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How Google, Apple and Amazon try to own in-store shoppers

With the significance of mobile?s role as an indispensable tool throughout a consumer?s daily activities beginning to emerge, the next battlefield for mobile dominance is the in-store shopper.

Apple?s iBeacon and Google?s Project Tango are just the latest examples of how these mobile giants are looking to work with retailers to expand their reach indoors. While Amazon?s aggressive strategies put it at a disadvantage with retailers, Google and Apple could also take a more threatening stance in the future.

?We can see how these companies will look to act as an aggregator, creating a single place that will manage all the end-users retail apps, loyalty programs rewards/coupons, etc.,? said Patrick Connolly, London-based senior analyst at ABI Research. ?However, while a customer can chose to use a retailer?s app, they can also choose to use an aggregated application from a company like Amazon or Google.

?We can also see these companies creating the next generation of local search where instead of looking for a store, we can look for a specific product and know where it is in stock, in the size/color/etc. that we want and if there are any offers available,? he said.

?This completely changes how people search for products and is an approach that is unlikely to appeal to retailers.?

Hearts and minds
Despite the growth in ecommerce, a very significant portion of consumers? shopping-related time and money is still spent inside physical stores. 

At the same, mobile?s role in that experience is growing.

With the growing availability of Wi-Fi in stores, stadiums, airports, malls and other public spaces, there is a significant and still growing opportunity to reach mobile users inside these venues with contextually relevant communications, mobile search and indoor maps. Then there are the retail services such as mobile point-of-sale, in-stock information and same-day delivery services.

For the technology company or companies able to insert itself in a meaningful way into this scenario, the pay off is likely to be significant.

?The battle for the hearts and minds of shoppers is critical,? said Jason Goldberg, Chicago-based vice president of the commerce practice at Razorfish. ?Retail sales are over $4.5 trillion per year in the U.S. alone, and 92 percent of all purchases still occur in brick-and-mortar stores.  

?While commerce is obviously the primary revenue model for Apple and Amazon, it's also one of the most important channels for Google to monetize its services,? he said.

Indoor market
Google already plays a big role here via Google Search and Google Maps, which have essentially replaced phone books as the primary way consumers find retailers.

More recently, Google introduced Project Tango, which is being piloted in Walgreens stores (see story). 

The virtual indoor mapping technology delivers personalized and discoverable rewards to shoppers using augmented reality. 

Project Tango joins other Google services for retailers such as Maps Business View, Indoor Geo-Location, instock nearby and the same-delivery service Shopping Express.

Apple has also been building up its retail services. Mobile POS was an early example, followed by Passbook and, more recently, iBeacon.

?There are a number of different reasons why these companies are entering this space,? Mr. Connolly said. ?But one of the biggest drivers for Google and Apple is how indoor capabilities will become a huge part of the future of local search and more importantly advertising.?

Different approaches
Amazon?s desire for a bigger role with the in-store shopper has been apparent for some time thanks to its mobile app that had retailers scrambling for a couple of years to figure out how to deal with showrooming.

While retailers addressed that threat by doing a better job of leveraging mobile in their own stores, Amazon is not retreating. The recently introduced Amazon Fire smartphone could make shopping online from Amazon even easier, impacting in-store sales along the way. 

?All three companies have very different approaches,? Razorfish?s Mr. Goldberg said. ?Amazon is primarily adversarial with the rest of retail; they simply hope to win market and wallet share from their competitors.  

?Google has clearly tried to position themselves as a partner to retailers, offering services like Shopping Express that they hope retailers will use,? he said.

?Apple primarily invents retail solutions they want to use in their own stores, and then makes them available to the rest of the market to help drive more hardware sales.?

Retailers understand how important it is to control the in-store shopper relationship. This is why they are working furiously to leverage mobile to enhance the in-store experience. 

When the MCX consortium of retailers introduces its mobile payments solution, this could also help shore up important customer relationships if it is well-rounded solution.   

It is too soon to know who will be the winner and own the in-store shopping experience. It is possible there is room for multiple players here.

?Google was certainly quicker out of the block but with iOS8, Apple is finally revealing its hand on indoor location and mapping and opening up many of the technologies it has been working on to developers and venue owners,? ABI Research?s Mr. Connolly said.

?Google is much better placed today in terms of mobile advertising, local search, mapping and support for SMEs,? he said. ?Indoor is Apple chance to compete on an even footing and potentially de-Google much of its mobile offering.?

Final Take
Chantal Tode is associate editor on Mobile Marketer, New York