Beacons to Shine a Light on Consumers’ Murky Path to Purchase

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Lighthouse shines a beam of bright light into the night in Scheveningen, Netherlands

Retail activity this holiday season promises to be more omnichannel than ever, courtesy of the ever-present smartphone. That raises the stakes for retailers in terms of their preparedness and complicates their attribution metrics. With online-to-offline shopping dynamics in focus, this may be the long-awaited breakout year for beacon technology.

According to data from beacon proximity and location intelligence platform inMarket, beacons and proximity marketing programs are set to influence $7.5 billion in U.S. millennial spending this holiday season. That’s a huge figure, and it only applies to one segment of the shopping population, albeit a sizable demographic that is very attuned to in-store technology, so there’s a lot of discretionary spending at stake here for retailers that figure out the right messaging and offer cadence. In a study of U.S. consumers by beacon-powered mobile marketing firm Swirl, 86 percent of shoppers said they would spend more money with retailers that offer a more personalized and connected online, mobile, and in-store experience.

Deployments are growing a very rapid pace. There are now upwards of 3.3 million proximity sensors deployed globally by service providers in Unacast‘s network, according to the company’s Q3 2015 “Proxbook Report” on the state of the proximity industry. That’s up 280 percent from Q2. iBeacon remains the leading standard among Unacast’s partner network, supported by 96 percent of providers, with Google’s more recently introduced Eddystone format a distant second, supported by 25 percent, although growing at a faster rate.

Unacast just announced that 25 beacon providers, including Estimote, Signal 360, Mowingo, and Urban Airship, have now joined its PROX network, which connects beacons and other physical proximity sensors to online marketing platforms. Unacast said it’s signing more partners at the rate of ten per month, putting it on target to hit its goal of 100 partners by mid-2016. That will add new volumes of data about consumers’ in-store behavior and preferences and provide new opportunities for retailers to target shoppers as they’re browsing and retarget post-store visit.

A number of interrelated factors likely are driving beacon implementations. One, beacons enable retailers, restaurants, or any place-based business to deliver different types of information. Coupons and offers have been a typical beacon use case, but marketing service providers are beginning to think outside that box. For example, Yext’s Xone program, which we covered back in September, seems designed to help businesses cultivate both in-the-moment engagement and audiences that could later yield online or in-store purchases.

Two, the cost to deploy beacons is negligible (the true challenge and resource allocation lie in executing effective marketing campaigns that utilize in-store technology). Finally, as Estimote’s Steve Cheney told us back in September, beacons are a key piece for solving the attribution challenge in an omnichannel purchase path. “The online world that we’re used to has tons of available information,” he said, “but the physical world is this place we’re trying to navigate at all times, and your phone doesn’t have any context about it. Beacons are one way to solve that.”

Beacon-related opportunities go beyond retail and beyond the holiday season. In fact, based on average incremental spending driven with its proximity campaigns, inMarket found the top-five product categories to benefit from in-store proximity engagements in 2015 largely fell into the consumer packaged goods (CPG) category:

  1. Deli items
  2. Over-the-counter medication
  3. Wine and spirits
  4. Non-alcoholic beverages
  5. Snacks

This ranking may be due to the fact that consumers shop for grocery items with greater frequency than apparel or electronics.

Given the extent to which consumers in general and millennials in particular use their devices in-store as a shopping aid if not an outright shopping platform, the inMarket findings suggest most consumer categories will benefit from relevant information delivered in a timely fashion. xAd recently observed that in-store smartphone usage has quadrupled since 2013, with a growing percentage of shoppers looking to make a decision immediately

Retailer fears about showrooming seem to ebbing relative to last year (or retailers are simply resigned to the fact shoppers will be on their phones). There is growing evidence that the smartphone is more friend than foe. The xAd study, for example, indicated 60 percent of in-store shoppers convert in-store, vs. 21 percent on their smartphones and 14 percent later on the desktop. Swirl detected a similar pattern, finding consumers are more than twice as likely to buy in-store than online or on mobile.

Buying in a brick-and-mortar store comes with some inherent advantages for shopper and retailer alike. Consumers like to see items in the flesh before they buy (this was the top reason consumers in the Swirl study said they choose to shop in stores, cited by 47 percent of respondents) and they enjoy taking home their purchases immediately, something even the fastest same-day delivery services have yet to replicate. For their part, retailers, especially small businesses, can use the personal touch to facilitate consumers’ shopping experience. Increasingly, that personal touch is likely to be aided by the use of technology. The challenge and opportunity this holiday season will be to connect the two.

Noah Elkin is Street Fight’s managing editor.