Will Beacon Technology Accelerate Shopper Engagement?

Late last month, two of technology’s more influential companies, Apple and PayPal/eBay, announced proximity communication products based on the Bluetooth 4.0 specification, also known as Bluetooth Low Energy (BLE) and Bluetooth Smart. These announcements bring both attention and momentum to the technology and set it up as a serious contender for near field communications (NFC).

These Bluetooth "beacons" can communicate with smartphones up to a range of 50 meters, creating both a channel for retailers to send more targeted messages to nearby shoppers and a way to determine shoppers’ in-store locations. PayPal’s Beacons are also capable of contactless payments through the use of an app.

The messages sent from beacons to shoppers can be product suggestions, special offers or any other kind of content, although current limitations won’t directly support the bandwidth intensive delivery of streaming video. They can also send different messages to shoppers who are at different distances from the beacons.

Additionally, as the beacons can help determine shopper locations, they can be used for in-store analytics, such as understanding shopper locations and movement in stores.

Compared to some other proximity communication technologies, beacons have some unique advantages. They are relatively inexpensive. One manufacturer currently sells three for $100. As with most technologies, prices are expected to drop.

As standalone devices, beacons can run on a watch battery for up to two years. These features lower the bar for retailers to test how they might use beacons to drive business.

Beacons, unlike NFC, do not require a shopper be within an inch or two of a tag to communicate. This requirement for NFC puts the burden on the shopper to take a specific and potentially unusual action, and is likely to severely limit how many shoppers will use it.

Also, Apple has not yet embraced NFC, inhibiting its universality. Conversely, all iPhone models since the 4s are equipped with Bluetooth 4.0. Google provided support in Android 4.3 although some manufacturers (Samsung and HTC) have already developed their own SDKs.

There is an increasing number of technologies available to retailers, but they are usually more expensive to deploy and maintain. WiFi triangulation and fingerprinting, for example, has higher setup costs and requires a significant infrastructure to support (including a WiFi network that many do not yet have in place).

A potential hurdle to mass acceptance of beacons is that smartphones will need to be set to accept incoming messages, although t’s likely that will become standard operating procedure. And, as always with communication technologies, this one may bring its own set of security concerns that need to be addressed.

BrainTrust

Discussion Questions

How do you see retailers using beacon technology? What challenges will need to be overcome for the technology to be widely accepted?

Poll

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David Dorf
David Dorf
10 years ago

While I’m not ready to declare BLE the winner, I do think they have some significant advantages over NFC, one of which is Apple’s endorsement. But payment is likely not the killer app. Instead, micro-location and in-store marketing will be the first apps. More here.

Ben Sprecher
Ben Sprecher
10 years ago

I see Bluetooth Low Energy and the related beacon-like technologies as “yes, and” not “either/or” with other technologies such as NFC, WiFi triangulation, QR codes, etc.

Each one should be used in different situations, based on its particular strengths and weaknesses. BLE is a great tool for in-store micro-location and the things that can enable, like targeted messaging and zero-interaction check-ins and payments. But lower bandwidth than NFC means that it may not be the right tool for delivering rich media and video about products.

Ask any mechanic: always make sure you have the right tool for the job.

Liz Crawford
Liz Crawford
10 years ago

This is a significant step forward in realizing the potential of geo-fencing at retail, and identifying shoppers before they are checking out (like shopper cards now). Also, of course, it opens the door to much more extensive research capabilities…which raises the question, “Who owns the data? Who can gain access? Information is money.

Ed Dunn
Ed Dunn
10 years ago

Bluetooth marketing has been around for nearly 15 years and was nothing short of controversial.

When Bluetooth was first introduced, the technology used to be open but hackers and aggressive markerters figured out how to send “marketing messages” to people mobile phones as they walked by a store. So phones began to lock down Bluetooth with a security code.

Bluetooth is now being used for earpiece and audio streaming as well as the upcoming iWatch and these resources are competing for the same Bluetooth protocol stack. Now Beacon want part of the stack.

Beacon may be overkill and may not be the best solution for retailing. A simple low-tech solution similiar to a Disney experience ride where a moving cart activates a switch that activates a presentation would accomplish the same task without the drain on a consumer mobile device battery.

Bill Davis
Bill Davis
10 years ago

Beacons will be used to identify where customers are in store so context relevant messaging/offers can be delivered to their phones, because brick & mortar retailers need to close the data gap with online.

The key to making this happen though is getting customers permission to deliver them messaging so something will have to be given to get, and with any new technology there will hurdles to be overcome.

And that being said, while iOS/Apple has 40.4% share here in the US, Android/Google is still the leader at almost 51.8%. As such, Google will have some influence in determining what smartphone location based enabling technologies prevail. While it’s way too early to dismiss NFC, we also shouldn’t forget that it’s based on RFID standards, so am sure the competition is just getting started.

Matthew Keylock
Matthew Keylock
10 years ago

I believe this kind of technology is big for retail.

As with many of these opportunities, there will likely be a set of retailers that seek to do this and control it themselves, and those that effectively sell it to the highest bidding 3rd party provider in exchange for royalties and data/insight.

I am of course a much bigger fan of the former approach than the latter. The plethora of competing third parties involved in retail technology and media is already creating enough confusion for customers. Although these companies may create a visible revenue stream for a retailer, there can also be a very invisible and detrimental impact on customer loyalty which is far greater.

I would encourage retailers to follow a very measured roll-out, making sure that the data and insights are fully integrated from this. New and conflicting islands of big data “variety” and insight are already causing headaches and confusion for many retailers.

Robert Heiblim
Robert Heiblim
10 years ago

There is little doubt there will be experimentation, and why not, as a large number of devices capable will be there unlike the current situation with NFC. As the article points out, there are plenty of deployment issues including costs and standards to name a couple. However, this may not be just about payment as these “beacons” can also offer product information or links to product pages enhancing store signage and promotion.

What I think we see is a race for method. There is no reason for Apple to king NFC at this point so they are looking around. The BT link will be valuable no matter what so low risk for them or other handset makers. Let’s see what retail deploys and how consumers respond.

Martin Mehalchin
Martin Mehalchin
10 years ago

Similar to what we are seeing with solutions that leverage in-store Wi-Fi, retailers will use Beacon technology to obtain in-store analytics (traffic, where are they going in the store, how long are they staying in a particular zone, etc.) and for presenting relevant offers and incentives to the consumer.

Because of the widespread use of Bluetooth for “hands-free” systems in cars, I suspect that a far higher percentage of smartphones entering a store will have Bluetooth turned on than those that have Wi-Fi enabled; so Beacon technology has a good chance of becoming the leading platform for wireless shopper engagement.

Peter J. Charness
Peter J. Charness
10 years ago

Low cost, easy to deploy, unobtrusive…. I think it’s a logical choice and probably will win out over competing technologies.

Ralph Jacobson
Ralph Jacobson
10 years ago

I think the advantages of beacon outweigh the disadvantages. However, global adoption is key if this will become the technology of choice for these as yet-to-be-defined uses for the industry. We need international retailers to embrace this and share its benefits to consumers.

Lee Kent
Lee Kent
10 years ago

What I love the most about this and the reason I believe retail will surely embrace it, is the low cost and ease of installation so they can start playing with it.

There is no reason at all that every retailer couldn’t start some pilots right away. See what has the most bang for the buck and what adds the most value to the shopping experience. I’m all in!

Kai Clarke
Kai Clarke
10 years ago

This is a solution looking for a problem. Retailers are not using all of the other technologies (and the data which they create) to their advantage. Now we want to introduce another one into a dangerously full mix? Hmmmmmm……