IoT Provides Retailers with a Secret Weapon

Google chairman Eric Schmidt recently predicted that “the Internet will disappear.”

Of course, what he means is that the conspicuous interactions of connecting and transferring information will continue to recede into the background, as we become the beneficiaries of increasingly automated information transactions.

This transition is already happening, but it will accelerate, and innovation will happen in this invisible world. Consider the electronic highway toll passes that have replaced manual toll booths, or the early days of telephone dial-up Internet access with a WiFi connected home. Again, much of that seamless, invisible Internet will happen via more frequent, and smaller transmissions of data—transmission that will use technology like near field communication or NFC.

NFC can be thought of as a general concept (the notion of proximity-triggered data transfer) and as a specific set of protocols. So while Bluetooth is a type of near field communication, it is also distinct from the NFC specific standards. Understanding how NFC’s unique attributes will shed light on how it will contribute to emerging technology trends.

NFC, compared to Bluetooth, is much cheaper and faster to set up, but has a lower rate of transfer, and a shorter range. The cost factor alone is huge. NFC tags are electromagnetic decals that can be affixed or embedded in objects, allowing them to interact with compatible devices. Similar Bluetooth tags cost about $5 per tag; NFC tags cost $0.10 each. This low cost allows NFC tags to be used much more widely, and lowers the barrier to adoption. At $5, Bluetooth tags would be cost prohibitive for disposable products. When the price goes down to $0.10 per tag, it suddenly becomes feasible to put NFC tags on just about anything.

NFC data transfers are limited in throughput and range. This means that NFC data transfer is typically going to be incremental and specific. The short range allows NFC data exchanges to happen in crowded areas because NFC receivers are only going to interact with devices that are close enough to initiate and exchange. This is key to NFC-based transactions.

Consider retail applications in a clothing store. The proximity limit means that a shopper would have to be close enough to a garment of interest to have a specific promotion delivered to their phone. Similarly, somebody would have to be close enough to a cashier to initiate an NFC-driven sale.

Proximity is a potent medium for enhancing interactions and making a seamless, invisible Internet of Things. Proximity can imply intent; we gravitate towards what we desire, and move away from things we wish to avoid. The act of entering a clothing store, for example, is a strong statement of consumer interest, and proximity-based communication can enhance that simple activity with promotions and other effective forms of marketing and relationship management.

The challenge, as developers continue to innovate, is distinguishing proximity from intent.

Sometimes proximity does not represent intent. For instance, we may be entering that clothing store because we are following our spouse, or some other purpose that has nothing to do with clothes.

For the past decade, we have heard about the decline of brick and mortar stores. While the Internet has certainly been disruptive to many industries, it’s destruction of traditional business is overblown.

One reason is while the Internet provides convenience, privacy and complementary data, it lacks important interactions (sensory, social, etc.). A seamless Internet experience that can be used by traditional storefronts is a happy medium, and NFC technology will likely play a key role in making this vision a reality.

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