eWallet: The next step in retail evolution

We live the in the “smart” age, everything seems to be connected to the internet these days, your phone, your TV, your car, but what about your wallet? Do you still have those last century old paper bills or maybe those molded plastic credit cards? Reality is that most of us still carry (and god forbid) use Twentieth century tools on a daily basis for buying goods and services in the Twenty first century.

So, how can come the digital revolution has yet to reach us in our pockets?  Don’t worry, it is coming and coming fast. With the new generation of mobile devices is now possible to link the device directly to bank and credit card accounts and many merchants have started to accept payments leveraging either a scan code displayed in the phone screen, or through “contactless” readers using the NFC (Near Field Communication) standards.

If you accept the fact that these technologies are already here, the next logical question is what will it mean for you, will it change what, where and how we shop? Most likely it will, let us explore what possibilities this new technology will bring and how it will impact shopper behavior:

First, let us think about how each of us gets to know about new products and what is happening in the market with our favorite retailers, chances are that you are part of either a mailing list and/or email campaign that periodically targets you with advertising. However, most of us find these kind of unrequested advertising irrelevant, annoying most times and occasionally a nuance. While some of the advanced shoppers would have no doubt signed-up for customized promotions the reality is that the information that we provide (or how these preferences are interpreted by the retailer) can only produce relevant hits once in a while. In my experience there is no better recommendation engine that the one which looks at every customer event: either purchase, on-line visit, or other interaction (e.g. call center), then uses advanced analytics (primarily event cluster – if you were wondering) to create a personalized profile that can distinguish every member of the household (so the dad does not his pregnant daughter specials) and their purchase occasions (e.g. when are you buying for yourself vs. a gift) to build a true historical profile.

In order to achieve this depth of customer knowledge, it is as important for the retailers to understand when you went to the store to buy something (which they can know by identifying you at the POS) and when you went to the store and did not buy anything and when you decided to go to a competitor’s instead -most the brick and mortar lacked the technology to identify you on this scenario. However, with the GPS technology added as a standard to all the “smart phones”, retailers have access to this data in almost real time. They can send promotions that will not only be specific tailored for you, but these promotions will only be delivered when are you physically on a location where you can act upon receiving them.  The possibilities become mind numbing: Imagine the scenario where you spend time in the store trying different outfits and then you decide not to buy anything, on the way out you receive a mobile coupon that is only valid on that visit, or the application could wait and see what other store you visit in the same shopping complex and then provide you an event better promotion that targets you as you enter the “competitor’s store”. Granted these scenarios will require you giving access to your geo-positioning to the retailer, but wouldn’t you do that to save some dollars on your favorite store?

Being able to pinpoint your location is just the beginning, thanks to Big Data, the retailers can play NSA with your purchases history and literally understand what your inventory is on hand, how old it is and how much you paid for it. These opens-up other possibilities, for example, if you are holding an Xbox® game which has strong demand and they know that there is one coming-up that you would definitively like to play, they could offer a higher trade-in amount for that game, which would lure into the store and then market to you to buy the new game at full retail price. You would be delighted and the retailer would have made good profit on your need to trade-up. In a more fashion driven example, imagine that you bought a jacket a month back which went out of fashion, the retailer could send you a reminder of the news trends and urge you to donate your old clothes (e.g. your month old jacket) to your local charity in exchange for a discount on new merchandise.  Better yet, in these scenarios, the credit for the trade-in game and the discount for new merchandise would be literally stored in your mobile device so you do not have to worry about carrying coupons or printed emails. Giving you an added level of convenience and giving the retailer a much closer relationship with you.

It is only logical that Digital Marketing, Mobile and eWallet will converge through Business Intelligence to bring a new level of personalization and convenience to shoppers, in exchange for their personal information and preferences. Reality is that this “Smart Wallet” already exists today and surely and inexorably will eventually replace our dear bills and credit cards. It is an evolution that truly started with Steve Jobs and the first iPhone and will now not stop until it has transformed the whole world. Retailers and Shoppers alike who don’t accept this new reality will be marginalized out of the digital economy, potentially taking the retailers out of business and increasing prices and reducing choices for merchandise (e.g. the shoppers will not receive discount coupons and announcements in real time).

There are still some open questions that will have to be answered, many will fear for their privacy while others will cherish the potential benefits of this deeper retailer-shopper relationship. Which one are you?