Cookies revolutionized online shopping – through product recommendations or personalized emails, they offer a real value to online customers. The new beacons transfer this personalized shopping experience into the real world. Beacons are small transmitters which increasingly find application in the retail industry and which communicate with according apps on the customers’ smartphones. Thus the question is: How do beacons work? Why do they have the potential to become a real trend? And what about data security?

How do beacons work?
Beacons are small transmitters that steadily emit signals with a range of about 30 to 50 meters in their immediate surroundings via BLE-technology (Bluetooth Low Energy). However, users first have to install the according app in order to receive these signals on their smartphones. The app then decodes the tree identification numbers sent out by the beacons. These numbers contain information about the sender’s exact location. Beacons cannot receive data, though. If the app is not installed, users don’t have to worry about their location being detected through the system.

Which advantages do beacons have?
Even if data protection remains a valid point of criticism, the system indeed offers reasonable possible applications. The retail industry, for instance, can enormously benefit from this new technology. Concretely this means: You’re in the supermarket and a beacon reminds you of your shopping list. It directly leads you to the according products and maybe even sends matching recipes to your phone. Or the app recognizes you as a regular customer and offers you discounts specifically tailored to your preferences. Moreover, beacons not only have the potential to address customers already in the store. They also reach out to possible customers passing the store and for example inform them about current special offers. In terms of customer loyalty, the beacon technology thus offers a multitude of new possibilities. The objective and benefit of this new technology goes hand in hand with its purposeful and moderate application. Using beacons as a means to overwhelm users with advertisement would be counterproductive. The added value has to be clearly intelligible for customers in order for them to accept it.

And beacons can do so much more than just sending highly contextual and personalized messages. Since the app exactly locates users, one can be navigated through buildings with the help of beacon technology. With beacon signals penetrating walls and closed spaces, as compared to GPS signals, they are well suited for indoor use. Thus in the future, beacons could navigate users through airports, guiding them to the right terminal, and simultaneously send them offers from the stores they pass through local real-time marketing. The same principal is applicable to shopping malls, fairs, expositions or museums. As another field of use, modern time-tracking systems would be imaginable. The possibilities of this technology seem endless.

Beacons already in the test phase
Although the technology is still in the developmental phase, beacons are already being tested. In the United States, Starbucks and Burger King equipped their stores with the transmitters, and so did Apple. The company has even developed its own prototype, called iBeacon. Also the online payment service PayPal wants to take part in the development and make the beacon technology the basis of its future payment system.

Beacons have the potential to revolutionize both the retail industry and our online behavior. Retailers have the possibility to optimize their sales strategy by analyzing customer data collected through beacons, and to win more customers through targeted, personalized advertisement. Also the former clear line of separation between offline and online shopping is increasingly blurring. Retailers can make use of the advantages of both options. Nevertheless it can’t be determined yet whether beacons become the next big success in marketing. Especially tracking functions and the collection of geographical data might distress data protectionists. The success of this new technology mainly depends on the consumers’ acceptance and usage. If they really want to reveal that much personal information remains to be seen.