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The Web 2.0 summit is an important annual event which outlines new trends in internet and social media. At the recent event in San Francisco, many subjects were covered but the key thread was “social commerce”, the bridge between online research and buying in-store.

It seems that, while 42 per cent of in-store shopping is influenced by online research, only seven per cent of this results in an online purchase. The vast majority (93 per cent) is still purchased in-store.

The number of mobile online shopping queries has increased by a factor of 30 in the last three years.  So online retailers are trying to find a mechanism to receive compensation for having contributed to a purchase offline, especially as research through mobile devices can take place at the point of purchase:

1.      Putting results on the map

Google demonstrated several enhancements to its shopping application: if you can name the product, search results will show the location of the closest retailers, as well as, through a deal with 70 retail chains, which have the item in stock. If you can’t name the product, the android shopping app can analyse a picture of an item and show the nearest retailer with a similar looking product. Finally, Google is now also adding phone numbers to search results. This number rings a Google call analytics platform, which redirects the call to the retailer, but logs the volume and duration of calls, so Google can receive payment for calls generated, not only for clicks. This had already been pioneered by Ingenio, acquired by AT&T two years ago.

2.      Getting sociable

The second objective is to leverage social networks (such as Facebook) in order to amplify the effect of loyalty schemes, and use near field communications (NFC) to make participation easier.

Foursquare and Gowalla have illustrated the effectiveness of a simple “check-in”, declaring your presence at a location, thus endorsing the venue, which stimulates business for the retailer with friends of friends.

Check-ins are now being replaced with “NFC taps”. The NFC protocol is sufficiently stable, NFC chipsets are being embedded in a large number of phones and low cost readers can now be placed throughout retail venues.

A start-up, Bling Nation, is spreading readers through retailers. By a single tap of your phone on one of these reader pads, you inform the retailer of your presence, increment your loyalty points and inform your friends (with your consent) of your patronage. You are also informed of any instant deal, coupon or points redemption opportunity through an SMS, or at the check-out counter. Stickers with NFC identification can be used until the majority of phones are NFC capable, which will accelerate significantly now that Eric Schmidt has stated that the next Google device will include open NFC.

3.      Where next?

This leads to the third and ultimate objective: Where should I go from here? It is the offline equivalent of online search, but calculates in real time your best possible destination taking into account:

·        what you want to do (which could be as vague as “have fun” or as clear as “purchase a 32G Wifi iPad”)

·        availability nearby

·        recommendations from Facebook friends

·        instant deals

·        optimisation of loyalty points.

Results will obviously be delivered through smartphones with directions, but the race at the moment is to collect and aggregate relevant information to feed the recommendation algorithm (store location, inventory, deals, loyalty schemes). Facebook already has a part of the data (friends’ recommendations), and therefore has a clear lead in the quest for ultimate social commerce.

As rightly summarised by Cyriac Roeding, the CEO of Shopkick, which has a placed loyalty tracking devices in more than 1,000 stores including Target department stores: “The future of online is offline.”


Jean-Marc Frangos, MD External Innovation, BT California

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