Beacon Technology: What does it mean for retail stores?Posted by Kush Khandelwal on January 27, 2014
Beacon technology will potentially revolutionize the customer retail experience. It brings a new dimension to interaction between you and the customer. So what is Beacon Technology? Well, it works on Bluetooth low energy (BLE) â€“ which is used by a low frequency chip that is found in devices like mobile phones. These chips communicate with multiple Beacon devices to form a network.
iBeacon is a version of BLE software made specifically by Apple that was released with IOS version 7. In Appleâ€™s case, this software pushes notifications to users as they walk around an Apple Store. But this is just the beginning; soon, independent developers and companies will be coming up with software tailored specifically for the Retail niche.
Before we get to why this matters and whatâ€™s in it for you, letâ€™s quickly get out the way what some of you are thinkingâ€“ Whatâ€™s the difference between this new Beacon technology and that thing you read about awhile back…NFC?
Well, when looked at through the retail lens, NFC works only when your device is very close to the NFC tag to read the informationâ€“ 10 cm or less. Whereas beacon technology can work within 70 meters of a beacon device. No scanning necessary. In addition, this system can pinpoint where your customer is in the storeâ€“ microlocationâ€“ and relay specific information for them.
Each NFC tag costs approximately 10 cents due to it containing silicon which basically means 10 cents for every product. This represents a significant and recurring cost to small retailersâ€“ although it could make sense for small retailers with higher ticket items. On the other hand Beacon technology requires a one time significant investment in devices that broadcast information to smartphones. Estimote sells 3 devices for $100 which can be used in a 10-20 meter area. With time and competition, these devices will cost much less and will become more affordable.
Who are the big players?
Estimote: This is perhaps the best known of the players to use BLE for beacon technology. Their devices, which are in the testing phase, are small. Estimote integrates with many mobile platforms including iOS7.
PayPal: PayPal produces a USB device that is compatible with several POS systems: Vend, Leaf, Erply, Leapset, ShopKeep, Micros, Revel, and NCR. PayPal Beacon detects a shopper with the PayPal app on their smartphone (only if the shopper has enabled it), which then pulls up the customerâ€™s photo on the merchantâ€™s POS system for verification before the sale. If the shopper also enables automatic check-in, the complete experience and payment happens without even taking your phone out of your pocket.
Apple: Appleâ€™s incorporation of this technology will probably be what gives it the biggest boost. As mentioned before, itâ€™s IOS 7 software has the ibeacon technology built in. It is unclear if Apple itself will produce and sell the hardware for ibeacon technology but other manufacturersâ€™ products will be easily compatible with it.
So what does this mean for Retail?
Analytics: The BLE technology will give retailers a greater insight into customer purchases. For example, retailers will be able to tell how much time a customer spends in each part of the store â€“ and how they navigate the store. This is valuable information that can be used to optimize the in-store experience and increase revenues.
Loyalty: In the not so distant future, we will begin seeing this technology used to create powerful 1:1 offers for customersâ€“ on the spot (literally). This sort of customized targeting could, for example, use the customerâ€™s purchase history and favorited items to come up with product-specific offers when they approach that item on the shelf. We all know these types of offers would convert very well!
Customer Service: You can expect a revolution in customer service alright. Imagine that as soon as a customer walks in to the store, your sales staff will know their name, what product categories they shop most, the items they browsed last time but didnâ€™t purchase and what their spending habits are. Using this information, retail stores can create a better shopping experience and offer superior customer service.