The Bull Case for Beacon

In the past year I’ve been hearing quite a bit about “Beacon” such as — Shopkick piloting its shopBeacon for in-store marketingPayPal using their own beacon for hands-free check-ins and payments, and Qualcomm pushing its Gimbal SDK for developers.

Beacons are devices that transmit a signal to determine the proximity of another device, like a shopper’s phone. The technology utilizes bluetooth low energy, which can transmit signals for years off a single battery and comes standard on most modern devices. Apple is currently using iBeacon (its their own standard of Beacon) to track and engage with shoppers in their retail stores, while other programmers and service providers are using Beacon as a platform to develop new applications. Use-cases include in-store marketing, customer relationship management, business intelligence, indoors navigation, guided tours (e.g. in a museum), and asset management.

I had the opportunity to attend MobileMonday’s Beacon event a few weeks ago with panelists from Qualcomm Retail Solutions, Walmart Labs, and more (the full list can be seen here). Here are a couple points that I found informative:

Business models around Beacon: Since Beacon is still in its early days, the panelists had varying opinions on who would actually pay for the hardware such as advertisers (e.g. the ‘cookie’ for the physical world), supplier subsidies (e.g. manufacturers keeping prices artificially low) and retailers. However, the prediction that resonated with me was that the service provider (e.g. in-store analytics providers) would be the primary customer.

This idea draws from existing precedents and parallels, and may be the answer to reducing adoption barriers. Startups like Shopkick (in-store marketing) and Brickstream (video hardware for analytics) are already working with major retailers and provide a complete solution (e.g. the applications as well as the devices). So while Macy’s may not care about the delivery mechanism to achieve ROI, third party service providers have a much larger incentive to research and deploy this technology.

I also believe that there will be certain retailers who will always want to maintain control of their data, pointing to private solutions that can be deployed in a closed ecosystem.

Beacon may not be just another transitioning technology: Mobile payment technologies already exist (e.g. NFC, QR codes), but the problem seems to be the lack of consumer adoption. This could be for a variety of reasons including effective range, convenience, and accessibility. Beacon, however, may differentiate due to better strategic positioning. For instance, iBeacon has the entire network of compatible iOS devices and retail stores. Not to mention Apple also has over 600M registered payment cards on its iTunes platform that could, theoretically, tie into a mobile payments network compatible with iBeacon. Although having a large user base may not be that important, since the NFC joint venture between Verizon, AT&T, and T-Mobile known as ISIS has yielding lackluster results. One panelist did note that NFC attempted to change an incredibly complex process, and could have made a stronger impact if the technology was used to take incremental steps via coupons, or loyalty cards. While beacon adoption clearly faces a lot of challenges, proponents have the opportunity to learn from the past mistakes of other technologies.

What’s next: As mentioned earlier, Beacon is still in an early state but appears promising. Large players like Apple, Qualcomm, and PayPal are leading the way, but there are also numerous other Beacon companies (e.g. Estimote, GeLo). It was also noted that there are currently as many as 40 Beacon manufacturers, so expect some consolidation in the space. Also, I would keep an eye out for the companies that can marry both the hardware and software aspects of Beacon as that will be key in creating quality data.

You can see the full panel discussion and presentation by Qualcomm Retail Solutions here.

On a final note, will shoppers even opt in to share this kind of data? Do shoppers want to be tracked by their every movement (knowingly)? I’ve seen a few articles touching on the subject, but would like to get your opinion. Feel free to leave a comment or get in touch —

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