The Internet of Things: AR, QR, NFC and iBeacons for Ecommerce

Posted by Victoria Elizabeth 9 Oct 13

shutterstock_211247059Many people have now heard of the mysterious ‘Internet of things,’ a term originally coined in 1999 by Kevin Ashton. This interconnected world where virtually anything could be tagged and digitalised is quickly becoming a reality with today’s rapid worldwide mobile growth. Smartphones and the creative apps that have been developed around them are allowing for more non-tech savvy people to become engaged in new technologies and use them for common needs, like researching products and shopping. Online retail is quickly becoming a major market for mobile engagement software, and as showrooming continues to be a popular shopping habit, smartphones are the key to bringing off and online closer together. In the UK, this trend is also on the upswing, and more retailers are using interactive apps and technologies to bridge the gap between on and offline stores.

In this post I’d like to compare four of the major contenders for interactive media technologies, namely AR, QR, NFC, and the newest addition, iBeacon. I have divided this post into three sections outlining important qualities that will help clarify which technology works better, and I will make a final assessment at the end. If you’d like to read more about each of the first three technologies, click the links below:

Interactive Media for Ecommerce: NFC

Interactive Media for Ecommerce: AR

Interactive Media for Ecommerce: QR

Cost of Implementation 

We all know campaigns cost money, and ROI is a difficult thing to determine for innovative technologies that haven’t been around for so long, so how should ecommerce teams think about adopting new mobile engagement software? First of all, this will be largely determined by your budget and the size of campaign you are looking to carry out, but let me outline some positives and negatives of each technology in terms of cost.

NFC, or Near Field Communication, uses a cheap, short-range tagging system (very much like Oyster cards) to exchange information between Smartphones and tagged objects, or visa versa. Although tags cost as little as 10p per unit, they still need to be placed on each object, and users require an NFC-enabled smartphone to interact with tags. On the marketing side, building the content and tracking the usage of NFC tags requires a bit more money, and custom encoders, like GoToTags, can cost upwards of $10,000.

iPhones have been the major outlier for NFC technology, but Apple has recently revealed its newest rival to NFC – iBeacons. iBeacon technology uses low-energy Bluetooth radio waves already built into a majority of smartphones, and it requires less tags, or iBeacons, to create campaigns due to their longer range. Estimote is a technology provider that is currently piloting their iBeacon sensors (small and colourful gem-like objects) in major retailers in Europe and the US, and you can preorder their developer preview kits (with 3 units) for $99. That being said, the analytics and marketing content will likely be quite expensive.

AR, or Augmented Reality, is an app-based technology that allows users to interact with virtual content through the help of their smartphone’s line of sight. It’s unlike the other technologies in this post simply because it allows for a different kind of virtual experience. AR apps are free for users, but marketers should be ready to spend a few grand on app content and implementation. Layar does a hassle free app building service that allows you to run an AR campaign without touching any coding, but the setup starts at around €5,000.

Last but not least, QR codes offer marketers a technology that has already been around for quite some time, and is relatively cheap compared to newer technologies. QR codes are actually free to generate and a number of online sites provide QR code generators. However, running a large campaign will require some more software and analytics, such as the enterprise package offered by Scanlife, a popular QR code provider.


Interactivity and Storage Capacity

The most important part to remember about all these technologies is how they allow users to interact with companies simultaneously off and online. So the level of interactivity and data storage allowed by each technology will inevitably determine how popular it is, and whether consumers will adopt it.

NFC tags differ across providers in terms of memory but in general they can store minimal amounts of data like a URL of 40-130 characters. Other use cases for NFC tags include social sharing, video links, sharing a contact, or displaying a simple message.

iBeacons such as Estimote can store a bit more data, and allow for longer range radio waves as well. They can be used for location-based marketing such as leading customers down a particular path in store, and can offer different deals, coupons, or entertainment for each iBeacon.

AR codes have about 2-5 megabytes of memory, but the experience they provide can be highly engaging, depending on the creativity of the campaign. The ability to see information overlaid on physical spaces makes AR codes highly interactive and engaging for consumers, even with limited storage. 

QR codes can range in data storage limits, but have a maximum storage capacity of 40-L, meaning they can hold small pieces of information such as a URL, coupon or product information. If done correctly, QR codes have the ability to thrill, engage and help users by providing creative content in popular places. The downside however is that trends are moving away from QR codes, and many marketers use them without providing any added value to users.


Consumer Adoption

Although some of these technologies have been around for decades, it is only with the recent growth of smartphones that interactive media like AR or NFC have come into the view of the general public. That being said, certain technologies have been pushed, and adopted by consumer markets in different ways. Therefore, QR codes are the most ubiquitous, but people have differing opinions about their usefulness, whereas AR codes are still relatively unknown amongst non-tech savvy groups but are highly engaging for those who do know about them. Here are some more stats for each interactive media:

1)   According to ABI Research, 1.95 billion NFC-enabled devices will be shipped in 2017. This will create a huge market for NFC amongst smartphone users, however a lot can happen between now and 2017. 

2)   iBeacons may skew the above number because this new technology runs on Bluetooth low energy, which most cell phones already have built in. Projections for consumer adoption may be wide of the mark at this point as the technology was newly announced, but it may become a natural part of showrooming, especially amongst iPhone users.

3)   AR codes are set to take over a large part of the mobile engagement market and are projected to be a $1.5 billion dollar industry by 2015. This is a big projection, but if the positve results of current users are any indication, then AR is on the way to being a common feature for marketers and consumers alike in a couple years. 

4)   According to eMarketer, there were about 3.3 million QR code users in the UK in Q2 of 2012. This trend has been steadily increasing, but the rise of more interactive technologies paints an uneasy future for QR. 


So Who Wins?

There has been a lot of speculation about which technology will win the interactive race, and supporters of each have valid points about their preferred one. My own opinion is that both iBeacons and AR codes will take over the market in different ways. NFC can't compete with iBeacons because it doesn't include iPhone users and iBeacon includes every phone that has Bluetooth capability. QR codes are more easily recognisable than AR codes, but with the right CTAs, AR is set to overtake QR codes like yesterday's news. None of the technologies I've discussed above are the best at everything, and they all have major limitations in storage capacity, but it will ultimately depend on consumers whether NFC, AR, QR or iBeacons will win the race. 






Topics: Ecommerce technology

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