Seven reasons retailers don’t need to be excited about iBeacons

The central problem for retail is not how to communicate with customers but what to say to them. iBeacons offer just one more option for the former but don’t make any contribution to solving the latter.

It’s certainly true that many retailers would like to be able to automatically identify customers (via their smartphones) as they enter and move around stores. This would allow them to offer personalized, location based communication. Ideally, these messages would be helpful for customers.

To do this, there needs to be a virtual connection made between the customer’s smartphone and the retailers’ systems.  There are a number of existing ways of doing this:

  • Customer scans a barcode
  • Customer taps an NFC tag
  • Customer checks in using a generic service like 4square or from within the retailer’s own app
  • Retailer geo fences customer using service from MNO
  • Retailer prompts customer to register for in-store WiFi

The latest idea is an iBeacon. Here’s a picture of one that’s part of a pilot installation at an Apple Store in New York. One vendor is offering them for around $40 each with another $10/month for analytics.

ibeacon

iBeacons are low-powered Bluetooth devices that talk to the store’s LAN. Shoppers who have enabled this on their smartphones (currently only iOS7 and the latest Android software) automatically connect when in proximity to the beacon. The retailer’s systems now know that you are in store and can push messages to the phone. The only catch is that the shopper needs to have downloaded an app that can “listen” for the iBeacons. This could be a generic loyalty app like Shopkick or the retailer’s own app.

Here’s why a lot of people are excited about iBeacons.

  1. It’s a push communication technology that doesn’t require customers to “check in.” This means that a greater proportion of shoppers are likely to receive whatever messages the retailer sends..
  2. It’s very short range so if you put multiple iBeacons in the store, you can send different messages depending on which department or aisle the customer is standing in. This is particularly attractive in grocery which is where vendors are pitching the technology.

US mobile loyalty start-up inMarket is funding the deployment of iBeacons in a number of large grocery stores – initially at American Eagle and Safeway. It has produced a helpful video that shows the vision.

Like many technology videos, these shoppers and scenarios make you wonder whether anybody involved in the making had ever visited a real supermarket on Saturday afternoon.

Here are a seven reasons not to be excited about iBeacons.

  • iBeacons don’t solve the central problem of what manner of intelligent dialogue a retailer’s systems might have with customers. If retailers had cracked this, we’d all be checking in to stores today using one of the other technologies listed above.

One commentator noted following a visit to New York: “I recently took a few laps around the Macy’s store in Manhattan, and all the app did was welcome me to the store each time I got near an entrance.”

  • If you’ve got compelling content, shoppers will be happy to check-in using geo-location. If you just want to say it’s 3 for 2 on beans, it’s cheaper and more flexible to put up a poster.
  • iBeacons are yet more hardware to maintain. They will take scarce LAN capacity and steal Wi-Fi bandwidth from other applications. They will need monitoring and a maintenance contract. They are battery powered and will need replacing annually.
  • Funding an iBeacon project is going to be difficult. It’s a cross-department problem. Marketing will get the benefit but will want IT to run the project and find the cash. A model is developing in the US in which generic app vendors (eg InMarket, Shopkick) bear the cost but that way lies madness. No self-respecting UK retailer will risk losing control of the in-store customer experience.
  • There’s actually no evidence that shoppers want to use smartphones to help them shop in supermarkets. Most of the time, shoppers know what they want and have visited the store often enough to know where to find it. They would like price comparisons and digital (not paper) coupons but you don’t need iBeacons to provide these.
  • Shoppers may be unwilling to leave their low-powered Bluetooth on. There are long-standing concerns around security and it’s yet another drain on the battery.
  • Marketers have a habit of abusing communication channels they see as “free”. We’ve seen this with email. There’s a limit to how many messages a shopper is likely to be willing to absorb before turning off. A couple of over-enthusiastic retailers could ruin a whole town for the technology.

UPDATE: in addition to the above, it seems that iBeacons are not secure. They just broadcast a number. This could be easily programmed into another iBeacon which could hijack the traffic. “It’s no different to a QR code,” I was told by a well-informed source.

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