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How Beacon Technology Could Change the Way We Shop

Still confused about iBeacon, PayPal Beacon and beacon technology overall? Here's your primer on the retail-changing tech.
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With more retailers taking an omnichannel approach to shopping, the line is blurring between online and offline. We've covered the rise of in-store analytics before, so let's take a closer look at a technology that you're going to be hearing a lot more about in the next year: Beacon technology.

If you're just dipping your toes into the wide world of in-store tech, here's your primer on beacon technology.

What it is

Devices like Apple's iBeacon and PayPal Beacon operate using Bluetooth Low Energy, says Hasty Granbery, the lead engineer for PayPal Beacon. Using BLE, they can communicate with phones and other devices using a low level of energy, since it wouldn't be worth it to have your phone drained of battery every time you walk in a store.

If a store has iBeacon or PayPal Beacon hardware installed, the store can communicate with your phone, as long as you opt in.

The implications of this are pretty vast. Outside of a "How are you?" stores don't get much information on the customers who walk through their doors. If they're lucky, the cashier might take down an email address at checkout. Beacon technology bridges the gap between online shopping -- and all the information your favorite e-commerce sites have gathered about you over the years -- and the relatively anonymous world of in-store shopping.

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How it might play out

Beacon offers hands-free payments, which is a big part of how PayPal initially started marketing PayPal Beacon. With the device integrated with the store's point-of-sale data, you can check into a store and pay from your phone. (You can already do this at an Apple store by checking out with the Apple Store app.) Pretty handy, although potentially bad for the state of your bank account given how frictionless it makes buying that new bag.

Aimless browsing in a store can be a lot of fun -- there's nothing quite like the thrill of finding a gem tucked into an otherwise blah clothing rack -- but for those who take a more organized approach to shopping, the technology can also help you figure out what's what from the second you enter the door.

As we reported in January, the multi-brand e-commerce startup Lyst has begun working with PayPal so that when a Lyst user enters a store that is PayPal Beacon-enabled, she'll be alerted that brands she follows are available in the store and receive real-time inventory information.

Depending on the preferences that a store has set, the devices can get pretty specific as to where you are on the floor plan, such that they're able to differentiate the makeup aisle from the haircare display. With that kind of information, a retailer can send through discounts specific to the area of the store that you're in at any given moment in order to increase conversions.

It also means that the conversation doesn't end once you leave a store. When you make a purchase offline, the e-commerce site will be better able to serve up recommendations on what you might like. Similarly, the merchant will be able to follow up with you, much like websites do now after you've made a purchase.

Cliché as it is, the possibilities are pretty much endless, and while it feeds retailers a lot of data about you, a lot of that feeds back positively to the customer. Of course, there will always be some shoppers who are leery of their whereabouts being tracked, so it's all opt-in -- for now.