E-commerce was supposed to herald the end of the brick-and-mortar retailer. From bookstores to consumer electronics retailers, tech companies have been working hard to steer shoppers away from physical stores.

Now, however, some traditional retailers are trying to turn the digital tables on the competition. Using technology developed by Venice’s inMarket that allows retail businesses to send mobile coupons to customers while they’re shopping, physical retailers are trying to keep consumers coming back in search of deals rather than buying products online.

Todd Dipaola, inMarket’s co-founder and chief executive, said the company’s “mobile-to-mortar” platform is helping retailers take up arms against online sites like Amazon.com that capitalize on “showrooming” – when consumers evaluate products in person then leave the store to buy them online at lower prices. Showrooming by some estimates costs U.S. retailers roughly $1 billion a year.

A September study conducted by Columbia Business School in New York found that one-fifth of all consumers use mobile devices while in retail stores to assist in their shopping decisions. Of those, 70 percent said they visited a store to look at a product and wound up buying it online instead.

Amazon’s new Fire smartphone even has a feature the trade magazine Business Insider referred to as a “built-in showrooming tool.” The phone can identify more than 100 million items via its built-in camera and give users the option of purchasing it from Amazon.

Accessing technology introduced within the last year into smartphones using the iOS and Android operating systems, inMarket is one of several companies that has developed a platform that can send coupons, loyalty rewards and grocery list reminders to shoppers as they walk through stores.

While the new technology could be a boon to long-suffering retailers, the software relies heavily on information stored in phones, leading consumer privacy advocates to argue that inMarket and others should be doing more to inform consumers of their data collection habits.

Always on

InMarket’s technology enables smartphone apps to detect signals from Bluetooth-enabled beacons placed in stores that track shoppers’ exact locations more precisely than even GPS. Each retailer controls what types of mobile notifications are sent at its stores.

Even retailers not as acutely affected by showrooming are getting in on hypertargeted marketing. Wholesale distributor Unified Grocers, a Commerce co-operative of retailers, deployed inMarket’s platform in select member stores in California and Washington state in June as part of a pilot program. L.A. stores could have beacons installed later this year.

In addition to three of its apps, inMarket also partners with makers of several other mobile apps, including Epicurious, a mobile recipe digest, and Key Ring, which stores loyalty cards that can be scanned from within its app at checkout.

Such developments in mobile technology, said Joao Machado, director of mobile for ad agency OMD in Los Angeles, are pulling consumers in multiple directions.

That’s where entrepreneurs like Dipaola come in to help physical retailers such as drugstores, home improvement centers and computer vendors combat showrooming.

“Savvy retailers are adjusting their marketing tactics,” Dipaola said, imagining a scenario where a customer walks in a store and is immediately sent a mobile “circular” about what’s on sale.

Dipaola and his brother Mark launched inMarket in 2010, after the sale of their ad tech firm Vantage Media for more than $100 million in 2007, and have been funding it internally.

He declined to disclose inMarket’s revenue, but said it has seen at least 100 percent growth every year since its inception.

A market that offers that kind of growth was bound to lure competitors, and among the other players inMarket is facing is Redwood City’s Shopkick, founded in 2009. It launched its shopBeacon platform in November at Macy’s stores in New York and San Francisco, and signed a deal with 100 American Eagle and Aerie stores nationwide in January. The company is backed by $20 million in venture funding from major Silicon Valley investors including Greylock Partners, SV Angel and Kleiner Perkins Caufield & Byers.

Shopkick’s technology allows consumers to earn redeemable rewards such as gift cards, song downloads and movie tickets. The company said that it drove more than $500 million in revenue to retail and brand partners in 2013, compared with $200 million in 2012.

“Shopkick is the one that really started on a massive scale,” said OMD’s Machado, referring to the company’s partnership with Macy’s.

He said beacon-based digital campaigns are helping retailers large and small keep shoppers in their stores while also delivering additional insights into consumer habits.

“It’s going to be something you’ll see happen a lot more often,” he said.

Coco Jones, Shopkick’s head of brand partnerships, pointed out that despite competition from virtual retailers, physical retail in the United States is still a more than $3 trillion industry.

Mobile transactions in the United States are only expected to reach $114 billion this year, according to a report from Forrester Research.

Nevertheless, Jones said, “for our alliance partners there has been a positive impact” in regards to showrooming.

In addition to location data that’s acquired by inMarket and the retailer, inMarket said it “may share nonpersonally identifiable information, such as unique device identifiers and aggregated user statistics, with third parties.”

The company makes clear in its privacy policy that consumers should think long and hard about whether to let a marketer know where you are.

“You should consider the pros and cons involved in disclosing your location information to us and to other people,” reads the policy posted on inMarket’s website.

But that suggestion does not allay the concerns of Paul Stephens, director of policy and advocacy at the Privacy Rights Clearinghouse. He questions whether inMarket’s privacy policy does enough to safeguard information about consumers and their habits from third parties, saying he finds aspects of its privacy policy troublesome.

Disclosing location information while shopping for potentially sensitive items, such as those related to birth control or pregnancy, could lead to unwanted solicitations in the future, he said.

“Do you want to have your information shared with all these external sources?” Stephens asked. “One must realize that there is a cost, particularly with tech that comes to the consumer at no cost.”

InMarket says personal and demographic information such as an email and home address, gender or ZIP code is only collected if a user offers it themselves during the app registration process or by signing up for a newsletter or sweepstakes. Personal data is also culled if the shopper connects to the app via Facebook or Twitter.

Shopkick’s Jones said its app users opt in to sharing some data when they download and use the product.

“Our users are self-selecting to give us their location and turn on the Bluetooth setting,” she said.

Stephens said companies that utilize beacon technology should make their dealings with third parties more explicit instead of burying it in the fine print of a privacy policy. He believes no information at all should be shared without a consumer’s consent.

“Unless something is really in your face in regards to privacy, consumers tend to be oblivious,” he said.

InMarket did not return a request for comment regarding Stephens’ remarks.

Machado said protecting consumer privacy is an issue that concerns the entire sector of mobile commerce.

“It’s not just restricted to beacon technology,” he said. “It’s an ongoing challenge.”

Correction: An earlier version of this story incorrectly stated that Shopkick's shopBeacon technology is deployed in 15 of the largest national retail chains. It is an earlier Shopkick sensor that is deployed in those stores.

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