November 4th, 2013 | 7 MIN READ

Beacons and the Age of Micro-Location Context

Written by author_profile_images Linda Bustos

Linda is an ecommerce industry analyst and consultant specializing in conversion optimization and digital transformation.

By now you may have heard the buzz about beacons, with PayPal, Apple, Google, Nokia and Estimote sparking headlines about their potential applications for retailers (we're not talking about Facebook Beacon here).

While each of these players' beacon offerings differ, they all involve BLE (Bluetooth Low Energy) technology, and may all play an important role in the age of micro-location context.

PayPal Beacon

PayPal Beacon is a USB device that retailers can pair with compatible POS systems and use in-store to support hands-free payments for anyone with the PayPal app installed on their phone. The hardware detects when a shopper has the app (provided Bluetooth is on), and to verify one's identity, a picture of the customer appears on the POS. All that's required to verify the purchase is verbal consent. It's completely opt-in for customers, who can control which retailers can tap their app and process orders.

While many consumers will balk and say they'll never use this, plastic will eventually be phased out, with all payment methods stored digitally. The specific technology used may be BLE or something else, but hands-free payments is certainly where the puck is going.

PayPal is set to pilot the device with select retailers, and that want to start using it can sign up to be notified when it's available.

Apple iBeacon

Similar but different, iBeacon also uses BLE and has the potential to support mobile payments by linking to iTunes accounts. But unlike PayPal, iBeacon is also location-aware, giving retailers the ability to recognize any device running iOS 7 and pinpoint where in the store, and do so more accurately and reliably than wifi and GPS.

Naturally, folks are humming about personalized push promotions and other marketing messages, but it has far deeper value to retailers (just keep reading), and could truly transform in-store experiences as we know them.

So far, Major League Baseball's on board, its At the Ballpark app guides fans to their seats, pushes concession deals and other offers. American Eagle also promises to have iBeacons in store by the holiday season.


Estimote is a third-party device that works with BLE, which can adhere to any flat surface inside a store, communicating with smartphone apps as near as 4 inches to as far as 30 ft away.

Though Apple's getting all the buzz, Google and Nokia have also announced native support for BLE is in or is coming to their mobile operating systems and devices, and players like Estimote will be able to speak to any native app that leverages its API.

Sensors can be pre-ordered for $99 from Estimote.

How Beacons could usher in the next generation of shopping experiences

Digital loyalty

It's about time that plastic loyalty cards transition to mobile apps. Not only do I hate rifling through my wallet to locate them (or they're lying on a table at home) -- they truly are dumb plastic.

Paired with beacons, loyalty marketing could really shine. For example, my local drugstore sends out weekly emails with personalized offers of the week (sale or bonus points for card holders). I often don't open the emails, or forget what the specials are. With a smart loyalty app that speaks Beacon, I could view and select all personalized offers as I enter the store, and be guided to them if I can't find their aisle.

Of course, there are many other possible applications within digital loyalty here.

App features and functionality

Many mobile retail apps are mere copies of the Web storefront - they contain no context. Rather than repackaging the catalog into an app, developers could pack new features in retail apps that tie together in-app and in-store channels more effectively, even personalizing based on behaviors that span contexts. Customers could "tag" items in the brick and mortar store to add to a favorites list within an app, or customers could purchase in-app and pick up in store, beacon sensors confirming identity without the customer even removing her phone from her purse.

Sales clerks of the future

Imagine a world where apps talk to apps via BLE, and a device like Estimote reads loyalty card and other customer information, relaying pieces of it to associates on the floor via Google Glass apps.

Sales associates could be clued-in to what styles a customer likes and has bought before, what's on her wish list, what she's Pinned, if she tends to beeline to the sales rack, and generally how many items she buys per visit. This can inform her approach to the customer. When greeting, a salesperson could say, "Hi! Just to let you know, we've added a ton of new items to our sale section this week" to one customer, and "Hi! Just to let you know, we just got a new shipment of skinny jeans, would you like me to show you?" to another.

Customer service of the future

I used to sell shoes. Here's how the in-store experience worked (and still does). Customer walked in, picked up a shoe (or ten). Handed them to me. I would ask her size, and mosey to the back room, where all the shoes were stacked on two sets of rolling shelves. One sales gal could be in either side of the stock shelves at a given time. If someone was in there, you stood and waited your turn. Then one by one, you sought out each shoe by style number (and if someone had re-shifted the stock, you weren't sure if that style was in the same spot as the day before). If it was a busy day, and you were serving multiple customers, you could be in the back for a good 10 minutes before returning to the customer.

I think of how much time could have been saved if the customer could pick up a shoe, scan the price tag with her phone, the app intelligently knows what size she needs, and can let her know whether the shoe is in stock.

Similarly, when styles and sizes were sold out, we'd have to jump on the phone and "call around." On a busy Saturday, this simply couldn't be done. We'd have to write down the customer's name and try calling during quiet periods, hoping to locate a pair. Then we'd have to call the customer, and usually leave them a message, and hope they come to pick them up when they finally are couriered in. Of course, today's clerks likely have Internet access in-store and can locate stock much quicker, but imagine if that functionality was integrated within a customer's app, and the customer could check stock availability across the chain and the Web without asking a sales associate.

Merchandising optimization

We all know loyalty cards are as much about collecting consumer data for more profitable and even more personalized marketing as they are about repeat business. If loyalty apps replace cards, and these apps can communicate with in-store sensors, marketers and merchandisers could optimize store layouts and product placement based on navigational patterns, how long customers linger in particular sections, how many visits they make before in-store purchase, how often apps are used while in-store, and so on. This data can also be tied back into ecommerce systems, optimizing home page merchandising zones on desktop and mobile to match customer behavior city-by-city, and even neighborhood-by-neighborhood.

Sales assistants of the future

Apps can and will act like sales assistants in the future. Google Now, contextual search, Siri and Google Glass are all indications of that - machines will be able to answer our questions instantly and hands-free. Rather than ask sales associates, customers can ask questions directly of Glass, using apps developed by the retailer, Google itself, or third parties that figure out how to index and deliver meaningful content in context relevant to shopping queries.

It will be interesting to watch who moves first, and what early adopters build using beacons and BLE technology in retail. We'll keep you posted.

We'll be in San Carlo, California this week to celebrate the launch of Robert Scoble and Shel Israel's Age of Context: Mobile, Sensors, Data and the Future of Privacy , well worth a read if you want to stay up to speed with wearable tech and how it is poised to transform the way we connect with consumers.

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