Portland's small retailers have always had to stay on their toes to be competitive in the face of online and big-box stores. Owners work hard to create personal relationships and shops that offer great experiences. Local leaders and business organizations have tried to help inform and motivate consumers with buy-local campaigns. Now, small retailers face an emerging threat from mobile apps that can turn a shop created with love into a showroom for Amazon or eBay.
Modern mobile technology puts powerful apps in the pockets of savvy shoppers. Smartphones have cameras that can be used as sensors to read bar codes or recognize a book just by seeing the cover. High-speed mobile data networks can reach out to more than one online retailer and return matching products with prices and links to buy instantly. Some might think of this type of app as the harbinger of doom for the brick-and-mortar store. Locals armed with knowledge and creativity may prove otherwise.
Flow and the Rise of the Machines
Flow Powered by Amazon is a free iPhone app that uses the camera to scan for bar codes on products. The app also uses image recognition to match books, DVDs, and movies. The image recognition helps Amazon bypass measures taken by brick-and-mortar stores to mask the standard bar code on many products. All a shopper has to do is hold the phone up to different products as the app continuously works.
The results are shown to the shopper though an augmented reality interface. Augmented reality means that the information appears to float in the air in front of the product itself when looked at though the device. Imagine a shop display with little Amazon web pages floating all over it. The shopper sees the price of the product, the shipping price, ratings from reviews, and sometimes movie or audio clips. If the shopper has an Amazon account, they can choose to buy instantly.
Since Amazon sells a huge volume, they can discount many products below MSRP. They have also mounted a national ad campaign advising consumers to go to retail locations to see products, then buy them on Amazon.
Informal tests of Flow at Powell's Books in Portland's Pearl District showed that the app works as advertised. Powell's uses their own bar code stickers that they place over the manufacturers’. This interferes with Flow’s ability to read the codes. Flow was still able to find every book based on recognition of the book’s cover. Toys in the Powell's children's section proved more difficult, and the image wasn't enough for a match.
Flow is continuing a broader trend of smartphone bar code scanners that have appeared over the past couple of years including Google Goggles, eBay's Redlaser, and Shopsavvy. These companies are investing millions of dollars in mobile shopping tools to try and boost sales. This is partly due to the increase in smartphones and the disposable income of smartphone owners.
Portland Businesses React
Some small business owners are simply unaware that this technology exists, or they have yet to see it in their stores. "No, I have not encountered that yet, mostly people will come in and make a list..." says Pam Lewis, owner of A Children's Place Bookstore. That doesn't mean that shops like Pam's are not familiar with comparison shopping. "...We're known for reading the books and giving advice, so we know when people are taking advantage of that, are coming in and getting information from us on a book and then going somewhere else and getting it cheaper, say at Amazon or one of the big-box stores."
Other owners feel that they should try and prevent camera use. "I have to say I'd try to shut that one down," wrote Debbe Hamada, owner of Tilde, on Facebook. "I don't allow pics in my shop. If people want to find my products elsewhere, they can do it outside of my shop."
The prospect of banning phones isn't appealing to everyone. "I don't think we could ban cell phone cameras. It's likely to leave a bad taste in customers’ mouths," wrote Megan Lynch, of Black Wagon children’s boutique, on Facebook. Megan also advocated covering bar codes with labels and educating consumers about the benefits of shopping locally.
Tips for Dealing with Cyborg Shoppers
So how do small shops deal with apps like Flow as they emerge? Business owners have already come up with some great ideas in a discussion on the Neighborhood Notes Facebook Page. Here is a summary mashed up with some additional tips:
- Banning smartphones is an option that some business owners already practice. The problem with this is that it's not exactly the best form of customer service, and some shoppers might just start skipping your store.
- Placing your own bar codes on products or covering the manufacturers’ code can be especially effective for goods that are not some type of media. Testing books, DVDs, and films shows that advanced apps like Flow can get around this measure. Less sophisticated programs that can't use image recognition can still do text searches, but that is much more time consuming.
- Selling mostly locally made and niche products is a way to minimize the impacts. If something isn't sold on Amazon, it's not going to impact the sale. If the product is scarce everywhere or a collectible the price difference might be minimal.
- Shops that understand what they are seeing have an opportunity to engage customers and use old fashioned salesmanship. Ask customers how your prices compare and appeal to their better nature. Perhaps they want to buy local or greener. Make sure they know that there is no sales tax. They already made a trip to your store, and, if the price difference is small enough, they might feel motivated to buy with a little help.
Knowledge is always one of the best weapons to fight for your business. If you don't know how your merchandise looks to apps like Flow, you should find out. Do some research and identify your vulnerabilities. Customers have to make a judgment based on the price difference versus the convenience of buying the product in front of them. If the difference isn't enough, the brick-and-mortar business has a higher chance of making the sale.
Small businesses in Portland already collaborate to make great products and help each other succeed. If you have additional ideas, please share them as comments or join the discussion on the Neighborhood Notes Facebook Page.