E-commerce goes omni-channel (part 2)NFC, LFC, Beacons, WiFi tracking, MEMS and LEDs

E-commerce goes omni-channel (part 2)

In my last post, I talked about the development of technologies that allow retailers to create an online-experience in their brick and mortar stores in order to stand up to the online competition. NFC, LFC, Beacons, WiFi tracking, MEMS and LEDs are currently named the most-up-to-date tracking technologies, and I will give you a brief description of what they do:

Near field communication (NFC)

Using NFC, data can be transmitted between senders and smartphones wirelessly over a short distance (a few centimeters), but the latter must be equipped with the appropriate chip. While this is the case with many Android devices, Apple (as an important driver of innovation) does not support this technology.

Currently, NFC is used commercially almost exclusively for mobile payment, where it has the lead. In this case, payments up to 25€ can be handled completely without contact using NFC-enabled devices or cards. It is also possible to track products or use it for mobile marketing, for instance by linking payments to the customer's bonus account. In a certain - albeit limited – way, it is also possible to gather information about the customer's behavior in order to optimize the multi-channel shopping experience for the customer.

However, the distribution seems to be stagnating. For one thing, many retailers shy away from the costly acquisition of mobile payment reading devices, on the other hand, the limited transmission distance makes true in-store tracking nearly impossible. Furthermore, the data is not encrypted during transmission, thus creating concerns for the customer. Overall, the technology has not really been embraced by the customers - and the successors are already being launched: Accessories manufacturers are relying increasingly on Bluetooth 4.0 (see 3.3.).

Light field communication (LFC)

LFC, developed by ByteLight, uses invisible LED wavelengths, which can be read by smartphone cameras. An app is required in order to receive this LFC, but no special receiver technology is necessary, the smartphone camera is fully sufficient.

It is possible to use this technology for mobile payments or to support a bonus program. Whether or not this technology will be embraced by the customer remains questionable.

Beacons

Because there is a more powerful technology, which is available, supported by Apple (devices) and above all, offers a much broader spectrum of applications:  Beacons are small hardware buttons that implement Bluetooth low-energy wireless technology (BLE, Bluetooth 4.0).  These Bluetooth-powered buttons require very little energy, yet are able to deliver information to mobile devices from at least 30 meters away, meaning that it is easy to cover a whole room with one net.  The iBeacons from Apple are also compatible with Android devices; however customers do need to have the corresponding app.

However, since the technology is also suitable for home use, and since almost every modern smartphone is equipped with Bluetooth, Beacons have a good chance of being embraced by customers.  These advantages outweigh the major disadvantage in comparison to NFCs:  Beacons are significantly more expensive than NFC tags, which costs less than a dollar per unit.

Due to their properties and performance, Beacons serve as interfaces between the virtual and real world, allowing for a significant improvement of the shopping experience. Some possible uses are:

  • Detailed in-store navigation – directions to a desired product
  • In-store analytics: the collection of customer-related data like where did they go, where did they stop, how long did they stay there, etc. for optimization purposes
  • Cross-channel attribution: a simple measurement of the influence of mobile advertising on shopping behavior in local stores
  • Offers that greatly benefit the customers:
    • Recommendation of interesting products
    • Recognize and reward especially loyal customers
    • Cashless payments using Paypal at a point-of-sale
    • Improvement of personal advertising

Above all, the retailer can provide the customer with advertising and offer him great deals in order to disrupt the “inform offline – buy from the competition online” cycle. Plus comprehensive customer behavior data can be collected over longer time-periods, which can help to significantly increase customer retention.

Versatile: Possible applications for Beacons

  • Retail: product information, promotions (discounts, coupons etc.), Tracking/data collection to increase customer loyalty
  • Museums/exhibits, urban marketing/tourism: visitor information, visitor orientation/guided tours, information about objects/attractions/exhibits
  • Trade-fairs and major events: guide-system/visitor orientation
  • Airports, hospitals, malls: visitor information/guide-system, indoor-location (without GPS)
  • Gastronomy: daily offers
  • Buildings: control/automation of heating, lighting and blind/shutter  positioning, also at home

Apple is already working on another development for iBeacons: customers in the future will be able to pay using TouchID, which allows customers to pay using the credit card data stored in their iTunes account.

WiFi tracking

For the purpose of simply observing customers, WiFi tracking is the most commonly used technology, which can determine the location of the customer as long as the WiFi is activated on their smartphone.

MEMS

It is possible to create an exact heat map of the customer's activities with the help of the MEM-chips located in the customer's smartphone.

LEDs

The grid layout of the LED lighting in the store serves as a kind of tracking map to detect customer activity via a smartphone app.

Where is this journey headed and how will these technologies find their way into the realm of retail in the future? More about that in the next blog.

Dr. Jochen Wiechen

CEO Intershop Communications

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