Amazon has cast a long shadow over the retail world, shaking brick-and-mortar retailers to the core and leaving retail e-commerce investors uncertain about whether they are putting money into a lost cause.

But brick-and-mortar retailers are finding their footing again, using technology to transform their physical stores into an Amazon-like digital experience.

"We call it augmented commerce," said Ashok Narasimhan, CEO of San Francisco-based Omnyway, which provides the technology behind Kohl's Pay and other retail mobile payment and loyalty programs.

Ashok Narasimhan, CEO of San Francisco-based Omnyway
E-commerce IRL
"In this new approach for brick-and-mortar, a shopper could walk out with three physical items and maybe two or three in their virtual cart to be shipped later. This is how the retailer can compete and not lose those sales," said Ashok Narasimhan, CEO of Omnyway.

"What we do is virtualize the entire physical store in the cloud and then make the consumer mobile device the point of interaction to bring virtual and physical worlds together," Narasimhan said.

Embedded payments within the retailer's Omnyway-powered mobile app lay the foundation for this sort of interaction, giving a brick-and-mortar retailer more knowledge about a consumer who previously may have walked in and out of the store without the retailer ever knowing.

A consumer walking into a physical store could be greeted through a message on their phone, in the same manner Amazon greets a consumer on its site. As part of that message, the retailer could provide product recommendations and deals.

In the augmented commerce experience, the shopper could scan bar codes for product info and price comparisons, and the retailer could then offer a discount to keep its pricing competitive, Narasimhan said. The digital experience can also make up for shortcomings in the retailer's inventory.

"In this new approach for brick-and-mortar, a shopper could walk out with three physical items and maybe two or three in their virtual cart to be shipped later," Narasimhan said. "This is how the retailer can compete and not lose those sales."

In another move to help the retailers with their e-commerce sites, Omnyway launched ZapBuy two months ago to sell items directly from ads through QR code scans.

It's a critical time for retailers to establish their own apps as their "lifeline to compete with Amazon," said Richard Crone, chief executive of San Carlos, Calif.-based payments consulting firm Crone Consulting LLC. "This is what Omnyway is offering through its white label service and embedding payment into the retailer app."

Omnyway understands that the primary way to serve customers in a one-on-one relationship is through a retailer app, and that it can't be done without adding payments as the foundation the retailer needs to better know the customer and reward the most loyal ones, Crone said.

"The [merchants] benefiting the most are the first-movers on this, and those are all of the quick-service restaurants that have gone to order-and-pay-ahead in their apps," Crone said.

That sort of process is really best suited for customers who are loyal to a certain retailer, Narasimhan said, noting that consumers are not going to download apps for stores they visit only occasionally. That's why Omnyway is approaching banks to get involved in the augmented commerce process.

"We go to the banks and tell them we can enhance their mobile banking app by allowing certain retailer apps to be part of it," Narasimhan said. "Consumers who use the bank app to make payments would be able to load the retailer deals through their bank app."

The consumer would still get the benefits of the retailer's coupons and special offers, but wouldn't have to download separate retailer apps to do so, he added.

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