Brick-and-mortar store owners, this is what you’re missing out on

Ecommerce might be all the rage in the tech world, but don’t be fooled – 94 percent of total retail sales are being generated in brick-and-mortar stores, according to market research firm eMarketer. Considering that business-to-consumer (B2C) ecommerce sales worldwide are estimated to reach $1.471 trillion by the end of this year, the size of the offline market is mind-boggling to say the least.

Strangely enough, the number of startups that focus on brick-and-mortar stores are far fewer than those in ecommerce, and this can be incredibly frustrating for a generation of shoppers who have feet planted in both the online and offline world. Shoppers are pampered with personalized recommendations and offers every time they head online to shop, since etailers have access to a proliferation of tools for online analytics and customer data, yet on the flipside brick-and-mortar stores have close to nothing – except their sales numbers – to optimize their performance.

The exuberant co-founders: Shye Kang Loh (left) and Lim Chee How (right)

Suffice to say, an offline store armed with the right data would be able to snag a larger portion of the enormous pie. This is what Lim Chee How, founder of Malaysia-based Tapway, is counting on. He dubs Tapway the “Google Analytics for the offline world”, and believes that this is something store owners sorely need. Lim explains:

Whenever I purchased something through Amazon, they were really awesome at identifying who you are, what you have purchased, and giving you really personal recommendations. I’m a rock fan, so I always purchase CDs through Amazon, and when I returned to Malaysia [after studying abroad] I always shopped at this record store, but despite being a repeat customer, they couldn’t remember me at all. They couldn’t give me good offers, and it was always the same boring welcome and goodbye message. That’s why I created this.

Actionable data

According to Lim, offline stores simply don’t have access to actionable data that they can use to improve the customer experience. “Most stores only have sales data – and only care about that – but what they don’t know is what actually contributes to those sales,” he explains. “They might have a traffic counter, and some loyalty program data, but that’s about it.”

Much like Google Analytics, a lot of insight on shopper behavior and activity can be drawn from the data captured on Tapway’s platform, but it is up to the store owner to act on them. The startup’s basic package – which captures metrics such as walk-by traffic, visitor traffic, and average visit duration – relies on wi-fi presence and triangulation technology. It’s currently charging MYR100 (US$30) per month for this service.

The second tier involves video analytics captured through CCTV cameras, which naturally provides a suite of more advanced data, such as footfall, demographics, and heatmap analytics. Footfall analytics would cost retailers an additional MYR150 (US$45) per month, while heatmap analytics cost about MYR80 (US$24).

Heatmap analytics tells you how many shoppers are in each part of your shop.

All these data points give store owners and their staff a better overview of what’s happening in their store. In particular, such data would be a boon to those involved in marketing for these stores, as it would give them firm empirical data to inform their strategies and campaigns.

A look at Tapway’s dashboard for marketing analytics.

“For example, marketers can try different storefront displays and see which one brings more shoppers in,” Lim elaborates. “Or they could place a 30 percent discount on an item on one side of the store, and use heatmap analytics to see if more people go there.” If the store is one in a chain, store owners can also compare and apply what works.

Footfall data would reveal when the peak periods are, and so allow owners to better prepare their staff for it. Shopper demographics are also useful to know, as marketers can then tweak their campaigns to target the respective gender and age groups better.

Bringing Amazon to life

With so much data in hand, though, it’s easy for store owners to get lost in it. “The feedback we got is, what good is data if you can’t make use of it? Retailers are busy people, and they wanted us to help them act on the data,” Lim says. With this in mind, the team created a simple one-two punch that owners could use to automate part of the marketing process: a fully customizable in-store wi-fi hotspot, coupled with a real-time campaign tool.

Here’s how it works. When customers use a store’s wi-fi, they usually have to key in a password to get access. Instead, Tapway’s ‘Wi-Fi Hotspot 2.0’ brings users to a landing page, through which they can access the store’s wi-fi network by either logging into with Facebook or Twitter. This landing page is the retailer’s playground – they can edit the style to match branding, advertise promotions and products, or even redirect customers to a website of their choice upon registration.

That’s just the tip of the iceberg. Once customers are logged on, retailers can use the real-time campaign tool to send alerts to customers – such as personalized offers – based on the customer’s store visit behavior. For example, the tool can be set to send a 20 percent promotion on jackets to a customer who visited the jackets aisle the last time he or she came. In other words, bringing Amazon’s personalized recommendation tool to life.

See: Predictry aims to give small retailers Amazon-like predictive powers

This tool is also useful in combating the phenomenon of shoppers using physical stores for window shopping, and then hopping online to find cheaper options. That’s called showrooming. A timely offer can disrupt this process and increase customer retention rates, according to the startup. Currently, the basic package plus the marketing tool costs about MYR160 (US$48) per month.

An offer made in time wins you a customer.

Most of this seems like good news for both retailers and customers alike, but given the rise of privacy concerns, one might imagine that customers would take issue with unsolicited offers being pushed to them or their activity in the store being monitored. Lim stresses that all these are done completely above board:

We don’t really encroach on privacy as we are collecting device data, and they are anonymous – I won’t know who you are, or your name, until you log into the wi-fi hotspot, and we will give the terms of conditions and service when that happens. Also, the facial recognition software in our video analytics only captures gender and age, and whether you are smiling or not – that’s all [...] In any case, we always encourage retailers to put up a notice informing customers of this.

Customers are also sent an email directly after they register for the wi-fi service, giving them the option to opt out.

Ramping up

Tapway isn’t the first in the world to jump into this space. Lim says that there are big players in the US and Canada, two of which have recently moved into Asia – Euclid and RetailNext. He isn’t too worried about the competition, however, as he claims that they are far more expensive than Tapway.

There is also another homegrown competitor in the form of Malaysia-based Tide Analytics, but Lim sees them more as a partner rather than a competitor. “Generally, I’m more afraid of those who have big money to put in,” he explains.

According to Lim, the team has been deliberately keeping a low profile as they ran beta tests in the past few months. As the focus turns to sales, the startup has come out with guns blazing, winning the ‘Best Startup in Malaysia’ title in the local leg of the Seedstars World 2014 competition, and recently pitching at Korea’s DreamPlus Day 2014. One of the major clients it has secured is a prominent shopping mall in Malaysia, as well as a couple of big food and beverage stores that Lim chose not to disclose.

The startup team has so far secured MYR150,000 (US$152,000) from the local Multimedia Development Corporation’s ICON grant, and another MYR150,000 from angel investors. The founder says they’re now looking to raise between MYR500,000 (US$152,000) to 800,000 (US$244,000) to capture the Malaysian market and continue to come up with more creative solutions.

Brick-and-mortar store owners, this is what you’re missing out on