Hari Gottipati, an independent tech consultant, saw the future of shopping in 2013. In its annual software update for its mobile devices, Apple had just made it possible for its phones to allow super-precise location services — and that would be a major coup for the staid world of coupons.
While the global positioning system on your phone could reveal a particular store’s location closest to you, this new technology would go much further. Advertisers would be able to determine exactly which aisle you are in. A merchant would only need beacons capable of communicating with the Bluetooth Low Energy technology on an iPhone, and shoppers would almost magically receive cereal coupons for the very boxes they happened to be viewing at that moment.
Consultant Gottipati advised retailers to get on board. Two years later, he said, it doesn’t look as if many stores took his advice. “I go to a lot of malls, but I don’t see as many beacons as I expected. It’s very disappointing.” Gottipati still favors the technology, which he now believes will be adopted more readily inside smart homes. There, beacons might turn off the lights when it senses that someone has left a room.
As the annual orgy of holiday shopping officially kicks off this week, many people who shared Gottipati’s enthusiasm two years ago echo his disappointment. A survey conducted by Forrester Research earlier this year found that only 3 percent of retailers use beacons; just 16 percent had plans to try the technology in the foreseeable future. When Reveal Mobile, an analytics company, did a census of beacons in U.S. retail stores this spring, it found that Apple’s own stores accounted for about 15 percent of the existing beacons.
Companies that sell beacons and related services to retailers struggle to point to big success stories, even as boosters insist that the technology is on the verge of success. For the people who run startups such as Shopkick, InMarket or Estimote, which are based on bets that beacons will soon be everywhere, the issue is more about expectations than results. Sure, the startups admit, it’s been slow going, so far. But over the summer, both Facebook and Google announced new programs for their own beacons, joining Apple as tech giants behind the technology.
“They’re not ubiquitous yet, but they will be ubiquitous in a couple of years,” said Todd DiPaola, chief executive of InMarket. “Facebook shows this isn’t a fad.”
“Much of this chatter exists in a marketing-driven echo chamber,” Krista Garcia, an analyst for eMarketer, wrote in a report in August. A basic question faces beacon boosters that’s familiar to pretty much every kind of advertising: Is the service just doing something advertisers crave, but which fails to inspire shoppers? Beacon companies insist they’re capable of connecting with consumers. Other companies say that location-specific coupons sent in conjunction with beacons are far more likely to be used than other marketing offers. At the same time, customers seem to have a very low tolerance for such messages. InMarket found that people basically stop using any app that sent them more than one message.