Features > Cross-Industries
Beacon, Averting the Offline Market Crisis! (Part 1)

– BLE Beacon Emerges Amidst the Changing World –

The emergence of the iPhone and smartphones becoming more commonplace has changed our lives more than any other technology in recent times. Being able to have computers in our hands with smartphones and tablets has made our lives much easier. However, there are not only positive effects from this technology. The intense growth of the online market has contributed to the decline of the offline market. Today we will take a look at the rise of Beacon technology that has emerged from the offline market crisis.

The Offline Market Crisis Caused by the Growth of the Online Market

There are some industries that have quietly and slowly slipped into a crisis due to the quickly changing ‘smart’ market. Take the MP3 player, camera, cable TV and PC industries for example. You can say these forms of media have completely changed how people live and they are truly unavoidable trends. We have all experienced this change with the onset of the ‘smart world’ and the ‘media era.’ These changes have become more noticeable due to the IoT (Internet of Things).

Shall we take a more detailed look at these examples? In the past, we saw the emergence of neighborhood video rental shops during the analog era. But, when DVDs came out, the Internet was developed and the online streaming era began, the offline video stores began disappearing one by one. DVD and video streaming were detrimental to the survival of the videotape. While people have a lot of interest in emerging industries, they don’t have a large amount of interest in collapsing industries.

The popularity of the Internet also had the same effects. Almost everyone is now connected to the Internet and a new diverse set of industries is emerging with the construction of the anytime/anywhere Internet environment. However, there are also many fields that have suffered due to these developments. Offline businesses have suffered the most. With the amazing growth of Internet shopping malls and mobile shopping, offline shops have faced a significant crisis.

We can already verify the numbers to show these results. According to E-mart (Korean department store) electronic data, the growth rate of large department stores has been on the continual decline since 2011. Growth for the industry has severely reduced from 10.9% in 2011, to 5% in 2012 and 1.8% in 2013. E-mart also recorded a reduction in growth this year. In the Korean market, the online market and mobile shopping sales increased extremely sharply and this had a significant effect on the decrease in the offline market.

비콘__모바일_쇼핑_시장규모

Korean Mobile Shopping Market Scale and Shopping Channel Use
(Source: Korean Online Shopping Association)

In the case of mobile shopping, the market growth was USD 1.7B in 2012 and near USD 4B in 2013. This year the market is expected to increase almost 2 times to USD 7.6B. That’s very impressive growth! This type of online growth is expected to have an irreversible effect on the offline market. One way the offline market crisis can be averted is the emergence of Beacon.

What is ‘Beacon’?

A Beacon is a device that sends a fixed signal that carries information such as location. Apple released iBeacon this year.

● The Definition of a Beacon:
Wikipedia: A beacon is an intentionally conspicuous device to attract attention to a specific location.

In the past, beacons used light to transmit their signal. However, Apple’s iBeacon uses BLE (Bluetooth Low Energy) technology. A company called Shopkick implements a low frequency sound. BLE uses an electronic signal as opposed to sound. This makes it possible to install the technology anywhere and avoid effects from the physical environment. Because of these advantages of BLE, Shopkick is now also introducing the BLE technology called ShopBeacon.

Another technology worth mentioning along with Beacon is Bluetooth. Bluetooth is a technology at the center of IoT and deserves attention as well.

● Bluetooth: Based on R&D done by Erikson in 1994, was developed through efforts by Erikson, Nokia, Toshiba, IBM, Intel and other companies in 1998. Beacon implemented Bluetooth Smart 4.0 with low power support in June of 2010.

● Bluetooth Smart: Low power Bluetooth technology with a reach up to 50m through a sensor enacted through the battery.

The Fundamentals of Beacon

What is the basis of Beacon service? The image below explains BLE Beacon service.

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Fundamentals of BLE Beacon Service

Beacon technology emits a signal with a specific ID value that can be recognized within the range of the signal. Smartphone applications that recognize this value send the value to a server. A server that has this ID value can check the location of the signal. Then events or services related to the location are sent to the smartphone. Through this service, specific services, events or coupons can be offered to customers in stores through beacon technology offline and creates new value in the offline market.

Apple is not only implementing beacon technology, but also Nike Plus and other different fields are introducing the technology. There is a high amount of interest in this technology that could save the offline market. Next time, we will take a look at some of the limitations of beacon technology.

Written by Young-Joo Kim, LG CNS Smart Blogger

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