QR CODES AND WHAT THEY MEAN FOR ECOMMERCE. e-business Issue.

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1 emarket Services makes it easier to use electronic marketplaces for international business internacionales QR CODES AND WHAT THEY MEAN FOR ECOMMERCE By Inés Ramírez Nicolás emarket Services Spain e-business Issue October 2012

2 Abstract Pixilated codes have, for some time, appeared on posters and billboards, magazines ads and even consumer products. They are the so called quick response codes that have a broad range of applications in advertising and marketing. Are they the same as two-dimensional codes? Do you know what the codes are used for? Are they appropriate for e-commerce? This article will address any uncertainties about QR codes and shed light on how to take advantage of them in order to grow your business. Where do they come from? QR stands for Quick Response Barcode, a matrix or two dimensional barcode system for storing information, created in 1994 by Euge Damm and Joaco Retes for the Japanese subsidiary of Toyota, Denso Wave. The code looks like three squares placed on a square pattern, two in the upper corners and one at the lower left, which allow the decoder to align the position of the code. Javier Garcia Oltra, founding partner of Pro Solutions, an integral IT company that creates advertising and marketing campaigns with QR codes, says that the advantage of these codes over traditional barcodes is that they can store more than 4,000 alphanumeric characters as opposed to the EAN 13 s thirteen numeric characters. The codes were initially created to register auto industry spare parts, but later applied to all inventory. Thanks to the advent of smartphones and later tablets with camera decoders, QR codes took a great leap forward, becoming consumer oriented and opening endless possibilities to companies as well as to online and offline interactions. Now as a marketing tool, the possibilities must be put to good use since consumers are using the codes more and more. According to a study prepared by Scanlife, in the first quarter of 2012, codes were scanned 13 million times, a 157% increase over the previous year. The majority of users were men (63% vs. 37% women) between 25 and 34 years old. According to a CBS/Kantar Media study, four out of every six European users say they have hear of QR codes, although fewer than 14% have scanned outdoor ads. These figures give us an idea of why it is necessary to know about them and how to apply them in order to take advantage of the potential they have for increasing sales and a company s visibility. October 2012 Pag e 2 of 3

3 How to read the codes Because it is an open code, since Denso Web has not exercised its patent rights, there are many QR code image decoding tools available for smartphones. This is precisely one of the things that differentiate them from two-dimensional or BIDI (2D) barcodes that at times are confused with QR codes. Two-dimensional barcodes were created by Movistar and need their own tool for decoding, says Aleix Palau, a computer engineer who has, among other web pages, a free tool that through simple clicks, allows you to create personalized QR codes. Palau says that there is a simple way of recognizing them, and that is by the three squares we mentioned initially, which 2D barcodes don t have. Another distinction is that 2D barcodes cannot store as much information and they aren t as popular with businesses because of the cost to users. Javier Garcia recommends the QR code reader Scan for ios from iphone, Android and Windows Mobile; and Upcode for the Symbian operating system used in Nokia phones. One of the most interesting features is that they have a 30% tolerance in readability, which allows one to play with the design, apply colors, change direction and create visually attractive and effective codes. QR code designer Patrick Donnelly told Mashable that those design codes are not only a way to make them stand out, but they also add a bit of humanity to what otherwise could seem like cold technology. Advantages of using QR codes What are the main advantages to using QR codes? According to the cofounding partner of Pro Solutions, there are two primary advantages. First, it makes it easier for the user to access content, and Javier gives this example: Imagine that our goal is for the user to access our mobile website for more information on a product that he is looking at or to buy that item. If we only had our web address on the product label, he probably wouldn t take the time to type it on his phone because it is too much trouble. But with a QR code, in one simple step he can reach the website we want him to access. The second advantage according to Garcia is that it makes one wonder what is behind the QR code. User testimonials indicate that soon after they start using the QR code reader application, they look for it everywhere, and decoding can become addictive, says the Pro Solutions cofounding partner. Another advantage is that the QR code is always the same, despite revisions to the information we want to show. There is no need to change the product label, brochure, etc., just the information on the website. That way the codes can be used to keep the consumer up to date on news and promotions. Limiting the target audience to smartphone users can also be an advantage with respect to current market segmentation, since according to statistics, there are more smartphone users among decision makers, which makes it easier to target that profile. When it comes to measuring campaign results, thanks to its verticality and privacy, we can also see the benefits, because it is very easy to follow-up, calculate the return on the investment and manage campaigns. October 2012 Pag e 3 of 3

4 Another related benefit is that of brand perception with reference to the company that uses these codes. Since use is not very widespread, it projects an image of something modern and novel. What can they be used for? As we have already said, QR codes can be used in advertising campaigns and marketing, but they can also be used in merchandising, graphic design, on corporate letterhead and websites and blogs. Besides its easiest use, that is, to access a company s website and social networking profiles, the codes can be used specifically to substitute product labels, since without changing the packaging, the same code provides for example, the broadest amount of nutritional information the product s size will allow; as well as recipes, where the product comes from and when it was produced, if it is available in other stores, related products of interest or simply information about the product in different languages. They can be used as coupons for offers and discounts, placed on product shelves or at the store entrance, or used to access contests and drawings where the QR code takes you directly to registration. The QR codes can also be used as calling cards, stored in the smartphone, to quickly and easily provide anyone with your contact information. And they can be placed on business cards and company brochures to link to successful case studies so customers can see other customer experiences and feel confident in the company. Another alternative is interactive business cards, where the code goes to a mobile - optimized website that has all of the contact information and allows you to download a VCard so you can add the contact to the mobile phone. Aleix Palau adds, You can also write coordinates on the QR code to locate a country house that doesn t have a street address. By scanning the code, the smartphone will locate the coordinates so you can find the house. In line with geolocalization, QR codes can also be linked to augmented reality applications. The people at Pro Solutions say, imagine a QR code on the front of a monument that can access a Google street view of that GPS location which a compass read off of the code, so that we could see that same monument with addition information (surrounding streets, annotations, etc). And if POIs (Points of Interest) have already been created, they can be sent to other augmented reality apps. They can be used to entertain consumers on public transportation and waiting rooms, with brand games or demos, and to freely download music and videos. These codes are being used beyond the business world. Artists Space Invader and QR Street Art have been promoting street art that incorporates QR codes since October 2012 Pag e 4 of 3

5 QR codes in ecommerce It also opens an endless world of additional possibilities for ecommerce. On the one hand, for those companies that have both a brick and mortar and online store, by placing the QR code on the store window or at street level, a connection between the online and offline is made that enables the user to make purchases at the store through the virtual shop. In order to offer the customer the best service, this must be mobile-optimized. QR codes let you experience the impact of a specific ad campaign with the immediacy of buying the product through a mobile device says Javier Garcia. If reading the QR code can provide access to the website shopping cart so that the user can avoid having to remember the item, open the website, do a manual search to finally reach the shopping cart, the likelihood that he will make a purchase increases significantly. Another idea from Pro Solutions is that ecommerce companies take advantage of user downtime and QR code accessibility to access online shopping. They can place the codes on public transportation, at airports, train and subway stations, or any other place where people are hanging around with little to do. The industry has already come up with some interesting proposals for using QR codes in ecommerce. One of the most notable was when Tesco supermarkets, at the end of 2011 put posters of its products with QR codes in the Seoul subway, which allowed users to make purchases directly from their smartphones and receive at-home delivery that very same day. As a result of that campaign, online sales were up 130% and the company saw a 75% increase in the number of customers. Another interesting offer comes from JCPenney. For every gift purchased, the customer receives a sticker with a QR code that when scanned with a code reader, allows him to record a personalized voice message. When the person receives the gift, he can hear the message by scanning the code. Javier Garcia says that there are innumerable ways in which these codes can be used, and that with imagination you can make the most of QR codes. Reduced costs The cost involved in creating a QR code campaign depends largely on what you want to achieve and how the campaign is run. According to Pro Solutions, the code itself can be obtained free of charge with tools like. but it is essential to take care of each code s target platform, taking into account that it can be accessed through a mobile device and a mobile- optimized site. The integrated IT solutions company Pro Solutions has created a free web app, psqrl.es, for developing QR code related mobile websites that allows you to create optimized tags for mobiles and the code to access the site. Regarding costs,, Pro Solutions cofounder Javier Garcia offers an example: to set up a contest that can be accessed with a QR code placed on an item label that goes directly to the registration page costs around 1,000 to design and program for a mobile-optimized website. However, adds Garcia, each campaign must be studied individually in order to determine the amount of work required to get it up and running. October 2012 Pag e 5 of 3

6 Present and future A recent study from Selenus, titled Marketing Strategies for Mobile Devices with QR Codes concludes that in Spain, 71% of companies consider that these codes can be useful in times of financial crisis, but 68.8% of those companies that use QR codes do so without any kind of strategy, and 53% do not collect scan statistics, while 41% of those surveyed feel it is important to have that information. This is still relatively unknown territory. Aleix Palau says that it is interesting that campaigns still explain how QR codes work to those that are unfamiliar with the codes, since even though they are catching on, they are still not widespread. Although he believes that it will take a few more years before everyone is familiar with this tool, he does say that there are more people using the codes and that know how to create and read them. Palau says that a few days ago he noticed a QR code on a car-for-sale ad in the paper, and it made him feel good to see that people were using the codes for private matters. Even though they are not as widespread as say in Japan, for example, I believe the future promises that more mobile devices will have code readers and campaigns will adapt themselves to QR code features and sales adds the Pro Solutions cofounder. They will become an essential part of our daily lives. And along these lines, Aleix Palau says he believes that just as with corporate websites, which in the beginning were very few and now are widespread, the same will happen with QR codes. People will get used to using QR codes every day to get information that we can read later or store in the smartphone or tablet. October 2012 Pag e 6 of 3