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Thanks in large part to Apple’s inclusion of iBeacon technology in its iOS 7 software, in-store beacon systems are poised to be the shiny new thing of brick-and-mortar retail in 2014.
In short, the technology lets Apple smartphones and iPads communicate with one another or with tiny, battery-powered pieces of hardware commonly referred to as beacons. The beacons can broadcast content to nearby bluetooth-enabled phones.
Apple recently rolled it out in all of its U.S. stores, and other companies are currently doing the same in some grocery store chains.
Nomi, a New York City startup that has raised $10 million in venture capital, is now entering the fray. Nomi’s main focus up to now has been to give retail stores information on how customers were moving around their stores, answering questions like: What percentage of customers left shortly after entering? What area of the store is the most trafficked? How many first-time customers came in the door following an ad campaign? The company does this by anonymously tracking the movement of smartphones around stores over Wi-Fi signals.
Now Nomi is jumping on the beacon bandwagon, releasing a product-and-service combo that lets retailers, brands or other businesses push messages to customers’ phones after installing Nomi-manufactured beacons around their places of business. The beacons will use the iBeacon technology to communicate with iPhones but will also work on Android devices, CEO Marc Ferrentino said in an interview.
In a retail store, the beacons might be placed underneath a shelf or behind a counter. Or they might be placed inside some sort of product display, Ferrentino said. That last example would let customers tap the phone against the display and have information pop up on their phones, allowing a retailer the ability to broadcast product reviews or product information, for example. (Ferrentino says early conversations with customers indicate they are generally more interested in this tap-for-info functionality rather than pushing out unprompted messages to customer phones.)
“We have three verticals we focus in: Retail, restaurant and automotive,” he said. “But we also have venues, stadiums and amusement parks. This is not only about retail; this is about the physical world.”
What it’s also about, that no one is really mentioning among the hype? Boring old app downloads. Yep, that.
In order for these beacon indoor proximity systems to work and send messages to phones, the customer has to actually download the app of the retailer, brand, band, team or whatever kind of organization is using the system. Without the app, there’s nothing for the beacons to communicate with. This might seem obvious to those who know how the beacon systems work, but it’s still a pretty significant problem to anyone who doesn’t specialize in app download marketing.
Maybe this isn’t an issue if you’re one of the big boys that has developed a popular app — think Chipotle, Dunkin Donuts or Starbucks. But it’ll be a hurdle for most companies or other entities hoping to harness this technology.
So if you’re going to go to the trouble of installing one of these systems in your place of business, you better be prepared to make some investments in the app. It’s got to work well (still not a given in 2014). And then you’re going to have to bring some real value to the shopper or concertgoer or whomever you’re marketing to to get them to download it.
Ferrentino says he recognizes this friction point, but says that most people have been too caught up in the excitement over Apple’s entrance into the space to spend a lot of time thinking about it up to now.
“This is the next set of conversations we’ll have after the euphoria fades,” Ferrentino told Re/code. “Just having the hardware doesn’t do very much. The service behind it is the important part of the story.”