Commerce Weekly: Analytics for people, the next big thing in retail

Retailers tracking Wi-Fi, Payleven's new funding round, Square's success, and NFC's real role in mobile commerce.

Here are a few stories that caught my attention in the commerce space this week.

New trend in retail customer tracking: Smartphone Wi-Fi

my wifi hotspot is cooler than yours, on FlickrDan Tynan posted a two-part series (here and here) on IT World this week looking at growing trend of retail Wi-Fi tracking — retailers keeping track of you via your smartphone as you shop, much like online retailers keep track of your movements across the Internet. Tynan explains how they’ll do it:

“When you come within range of a properly configured Wi-Fi access point, it can record the wireless MAC address of your phone — a unique 12-digit number. Every time you pass by, that AP can log that number. … Think of it as Google Analytics for people; instead of measuring Web traffic, they’re measuring foot traffic.”

Tynan takes a look at Euclid Analytics’ software, which works with tracking device systems to help stores gather data on customers, from which aisles they spend time in to how many times they’ve visited the store to which locations they frequent. “[T]hey can even track people who walk by the store every day but never go in,” Tynan writes, “or [know] if more people enter after a window display is changed.” He notes that Euclid gathers data anonymously and in aggregate, storing the MAC address “in a one-way hash, so nobody can go backwards and figure out your actual MAC address,” but that the minute a shopper swipes a credit card, all anonymity is lost, at least as far as connecting a particular phone to a particular purchase.

Once an identity is linked to a MAC address, “all kinds of fun things can happen,” Tynan reports — retailers could text you as you walk by their stores in the mall and offer discounts or coupons to lure you inside, connect your in-store data to your online data for even deeper analysis, or even sell your data to someone else. He explores some of the privacy concerns and scenarios in his first piece and talks with Euclid Analytics director of marketing John Fu for some context in his second piece. Fu says their technology is — purposefully — not as Big Brother as it sounds:

“There are some powerful and potentially scary things you could do with this data if you wanted to, but I want to clarify that we are not doing any of those things. We anticipated these scenarios and came up with ways to prevent them from happening.”

In addition to creating a one-way hash for a customer’s MAC address, Euclid requires retailers to contractually agree “to not combine the behavioral data they collect with information they have about an individual’s identity,” and the company also “salts its data with a ‘statistically insignificant’ number of fictional customers” to further prevent customer identification, Tynan reports. He takes an in-depth look at some real world examples of Euclid’s use in retail locations and their efforts to protect consumer privacy, but also notes that “Euclid is only one of a half dozen companies using different techniques to help retailers track shoppers, most of which don’t bother to tell you.” You can read his complete report at IT World — part one, part two.

Payleven gets investment boost in pursuit of Square-like success

Europe’s Square-like mobile payments platform Payleven announced a new funding round — and a new mystery investor — this week. Ingrid Lunden reports at TechCrunch that “neither the exact funding figure, nor the investor, have been disclosed — except to note that the value is in the ‘high single-digit millions’ of dollars, and that it is ‘largely’ from the new backer.” Along with the funding round announcement, Lunden reports, Payleven also confirmed reports of a group of backers who invested “double-digit millions” last year: New Enterprise Associates, Holtzbrinck Ventures, ru-Net and Rocket Internet.

Lunden says Payleven, which has launched in Germany, the Netherlands, Italy, the UK, Poland and Brazil, still hasn’t disclosed its number of users, but a company spokesperson told her the new funding will be used to build out current markets and to continue Payleven’s international push.

Back stateside, Fast Company’s Austin Carr took a look at what’s making Square successful in the U.S. — and now Canada. Carr writes that part of Square’s success stems from an atmosphere of collaboration geared toward problem solving and a blurring of the lines between engineering and design teams. Square CTO Bob Lee told Carr:

“We’re not just a design company; we’re not just an engineering company. We’re strong in both areas — we need to be. … From an engineering perspective, design is not just about how something looks, but about how something works. We look at reliability, robustness, and performance as features of the design.”

Carr takes an in-depth look at how the company’s teams foster a high level of collaboration through weekly town square meetings, “where everyone from engineers to PR workers can show off their latest projects;” through the design team’s weekly creative reviews, where all work is pinned up and presented gallery-style for all designers to peruse and comment; and through internal education. He also looks at Jack Dorsey’s leadership style and how he manages to make credit card processing, receipts and point-of-sale systems “whimsical and interesting.” You can read Carr’s full report at Fast Company.

NFC’s real role in mobile commerce: Consumer engagement

Mark Bonchek argued this week at Harvard Business Review that the potential for NFC technology in mobile phones goes way beyond payments. “It has the potential to, as no technology before, bridge the gap between virtual and real,” he writes. Bonchek offered up the example of Kraft Foods’ pilot program, which tested consumer responses to an NFC marketing campaign:

“In select grocery stores, small signs were placed on shelves in front of Kraft cheese and Nabisco cookie brands. The signs invited consumers to get recipes, download a mobile app, or share with friends. Consumers could either tap with an NFC-enabled device or snap a QR code — up to now the main technology for linking mobile devices to physical displays. The results were quite remarkable. People were 12 times more likely to tap than snap. Considering that the ratio of QR to NFC-enabled phones is currently about 10 to 1, this means tapping was 120 times more engaging than snapping.”

The level of engagement wasn’t simply the result of novelty, Boncheck reports. Data from the pilot showed that 36% of the people who tapped the sign “converted it into action, whether saving a recipe, downloading the Kraft app or sharing with friends, etc.” Boncheck also notes that consumers who tapped the sign spent 48 seconds engaged in the experience, as opposed to the standard five to 10 seconds of normal brand engagement at the shelf.

Boncheck looks at several advantages NFC wields over current technology and notes that though it won’t happen overnight, “the ability to make the real world clickable holds great promise. … Taps are the new clicks.” You can read his full report at Harvard Business Review.

Photo: my wifi hotspot is cooler than yours by woodleywonderworks, on Flickr

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