Beacon-powered O2O deployments in China so far a waste of potential

Filip Zielinski

Beacons, essentially indoor GPS-like hardware that can communicate with your smartphone via Bluetooth to precisely determine the location of people and objects, are the backbone of the Internet of Things, and one of the most promising technologies for creating seamless O2O experiences. China has seen a few deployments, yet none of them have leveraged the full potential of beacons.

First there was excitement
Some of the big tech players quickly embraced the technology, and so everybody got an appetite for exciting projects and for China to lead the world in adopting location services based on beacon technology. Early on, Tencent enabled WeChat integration with beacons. Then Wanda deployed thousands of these devices in all of their shopping malls and hotels after announcing a USD 800 million joint venture focusing on O2O, which was signed at the end of 2014. Some of the most well-known museums, such as the Forbidden City or the Summer Palace, boasted on prime time TV that they now provide state-of-the-art indoor navigation. A few months ago, jewelry brand Chow Tai Fook received attention for reaching outstanding revenue by leveraging the magic of beacons.

So what’s wrong exactly?
Every single commercial use of beacons that you might have read or heard about in China is about coupons. Ironically enough, the process is not automatic or even smooth. You actually need to take the phone out, open an app, and shake your phone. More about this later, but if that sounds like the total opposite of what beacons are supposed to be, then I agree. A lot of this could easily be achieved with QR codes, which are widely popular in China, free, and last for ever.

Another big issue is malfunctioning apps/hardware that give you a bad user experience.

I was very excited to be guided through the new, digitalized version of the Summer Palace by beacon technology when I visited the famous tourist spot in early 2015. I walked around for 3 hours, passing by all the important points of interest and I only received one notification about the object I was standing next to. Needless to say I was disappointed, and I wish the management of the museum took time to properly select a reliable vendor who could advise on calibration, deployment and more.

The beacon-related industry is still in its early stage, and so inevitably there will be mistakes made. However, like with any other technology, you need to test first, and then go for the full scale launch. One obvious tip to those running museums: test the battery life and reliability of the signal. If the Summer Palace did it properly, its visitors wouldn’t be frustrated just one month after the beacon guide was launched.

WeChat dominance
Retail-based beacon projects that have been launched so far in China all focus on integration with WeChat. The most recent data shows that this most popular Chinese instant messaging app has 580 million daily active users, and so, unsurprisingly, every brand, every small and medium-sized enterprise (SME), and every customer wants everything to be on WeChat these days. It’s a whole ecosystem that lets you invest in money market funds, transfer money to friends, pay for groceries and above all, communicate with pretty much anybody in your network.

The problem is that Tencent, the company behind WeChat, strictly controls the flow of information in the app, claiming it intends to protect users from spam. Because of this, to get any content from a beacon nearby, you need to open WeChat, find the ‘shake’ function, and shake your phone to receive the information.

Compared to automatic notifications and apps running in the background, not only this is sub-optimal for the user, but the biggest issue is that you can only access one beacon at a time. In turn, this means brands cannot do indoor navigation, create heat maps, track the user’s journey through the store, and create a wealth of other data through WeChat-beacon integration.

What does the future hold?
There are a few ways forward. For starters, Tencent could enhance the beacon functionality within WeChat, and that would probably be the best news for everybody. Is this likely? It’s all speculation.. if you’re a brand manager and you’re certain you want to be on WeChat, then don’t try to use beacons, because it just doesn’t make sense.

An alternative would be to create stand-alone apps like brands and companies do in all other markets. Sure, it can be a long, expensive journey that wouldn’t bring much value. On the other hand, if in a few years you don’t have an app that is relevant to your customer, then I’m afraid you’re on a downhill track.

Another way is to focus on enterprise-level solutions where you require staff to have the app on their devices. It’s a completely different game from consumer-facing solutions and it’s much easier to measure ROI and achieve efficiency. Most importantly, you don’t have to worry about engagement rates, bluetooth open rates, and other obstacles that always come up when discussing beacon deployments.

Filip Zielinski works for, a global beacon vendor, managing its operations in the Asia Pacific. Prior to this position, he managed business development for Qihoo 360 and ran a popular Lanzhou beef noodle restaurant.

(Top photo from Baidu Images)

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