The Complete Picture - Beacon Technology

The Complete Picture - Beacon Technology 

Sometimes new technologies emerge like a fairytale coming to life. So many times we see cool technologies in sci-fi movies, that are way ahead of their time. We fancy them because they are cool, suggest a new way of doing things and seem to make our lives much easier. “Beacon” technology is one such example. A little more than a decade ago, we couldn’t expect it to be a real life thing.

Apple paved the way by putting the underlying Bluetooth Low Energy (BLE) technology in iPhone and iPads as early as 2010 and in Macs since 2012. And later released the iBeacon protocol as part of iOS 7 in the fall of 2013. Since then iBeacon has become a synonym of the beacon technology and is quite often used interchangeably. Although iBeacon protocol laid by Apple is considered as relatively more complete and widely deployable implementation (considering # of iOS devices), it is not the only one. Market now has more than a dozen players providing beacon solutions - beacon devices/nodes along with API implementation to communicate.

Here a snapshot of what Beacon technology has to offer:

Application of Beacon technology

• First wave of implementation includes In-store retail application. Customers simply install the mobile apps provided by the retail stores. Whenever a customer is in the range of any of the beacon nodes, they get recognised because of the installed app. This provides retailers with an opportunity to send customers highly contextual, hyper-local, meaningful messages on their smartphones . These messages could be targeted advertisements, special offers, location-based coupon redemption, notifications and reminders. e.g."Welcome! avail 20% discount on our Summer Collection. Please visit second floor."
• By applying data analytics algorithms efficient store shelf arrangements can be suggested to boost sales, as beacons also provide retailers with useful information about who uses their stores – eg, their age, gender and what they looked at.
• Identifying people: for example, passengers stuck in airport security by placing beacons at security lines in airports. Passengers' airline apps could identify passengers who are at risk of missing their flight. It can also be used to monitor people who risk missing connecting flights or whose gates have changed. Similar implementations can be done at concerts, trade/technology gatherings.
• All sorts of industries are looking at affixing beacons to pallets, carts, and other movable equipment to track their location on the go. Cargo containers, warehouse pallets, museum artwork, hospital patients and many more, all fall under the purview. Further, in-store navigation and vehicle unlocking are popular scenarios.
• Contactless payment systems such as PayPal Beacon.

The Challenges

• Due to lack of industrywide standard and presence of multiple vendors a problem that arises is that apps using a specific vendor's beacons APIs typically will work only with that vendor's beacons. So, if the vendor stops operations or support, changing the entire infrastructure could be costly.
• Other operating systems don't have the iBeacons protocol or APIs, and so far Google and Microsoft haven't developed an iBeacons-like API and protocol for their mobile platforms. To add to the problem, Apple hasn’t launched an iBeacon node till date.
• Security and privacy of the customers has always been a concern. Some customers worry that this technology is way too soon and intrusive.
• It becomes annoying if a customer is constantly bombarded with notification messages or offers by same or multiple vendors at the same time. Rather than increasing engagement, it could prove to be a complete turn-off. To gain adoption, it is essential to deliver a well thought customer experience.
• A unique challenge for the retailer is encouraging people to download and engage with the application for their store. This either increases the advertisement cost or limits the extent to which upsell to the customers can be achieved.
• In absence of a common platform that everybody can leverage, customers have to install applications for each of the stores/brands they choose engage with.
• Lack of efficient Beacon management tools makes it difficult to scale. And due to multiple devices and protocols available in the market it becomes difficult to provide an exhaustive Beacon management tool that works for all.

Conclusion

• Beacon technology will drive brand engagement, encourage new customers and help retailer upsell to their customers.
• Although it is too early to say to what extent Beacon technology can penetrate the market, but some researches suggest it is here to stay:
  • As suggested in a research from International Data Corportaion (IDC), retail IT spending will see large growth associated with IoT spending. The IoT IT market associated with in-store consumer digital offers will grow from $181 million in 2014 to $223 million in 2018.
  • IDC also predicts that the rise of IoT solutions will translate into billions of dollars of IT opportunity for vertical-solution focused vendors, estimating that the IoT will include 26 billion units installed by 2020.
  • An interesting research suggests that 65% of smartphone owners are likely to use beacons to access promotional coupons and 40% of smartphone owners say they are willing to be identified by their smartphones. No doubt, technology with such wide acceptance can work wonders for elevating customer engagement and brand loyalty.
• There is a need to create an engagement strategy to encourage customers to use the technology.
• Retailers have access to data about customers, such as location and buying behaviours, that can help increase personalisation. But customers should be able to choose to turn off the settings on their mobile and be able to disengage.

Written by

Shantanu Sharma