Location vs Proximity: How the Proximal Internet will disrupt e-commerce

Proximity vs. Location? 5 Thesis’

These days especially the search dependent ad- marketing industries are slowly but steady acknowledging the decreasing importance of location based decisions rather than the growing importance of proximity becoming different (and bigger!) than the static location based geo-fencing:

  1. Location / location based services (LBS) require the exact geo position as a center of geo-located services and broadcasting
  2. Mostly, location is just an intermediate state (key for geo-database requests). Most of the devices we’re communicating with are moving constantly
  3. Geo data = contextual data: The broadcasting beacons in stores and the related (e-commerce) apps are just the peak of the relevant, decision-influencing proximal iceberg. Any specific behavioral, individual consumer data (shopping and other related accessible historical analytics) are merging with local, specific and contextual data (places, people, brands, services, local weather, time, weekday, offers, events of any kind, etc. nearby)
  4. Proximity includes all relevant context-aware information but doesn’t require a static location
  5. Particularly detected networks (e.g. WIFI, LTED) are required for visibility and connectivity of (IoE) devices in proximity

Google made $51BN global net ad revenue in 2015 (Source: e-marketer) and based on the company’s global net ad revenue share of 30% (Source: DMR) the market is roughly providing $150BN annually.

A growing share of specific sales decisions in proximity will be made by the pre-commerce shopper. Mobile- real-time communication between 34BN+ connected Internet of Things devices of any kind (smartphones, beacons, wearables,..) is becoming the host of the last and most important step of the consumer-business relation within any (proximal-influenced) transaction. Making proximal decisions affects people’s lives literally around their constantly-moving geo position. To explain this we need to dig a bit deeper:

Proximal Internet vs. the Internet

The Proximal Internet communication infrastructure is significantly different to the traditional nearby web based search decisions such as buying products on Amazon. The current Amazon decision isn’t necessarily influenced by a consumer’s proximity until the package gets delivered. Google recently showed a study that breaks down how people make purchases while on the go. Though foot traffic at brick-and-mortars decreased by 57% over the past five years, the value of a shopper’s visit has nearly tripled. Even more important it is to consider Google’s nearby approach; “near me” searches for businesses doubled within the last year. Retailers not only have to step up their offline communication, but their e-commerce also has to be on point. The classic decision making progress is still working and won’t be cannibalized soon but we’re experiencing an expansion into the proximal mobile space.

Some facts and statistics are pointing towards a massive behavioral change and a new way of making decisions in a new digital environment called the Proximal Internet:

  1. The pre-commerce shopper is better informed: People are already intuitively browsing the web reading reviews, rating products and services and already pre-selecting best sellers based on their individual preferences. Focus on product reviews within their mobile app led to a massive 167% jump in mobile orders within a year.
  2. Local on the rise: A Sephora shopper statistic analyzed in 2015 already that 76% of searches for local available products visit the local business within 24h.
  3. Mobile searches via mobile have grown more than 50% within the last year and took over the fixed internet already in 2015 with almost 88% consumers trusting online reviews on the level of personal recommendations).
  4. Mobile apps beat web browser: Yahoo’s Flurry analytics shows that 90% of consumer’s mobile time is spent in apps
  5. Consumers are no longer loyal to specific channels and applications rather than to experiences. The shopper decision tree is changing significantly through the nearby always accessible transparency of decision making information, reviews and recommendation across apps and platforms.

Proximal Internet part one..