Recreating The In-Store Shopping Experience

Earlier this year PayPal announced that it is teaming up with astronauts to create an intergalactic currency for commercial space travelers. “One thing is clear — we won’t be using cash in space,” PayPal President David Marcus, a scheduled speaker at LeWeb, said at the time. “PayPal has already pushed payments into the Internet, onto phones and across terrestrial borders. We look forward to pushing payments from our world to the next, and beyond.”

While the sky is no longer the limit for its aspirations, PayPal will be demonstrating a far more down-to-earth vision of the future of retail based around a Bluetooth low-energy technology called Beacon at LeWeb, an annual Internet conference in Paris.

PayPal is promising shoppers that by next year they will be able to pay at stores hands-free, thanks to Beacon, an add-on technology for merchants based on Bluetooth, which enables connected devices to communicate with each other seamlessly, while keeping the energy consumed low. (See the photo of Beacon, which comes with an adapter that allows it to plug into regular wall sockets in stores.) For consumers who opt in, simply walking into a store will trigger a vibration or sound to confirm a successful check-in within milliseconds; their photo will then appear on the screen of the point-of-sale system so that they can be greeted by name. Paying will only require a verbal confirmation: no wallet, no credit card, and no requirement to even touch your phone.

People are pretty satisfied with paying by credit card, so there is little motivation for consumers or merchants to move to a different payment mechanism. The challenge is to find something that is easier than the current system to entice people to switch to a new way of doing things. PayPal thinks the company may have cracked it with Beacon, which requires “doing nothing,” says John Lunn, global director of PayPal developer relations.(Lunn is pictured on Informilo’s home page.)“It is a lot easier and the consumer is still in control,” he says.

The motivation for merchants is clear. Today legacy cash register systems are not Internet-connected, putting bricks and mortar stores at a competitive disadvantage. “When you shop online a site knows every detail about you: who you are, where you live, where items are shipped to, what items you look at on their site and where you go after you leave,” says Lunn. “In a real-world store you could enter every day for a week and they wouldn’t know. Real-world stores have to get access to data about consumers if they are ever going to compete with online.”

As the lines between online and offline blur, shopkeepers need to demonstrate their value-add. For example, say you are shopping for a new pair of jeans online. At the last minute you decide not to buy because you are not sure how they will fit. Once Beacon comes along a shopkeeper could be alerted to the fact that you were looking at jeans online last night when you walk into the store and the shopkeeper could immediately offer to help you find that same pair — and your size — and escort you to the fitting room. “Beacon will allow stores to offer customers the experience their grandmother would have had,” says Lunn. “A shopkeeper at her local store would have known what kind of bread and flowers she liked and offered a customized, personalized experience. It should be as easy as shopping online but with a human touch. Otherwise what is the point of going to the store when you can do everything on the Internet?”

At LeWeb, PayPal will be demoing a futuristic view of bricks and mortar stores. Personal shoppers will demonstrate Beacon’s customer relationship management abilities, then allow LeWeb attendees to select different t-shirts and use virtual try-on mirrors to test the fit. Then, using a direct-to-garment printing machine, the selected t-shirt will be manufactured on the stand in real time, says Lunn, who will help man the stand.

The demonstration on PayPal’s stand takes into account the notion of pop-up stores, which are expected to become more prevalent. Already e-commerce sites like Fab have opened bricks and mortar stores with very little stock. The idea is to give people the chance to see the designs up close and then order them in the right size or quantity and have them delivered to their home or a destination of their choosing within the hour.

PayPal is prepared for such a future. In October eBay announced an agreement to acquire Shutl, the UK-based marketplace that uses a network of couriers to deliver local goods within an hour of an online purchase. The Shutl service will be extended to offer the successful “eBay Now” experience. This service, currently live in the U.S., allows users to have items shipped to their current GPS locations.

PayPal is also partnering with orderbird, a Berlin start-up that offers an iPad-based point-of-sale service to merchants, for a check-in service that will recognize users when they walk in to participating businesses, and then, using those customer profiles, to let them pay for goods and services automatically from their PayPal accounts.

And, in keeping with its stepped-up efforts to work with developers, PayPal is counting on independent coders to help it figure out what kind of apps to build on top of the Beacon platform.

In this new omni-channel world, merchandise and promotions will not only be consistent across all retail channels, adapting to consumers who want to use different channels simultaneously; the offers will be personalized according to a specific consumer’s purchase patterns, social network affinities, website visits, loyalty programs, and other data-mining techniques.

But we’re not there yet. Before we figure out how to get money to Mars and send it back to earth companies like PayPal need to first help real-world stores better serve their existing customers.

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