Is iBeacon ready for prime time retail? Three key considerations

When Apple launched the iBeacon protocol at its Worldwide Developers Conference this summer, it went largely unreported.

Amidst the fanfare of iOS 7, the new MacBook Air, and OS X Mavericks, details of Apple’s technology that allows mobile apps to recognize when a smartphone is near a Bluetooth Low Energy (BLE) broadcasting device were relatively sparse.

Now that attention has turned to the all-important holiday shopping season, however, in-store location technology is attracting a lot of attention, with many predicting that it will fundamentally transform the brick-and-mortar retail shopping experience. Apple is planning to launch iBeacon technology in its own retail stores and leading retailers Timberland, Kenneth Cole, and Alex and Ani have had indoor location beacons deployed for the past six months.

Even Major League Baseball is getting into the game, recently announcing plans to leverage iBeacon technology next season to deliver content to fans in their stadiums.

I am a strong believer in indoor location technology. In fact, I founded a company based on it. I believe that in-store beacons will radically change the shopping experience by enabling retailers to deliver personalized offers and content precisely when the shopper is most engaged and ready to spend.

Pilot programs at Timberland, Kenneth Cole, and Alex and Ani have produced over 75 percent response rates to in-store alerts and messages triggered by beacons. With all the excitement over iBeacon and micro-location sensing technologies, major retailers are taking notice, but before jumping on the beacon bandwagon, they would be wise to consider some important issues.

1) Security: Apple’s iBeacon protocol was developed as an open information-sharing standard that was designed to make discoverability and content distribution easy. In fact, one interesting element of the iBeacon technology is that anyone running iOS 7 can easily turn their own iPhone into an iBeacon and transmit a signal to other iPhones.

For many mobile apps, especially those designed to be used in public places (e.g. museum exhibits, tourist attractions, entertainment venues), open broadcasts like those delivered by iBeacons are perfect for delivering digital content to anyone with a beacon-sensitive app. For retail applications, however, this approach creates some specific issues that need to be carefully addressed.

Retailers have a critical need for data security and privacy (for both themselves and their customers) in everything they do, and this extends to in-store location broadcasting as well. iBeacon’s fundamentally open design means that any mobile app could be designed to pick up a retailer’s location broadcast, including apps developed by competitors or unscrupulous third party developers. These apps could use that broadcast information to locate and track a user, possibly without their permission.

Retailers won’t appreciate this intrusion, and as we’ve seen, consumers are very sensitive to such breaches of privacy. In fact, with unsecured location broadcasts, competitors could leverage location information to trigger alerts for discounts and promotions at their stores, effectively driving shoppers out of the retailer’s own store. To prevent the unauthorized use of location broadcasts, companies must add extra layers of data encryption and security to their indoor positioning beacons.

2)  Value:  Much of the excitement surrounding micro-location technology comes from the ability to deliver targeted content to consumers when they are in specific areas of a store. One of the key benefits of using BLE technology is that it can be used to automatically notify consumers when they are within range of a particular beacon, thus eliminating the need for them to proactively open a mobile app to search for relevant content. While BLE makes it easy to deliver content, it is still up to retailers to ensure that the content is relevant and valuable to the shopper. Recent research revealed that consumers are willing to share personal information with retailers as long as they receive value in return.

In fact, 83% of women would be willing to share their location information in return for some level of value offered by the retailer. As retailers roll out in-store marketing capabilities, they need to be thoughtful in delivering digital content and offers that enhance their brand and create real value in the shopping experience from the consumer’s perspective.

3) Scale: Like so many of Apple’s products, the iBeacon protocol offers incredible simplicity in its design. For large-scale retailers, however, managing in-store mobile marketing campaigns is far from simple. Creating, launching, and optimizing indoor location-based campaigns requires much more than just placing beacons in a store.

Effectively managing large-scale, location-based mobile marketing campaigns and the network of hundreds or thousands of beacons that support them requires enterprise-grade tools that were specifically designed for retailers. From targeting and campaign management to beacon administration and analytics, retailers would be well served to look for complete and fully integrated platform solutions. The good news is that these systems are now becoming available as standard end-to-end offerings rather than having to rely on piecemeal building blocks (or worse, vaporware).

Bluetooth Low Energy beacon technology is beginning to garner the attention it deserves. Indoor micro-location marketing is an innovation that will forever change the in-store shopping experience and the business impact will likely be huge. The train is moving, and savvy retailers are jumping on board.

Hilmi Ozguc is the CEO of Swirl, an in-store mobile marketing platform provider.