The online retailer has spent nearly $300 million acquiring three shipping software vendors over the past nine months.
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Retailers are still on a learning curve, however, and new systems like SmartShop are not without their challenges. Some consumers have expressed concerns about the security of putting a fingerprint into a network system; connecting biometrics scanning data into back-end databases is still a new process; and there are more basic concerns such as keeping the scanners clean enough so that they accurately read fingerprints, experts say. “There are concerns that biometrics systems have to overcome, and a retailer has to decide if the value proposition is great enough to sway a lot of customers to use them,” says Tamara Mendelsohn, e-commerce technology analyst at research and advisory firm Forrester Research Inc.
Moreover, much of the same features are available through traditional plastic card loyalty programs. Carlisle, Pa.-based Giant Supermarkets is using a card-based kiosk loyalty program powered by software from St. Clair Interactive Communications Inc. that, like SmartShop, lets participating customers check in at a kiosk to print out coupons based on their shopping history. And while other supermarkets have signed on for the card version of SmartShop, they haven’t decided whether to migrate to the biometrics version.
Consumers presented with the SmartShop option have been wary of how it operates. About 10% think it’s great without question, another 10% want no part of it, says Shannon Riordan, vice president of marketing for Pay By Touch. “The remainder think it’s cool, but want to first know how it works, such as how we protect data privacy,” she says.
Pay By Touch and Green Hills have not aggressively marketed SmartShop, preferring to let shoppers gradually get accustomed to it, Riordan adds. An important part of the rollout strategy, however, is to educate store employees so they can explain how the system works. “We always have someone on hand to answer questions,” Riordan says.
The SmartShop system is designed so that it doesn’t transmit entire fingerprints each time a customer touches a scanning device, says Steve Ritacco, chief technology officer at SNH Solutions, a Pay By Touch subsidiary that configures the SmartShop software. Instead, it compares minute parts of the currently scanned fingerprint, such as the distance between curves, with data recorded for the same shopper’s fingerprint in a secured database.
Big on biometrics
Pay By Touch installs a network server within a SmartShop store to collect point-of-sale data, but it transfers this and the fingerprint scan through a web connection to its own hosted applications, where it runs the algorithms against shopping and promotional data to produce the personalized coupons. “This is all controlled via web-based applications,” Ritacco says, adding that XML and other web services integration technology make it feasible to collect, analyze and distribute the data on which SmartShop is based.
Hawkins, who launched his own plastic card loyalty program in the early ‘90s and ran it for about 10 years, says the fingerprint-based program provides enough advantages to give biometrics significant performance advantages over plastic cards. A big advantage, he says, is that biometrics makes it easier to collect and analyze shopping data for individual consumers, while card programs, to control the costs of the cards, typically issue one card account per household.
Another advantage, he adds, is that fingerprint scanners make participation easy for consumers, who often forget or misplace loyalty cards, while also assuring that merchants collect shopping data to support the loyalty program. When a cashier swipes an extra loyalty card to grant loyalty program discounts to a shopper without her own card, the retailer doesn’t get the benefit of recording that customer’s shopping activity to support future marketing efforts, Hawkins says.
All about the customer
“This is something up and coming to ease the customer experience,” says analyst Sahir Anand of Aberdeen Group. “At the end of the day, it’s all about the customer experience.”
The cost to deploy the SmartShop system starts at about $200 per checkout lane for fingerprint scanners, plus $1,000 to $2,000 per kiosk, according to Pay By Touch. In addition, Pay By Touch charges from 10 to 20 cents per transaction or fingerprint scan.
Shoppers signed up for the SmartShop system can request e-mailed notices of coupons, and they can log onto the Green Hills SmartShop web site to check available coupons and configure a shopping list. When they enter the store and touch the fingerprint scanner, the kiosk will automatically print out their coupons and the shopping list they configured online.
Hawkins compares Green Hills, an independent, single-store operation, to Google Inc. in its ability to improve marketing and boost sales by building on consumer preferences. “At Google, the web pages that come up in searches are keyed to how well they relate to search terms,” he says. “The analogy for Green Hills is that each time a customer buys a product in our store, she tells us what she’s interested in and we’re providing the web-enabled systems and capabilities to truly act on her interests.”
Calling all store shoppers
Verizon Communications Inc. is bridging the gap between virtual and real shopping experiences by letting store shoppers play online games and download movies and music on computers served by the same high-speed fiber-optic Internet access that it’s beginning to offer to homes.
Verizon has set up Demo Zones in two Verizon Experience Stores to both expand the number of products and services it offers through its wireless services and cell phone stores as well as to introduce the fiber-optic Internet access that it’s rolling out across the U.S. The stores offer customers access to about 30 web-connected terminals, each with touch-screen interfaces developed by web technology firm R/GA.
The fiber-optic home service offers Internet access speeds from 5 to 50 megabytes per second, depending on a home’s location. By comparison, the maximum speed offered by broadband cable Internet access ranges from 1.5 to 5 megabytes per second, according to the Federal Communications Commission and the information service High-Speed-Internet-Access-Guide.com.
“Many consumers can’t fathom what it’s like to use fiber-optic Internet access, so our store customers can sit down at a Demo Zone and play an online game or download a movie,” says Joseph Purdy, Verizon’s manager of store design and visual merchandising.