The future of retail?
By Felicity Francis
A new way to purchase products is coming to market, and may provide the perfect solution to both in store and online woes
"I think it’s inevitable that this technology will be in all office supply stores," says Andrew Paradise, CEO of AisleBuyer. And if the technology that he’s offering turns out to be as good as it sounds, he may well be right.
To put it simply, the AisleBuyer application for smartphones is a way to marry the best of purchasing online with the benefits of buying in store. By taking instant photos of barcodes, it creates, in Paradise’s words, "an interactive world inside the store" that allows consumers to simultaneously compare products, pay for selected items and order items online that are out of stock. The application is currently being trialled at toy and baby gear retailer Magic Beans and will soon be rolled out across the USA.
"If you think about it, there are missing elements from each experience," he says. "When you’re in store you get the wonderful tactile experience, being able to touch and look at products in person. When you’re at home you get the research capabilities and the speed and ease of online shopping. What I’m really excited about is combining the best of those experiences into one place and I think it’s going to be a wonderful experience for consumers everywhere."
The evidence behind the idea
The concept of AisleBuyer sprang from a number of consumer trends reported during the last few years. Firstly, according to research conducted by the IHL Group, transactions at self-service kiosks in North America, such as ticketing kiosks, check-in kiosks and food ordering, will grow to more than $1.6 trillion by 2013.
A second noticeable trend is that of abandonment. A study published by Motorola showed that during the 2009 holiday season 66.5 percent of shoppers abandoned a purchase. The primary reason for this given by consumers who participated in the study was that the product was out of stock, followed by the product being too expensive. Other reasons included that the checkout was too long, that information or price was not easily found on the shelf label and that a sales associate was not available. The study also found that more than half of consumers used mobile phones for in-store shopping, carrying out multi-channel comparisons by looking at peer feedback and product information.
"We really built AisleBuyer to deal with all of the top abandonment issues," says Paradise. "One of the really shocking statistics for me was that more than 20 percent of abandonment happens because a product is out of stock. People want to buy an item; they come into the store but the store has run out and they just go home. I think AisleBuyer deals with all these different problems by allowing a consumer to walk into an aisle, and if the product is out of stock zap the shelf sticker and order it on his or her phone. You can zap items as you wander around the store and pay as you go so you can skip the line.
"On top of that, the application has the ability to give detailed product information and specifications, so retailers can provide a kind of virtual sales associate with an amazing amount of information in the aisle. All these things are going to help with abandonment."
The technology that Paradise used to deploy AisleBuyer is not groundbreaking. Any phone or camera can take a photo of a barcode, but the difference with AisleBuyer is its speed. It only takes one second for the application to process the barcode and produce detailed product information and reviews.
More and more point of sale platforms are being integrated into AisleBuyer, along with technology to assist with issues such as security. To ensure that buyers don’t just pick up a product and walk out of the store, audits are carried out. In the USA, a number of companies already carry out random audits on self-checkout hardware to ensure that people aren’t just lifting products from the shelves. The AisleBuyer system is integrated into the point of sale. When the consumer leaves the store, a sales associate can electronically audit the contents of the cart to confirm items are on the receipt.
Along with ease of use, Paradise believes that AisleBuyer can go a long way towards saving retail stores money, mainly because the application is free for consumers and retailers. The company has a partnership with a payment processor to provide it on a similar transaction fee basis to that used when credit cards are processed. The only thing that Paradise asks from retailers is that they help market the fact that they own an AisleBuyer system and encourage their consumers to use it.
"In 2009, 18 percent of transactions in the USA were self-checkout, accounting for $775 billion worth of payments," says Paradise. "Self-checkout hardware costs are upwards of $150,000 to install in a retail store, but you can get AisleBuyer really for free. I think a lot of retailers who have already adopted self-checkout are going to be very excited about being able to offer AisleBuyer.
"We’ve had pretty strong interest from retailers, ranging from supermarkets and fast food restaurants to stores that sell electronics, books and office supplies. We’ve really stuck to the office supply and electronics categories because as a small business owner I think a lot about how valuable it would be to save time when doing a quick office supply run. I can’t comment on who we’re in discussions with, but I do think you’ll see AisleBuyer in some major office supply stores by early next year at the latest."
According to figures released by Gartner, smartphones represented 19 percent of the 325.6 million mobile phones sold in the USA in quarter two 2010. This is a sales increase of more than 50 percent on the same quarter in 2009. The Coda Research Consultancy predicts global smartphone sales of 2.5 billion between 2010 and 2015, and internet use via smartphones will increase 50 fold in that period. With market growth like this, developing applications for smartphones is good move. AisleBuyer is currently only available as an iPhone application, but in a matter of weeks the Android application will launch, with Blackberry soon to follow at the beginning of 2011.
"Our intention is to put it on every phone whose processing chip can handle the algorithms we’re running," says Paradise. "There is somewhat of a hardware limitation, although that’s quickly falling away as smartphones are really spreading and gaining dominance. I think there’s a tonne of pent-up demand on the networks that don’t have iPhone currently, and I think we’re going to bring this to every platform where there’s a meaningful number of consumers."
By jumping onto the huge success of smartphones worldwide, Paradise is hoping for similar growth for the AisleBuyer application. He can only think of one barrier to the application’s use. "One thing we need to consider is that in the large store format we are going to have potential cell coverage issues," he says. "We definitely have that question asked. However, we have a third-party partner who has a device that can capture existing cell signals and rebroadcast them right across the store to solve the issue. This is a very low-cost solution with off-the-shelf components. Other than that, we really haven’t had any other significant technology barriers."
Growth for AisleBuyer appears to be a sure thing, and so far Paradise has focused the company’s efforts on signing up chains and having them provide AisleBuyer to their consumers. He already has more than 10,000 stores signed up and wanting to implement the product. AisleBuyer is also making headway in social media channels.
"The system is actually integrated into Facebook right now," says Paradise, "so every time you look at something on your phone you can actually ask your friends and social network about it. Also, when you complete a payment, you can punch on Facebook: ‘I just bought so-and-so from this store.’ We’re excited about enabling this through the technology platform, and the search engine optimisation it brings back to retailers is wonderful. Now they have consumers creating targeted links that are inbound towards their domain name as they shop."
And Paradise believes there are benefits for the ultimate brand manufacturer too. "The brands that we’ve talked to have said there’s a strong desire to have, if possible, a physical brand representative in every store standing next to their products to tell the consumer all the things they can’t get off the label. When a consumer scans products, we can deliver an interactive world of content. So I think the win here is more, higher quality information from brands being represented through retailers’ applications, so consumers have a better experience."
What’s not to like?
The future of retail?