine the awardwinning user experience design that has made us one of the top creators of consumer apps, with the deep middleware and engineering expertise that we ve used to build and manage enterprise applications for the most demanding IT departments in the world. DMI mobility solutions improve business processes, tap new revenue streams, build customer loyalty, and increase employee productivity. And we offer a full range of Managed Services to securely set up, configure, and manage your mobile devices. THE PROOF We ve built more than 400 mobile apps in the past 12 months alone for more than 150 leading organizations like Bacardi, Toyota, Vodafone, The National Guard, Novartis, Unilever and Universal Studios. We offer brilliant creative and user experience: Our mobile app development group was named the Best Branded App Developer at the 2013 Mobile Entertainment Awards. We have 750,000 devices under management for 100+ clients, including many Fortune 500 companies like Johnson & Johnson, Sears, The Associated Press, Allergan, and more. We provide 24 x 7 x 365 mobile service support. DMI is the one call our customers need to make to resolve any issue devices, apps, infrastructure, even carriers. We offer a full range of security options that include Federal-grade hardware-based security, two-factor authentication, secure container, and sophisticated encryption solutions. With our expertise and economies of scale, we can provide mobility management at a higher service level and on average 20%-40% lower cost than most companies can do on their own. Pervasive excellence is our commitment to quality service. DMI is one of only a handful of companies that is CMMI L3 appraised for both application development and services, as well as ISO 9001:2008, ISO 27001:2005, and ISO :2011 certified. Our average D&B Open Ratings performance score from our clients is 95/100. We deliver secure mobile and ecommerce solutions for more than 50 leading consumer and business brands. Beacon Technology: What s in it for Retailers 9