August 19, 2011
Standing in an aisle at Best Buy two years ago, Andrew Paradise was stumped. The self-described “techno dork,” who had built and recently sold a business in the image recognition and online advertising space, couldn’t decide between two nearly identical memory cards he had been shopping for. So, he fell back on a trusted piece of technology: he whipped out his iPhone and Googled the cards to compare their features as he stood in front of them at the store.
Paradise, whose background in addition to deep programming experience includes time in venture capital, was struck by an idea. As smartphones gain a toehold with consumers (30 percent penetration right now, estimated to increase to 50 percent by yearend, he says) is there a way to incorporate the online and offline shopping experiences so that a retailer doesn’t lose engagement with consumers even while they’re in the store?
“When you use Google to find information on a product, you’re really no longer in the retail environment. You’ve taken a portal to a world that’s completely out of control of the retailer,” Paradise explains. “The retailer no longer has an opportunity to engage with the consumer. What we’ve been about from the get-go is helping retailers create in-store experiences so they can engage with the consumers who are going to shop using their mobile phone.”
To do this, Paradise and his team at AisleBuyer have developed an iPhone and Android application that enables retailers to provide information and relevant promotional offers to consumers who are already in their store. The app also lets shoppers purchase an item without ever having to stand in a checkout line. In effect, AisleBuyer has blended the card-not-present and the brick-and-mortar shopping experiences.
“We combine the best of online and offline shopping using mobile phones,” he says. “You get the ease of online checkout and the ability to see online research and reviews and then you get the best of the in-store experience, which is being able to touch the products and take them off the shelves and home immediately.”
But how do you convince retailers to turn a potential face-to-face payment transaction into a riskier CNP transaction? In a word: lift. In addition to information on the products they are looking at, consumers are delivered targeted promotional offers through their mobile device while they are still in the store.
“The way we get retailers comfortable with that is to show them a statistical upsell that’s pretty significant,” Paradise says. “In our first stores the average customer who used the AisleBuyer app spent 8 percent more than he would have at the traditional POS. Also, we had as many as 20 percent of shoppers accept an offer for another product while they are shopping in the store on a given day. It’s pretty exciting.”
Here’s how the system works. Consumers who are shopping in a store that offers the AisleBuyer service use the camera of their smartphones to scan the UPC code of the product they are interested in. Based on the product—for which they can access information to help make a more informed purchase—the retailer can extend discounts on related merchandise while the consumer is still in the best place to actually see and evaluate it.
When a consumer is satisfied that he or she has chosen the product they want, they can skip the checkout line completely by completing the transaction with a credit or debit card like they would any online transaction, without having to wait for delivery. The app generates a receipt on the phone which the consumer can show to a clerk on his way out the door with the product.
As for security, Paradise says the AisleBuyer app sports the full array of anti-fraud technology necessary to protect any CNP merchant. And, since the app is strictly for mobile transactions, the company also employs location data generated by the devices to screen transactions for fraud.
“There are techniques that are unique to using cell phones, like capturing a phone’s Unique Device Identifier (UDID) and being able to register a particular UDID to a person. Imagine if you could capture and register the address of a computer to one account.”
Bringing Online Shoppers Back to Stores
The Boston-based company launched last August with one merchant (Magic Bean, a Boston-area high-end retailer of toys and baby gear). Paradise says the company is not live with any others at this point, but has signed agreements with national retailers representing 19,000 physical locations and $30 billion in retail sales.
The 28-person team is working to bring the additional merchants online, he notes, as well as launching a version of the app for BlackBerry. Paradise figures more and more consumers are like him: young, tech-savvy and drifting away from the physical shopping experience because of the convenience of e-commerce. But he thinks AisleBuyer can reinvigorate the consumer experience and merchants can benefit from bringing that type of consumer back into their brick-and-mortar locations.
“Since the advent of e-commerce, I’ve been moving away from physical stores,” he says. “But this is a product I would use that might bring me to shop in stores again.”