Swarm Mobile has a product that may intrigue small brick-and-mortar retailers, but it has some troubling customer relations issues, especially in California. Swarm’s technology is the actual retailer’s way to respond to competition from the virtual world, and it deals, among other things, with a shopping behavior known as “showrooming.” A customer walks into a local electronics store, thoughtlessly agrees to whatever terms and conditions to use the store’s free Wi-Fi, browses politely among the big-screen televisions and then uses a smartphone to check prices online. As far as the retailer is concerned, the sale just left the building.
Swarm Mobile’s technology gives physical retailers the opportunity to collect data that online retailers already gather. It treats customers’ smartphones as offline cookies to collect browsing information, data about in-store web traffic, which section of a store a user is shopping in, where shoppers stand and how long they spend looking at a product. The retailer can then instantaneously offer coupons, discounts, promotions and loyalty points. In the case of the showrooming customer, it may save the sale. Customers get something, of course, but many are uneasy about expanding data collection.
California Leads the Nation in Protecting Internet Privacy, Sort of
The whole conversation is colored by news about NSA wiretapping and other governmental intrusion, but this is marketing, so the situation is different. In 2003, California passed its “Shine the Light” law requiring online marketers to either post a privacy policy or tell consumers who their information is being shared with. It applies to operators of commercial web sites or online services that collect personally identifiable information about California consumers. This gives the law nationwide application. This provision was recently amended to allow consumers to learn whether a website honors a Do Not Track signal. Notice that the law does not require a
website to honor the signal, just to disclose to consumers when it doesn’t. There may be less here than meets the eye. It’s just a disclosure law.
What’s Next for the Retailer?
Does the law limit data collection by the brick-and-mortar retailer? On its face, it doesn’t seem to because the retailer is not operating a commercial web site or online service. From a public relations view, though, full disclosure of the terms and conditions of the store’s free Wi-Fi may mute any adverse reaction.
There seems to be a growing political appetite for restrictions on customer data collection and marketing. In addition to amending the 2003 law, the Assembly recently passed a grab bag of other provisions relating to consumer privacy protection. On December 12, three Assembly committees on the Judiciary, and Business, Professions & Consumer Protection and the Select Committee on Privacy jointly held an informational hearing to explore an emerging consumer activist agenda. Items included the effectiveness of the existing law, the dangers of Big Data, ways to give consumers more control of the use of their personal information and privacy challenges in a “post cookies” world. The title, “Balancing Privacy and Opportunity in the Internet Age,” captures the dilemma. Swarm Mobile’s smart analytics may help to level the playing field for brick-and-mortar retailers. They may turn consumers off or expansive data mining may attract the attention of regulators. We face an challenge to ensure that the interests of all parties are fairly balanced.
EP. 8 of Legally Sound | Smart Business
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