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IRX 2014 PREVIEW Smartwatch & Co: wearable commerce?

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In the past few weeks I have had several discussions around ‘wearable technology’ in the context of omnichannel commerce – and no doubt this topic will also be part of many conversations at Internet Retailing Expo. There is one question that keeps coming up: Are wearable connected devices like watches or glasses just hype, or do they offer real opportunities in terms of mobile commerce?

Some of the experts I talked to claim that smartwatches couldn’t replace smartphones. I completely agree with that. Smartwatches won’t replace smartphones; they are a fun accessory that people wear from morning to evening. Considering the fact that this accessory is on peoples’ wrists for the biggest part of each day, it will have huge potential to gain customers’ attention.

Indeed the technology for smartwatches today is nowhere near as good as the technology on smartphones or tablets. The first generation of smartwatch models still can’t browse the Internet because of missing Wi-Fi and 3G connectivity features. Therefore, at least for now, smartwatches are primarily cool accessories that can do some useful things: receive notifications from Twitter, Facebook, email, SMS and different IM systems, take photos, handle incoming calls or navigate through music players. But this range of functions is expanding faster and faster. The second generation of smartwatches may well have a much bigger impact on omnichannel commerce. It’s reasonable to expect that smartwatches will soon be an extension of the smartphone that brings even more relevance and convenience to the user.

Will consumers use smartwatches for online shopping or content browsing despite the fact that it is easier to do with a smartphone?

Currently there is no functionality that allows consumers to shop or browse digital content on their smartwatches. Right now ‘early adopter’ consumers are in the exploration stage, trying to decide whether they like their smartwatches just because they are a nice new gadget, or because they actually provide valuable features that make people’s lives easier and more fun. So the point is not to question the missing technological capabilities but rather to find the right use cases that will bring value to consumers within their shopping journey.

This is not about simply offering an additional commerce touch point and copying the online shop that contains the complete product catalogue. Considering the fact that the smartphone has a different screen size and that people use it in a different context, the focus is on simplicity and relevance. Consumers probably won’t sit at their desk or in front of their TV and browse the online catalogue on their smartwatches. They will more likely look for relevant content, value-added features and entertainment.

Entertaining apps especially developed for smartwatches can attract consumers’ attention without representing the entire product range on a 1.6-inch display. For instance, Puma developed a PumaTrac App that consumers can use on their Pebble smartwatch for activities such as running. The app enables users to keep an eye on speed, time and distance during the run. It also allows users to track their routes, performance statistics and share results with their friends.

The PumaTrac App is a very good example of how brands can grab consumers’ attention and increase awareness within their target audience. Another example is the Mercedes Digital DriveStyle App. The user can retrieve information about his car on his smartwatch, such as the fuel level, mileage or tyre pressure. The possibility to improve the efficiency of already existing devices (e.g. smartphones) just by using a smartwatch creates significant added value.

There is a variety of ways merchants can use smartwatches to engage with their customers. What use cases could there be for smartwatches in the future?

Mobile commerce is currently a huge topic and sees noticeably more acceptance than ever before. Merchants are working on the integration of smartphone- and tablet-optimised mobile shops and apps. The chances of the smartwatch establishing itself as another, fully integrated shopping touchpoint are, however, rather slim. It is more likely that the smartwatch will take up an important role in stretching the mobile arm. For instance, in a scenario where the mobile phone sits at the bottom of a messy handbag and the user doesn’t want to dig it out for a simple task.

A study by KPCB conducted in 2013 looked at what we want from our smartphones every day. A typical user picks up the phone around 150 times a day, for example to check the time, read messages or make calls. Many of these tasks could easily be performed on a wearable item such as a smartwatch. What does this tell us about the future of these technologies with regard to their role in tomorrow’s mobile commerce? At least it tells us that wearables can play quite a useful role in our everyday lives, and consumers may start to expect this added convenience.

The newer generation of smartwatches and their increased acceptance will therefore have an impact on omni-channel commerce and the design of the customer journey. For instance, consumers may want to use their smartwatches to check an order status, receive shipping notifications, use store locators to find a store or make an appointment with the sales associate. In the B2B segment a business buyer may use his smartwatch to approve an order.

The usability of the device could be significantly expanded with integrated microphones and speakers. For example, to enter voice commands such as “Set the alarm for 7:00” or “Search for store”. This would significantly simplify the way we interact with smartwatches. Siri or Google Voice are examples where this kind of functionality is already used. The creation of notes or to do lists via voice command is already a reality, too. Just imagine, you are walking through the city centre and your smartwatch reminds you that you just passed a store where you wanted to buy something, because it has synchronised your previously created shopping list with you current location.

Another possible scenario: people often spend a lot of time walking the supermarket aisles, searching for items that are on their shopping list. Wouldn’t it be helpful if the smartwatch vibrated as you pass the product that you are looking for? Apple’s iBeacon already provides the technology fundament for this use case.

These small portable accessories also have the potential to store more data in the future. Today tickets such as concert tickets or train tickets are increasingly issued digitally and then printed at home. A more environmentally friendly alternative to the printout would be to transfer these digital tickets on to the smartwatch and use them for access control at the venue via wireless connections. With an additional status endorsement within these virtual tickets users could get access to special areas such as VIP zones without identifying themselves.

A smartwatch that securely holds customer information and the data required for payments could become a new near field communication (NFC)-based payment method. In the future it could be quite possible that a shopper adds items to his shopping cart at home, synchronises the shopping cart with his watch and later uses the watch in the store to retrieve data and pay for his purchases, all with just one device.

Finally, by using location-based services on the smartwatch, merchants can distribute vouchers and promotion codes that can be redeemed in-store.

In fact there are many use scenarios that are conceivable in the commerce space. In principle, there are no technological restrictions within commerce platforms. An open platform and an extensive commerce API allows all commerce capabilities to be re-used on any emerging touchpoint such as a smartwatch. The challenge for merchants is designing a frictionless customer journey by incorporating these new touchpoints. An ideal customer journey will harmonise all touchpoints and create clear use cases that fulfill the need of the target customers. The amount and nature of the information and the functions provided on each touchpoint needs to match customers’ needs and intent. Be it a smartphone or a smartwatch, each touchpoint needs to become more relevant in the respective buying stage.

Intershop’s e-commerce experts will be at Internet Retailing Expo to discuss this and other trends that will shape the future of omnichannel commerce. They can be found in the Coffee Shop, which is sponsored by Intershop.

Drazena Ivicic is senior manager global product marketing, Intershop [irdx vinc].

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