Peapod's QR Train Station Grocery Trial Shows Mobile Bias

In a series of mobile trials in subway and train stations in Philadelphia and Chicago, online grocer Peapod has been trying to drive sales of milk, diapers and dog food to commuters with a few minutes on—and a smartphone in—their hands. The trials had to deal with mobile technologies with a very uncertain future—such as QR codes—and the frustrating logistics of demoing in cramped public transportation centers.

Peapod got the idea from a wildly successful mobile QR trial that Tesco did in South Korean subways. Peapod's attempt is apparently the first to try and replicate the Tesco efforts in the U.S.

The trial itself was straightforward. At the test sites, huge high-resolution digital images of various products lined the walls. Shoppers would download the Peapod app, and then scan the QR codes of any interesting SKUs using their phone's camera. Groceries could be purchased and delivered to the shopper's home. The trial had a $60 minimum order, and it offered shoppers a $20 credit.

The dollars—and the ROI—involved in the project made it unusual. On the one hand, the trial's $60 minimum is rather steep for a trial of a new technological approach. To insist on a change in behavior and to insist on at least $60? (OK, with the $20 gift, a $40 commitment.) Small orders come with a $9.95 delivery charge, which drops to $6.95 when the order tops $100.

So why the $60 rule? "Because we're in business, and we have to make it make sense," answered Elana Margolis, Peapod's director of corporate communications.

Fair enough. But Margolis also sounded more financially relaxed when discussing the trial's sales and how items have been scanned. "This was not a campaign meant to have an ROI. It was intended to create awareness," she said. "It is supposed to be educational (to shoppers) that we do have a mobile app. This was not a campaign meant to flood the doors open (with sales), but we're also not losing money on it."

Didn't the trial have some type of financial or download goals before it was launched? "This was just a test for us. We didn't want to put any numbers against it," Margolis said.

After consumers make a purchase, they are offered free delivery for 60 days after the first delivery.

The trial, which is in one location in Chicago and at 15 train stations in the Philadelphia metropolitan area, showcased a much more limited sample of products than did Tesco, which tried to re-create much of a full store. "Korea doesn't have as much access to their local stores as we do," Margolis said.Although the Peapod mobile app features some 12,000 SKUs, just 70 items are being used in the Chicago trial and even fewer—about 45 items—are being tested in Philadelphia.

Part of the challenge was logistics. For comfortable QR interactions, the images need to be at eye level and about 5 feet from where the shopper is standing. Much more than 5 feet and the phone won't grab the code properly; much less than 5 feet and the shopper can't see enough of the super-sized image. That had to be worked into a limited train station—or subway—space.

The small sample of products displayed were chosen based on their perceived convenience. Items included milk, bread, Coke, water, dog food, diapers, paper towels, Kleenex and ready-to-heat meals.

"We wanted to showcase convenience products, and then let (the customers) continue shopping in the mobile app" while on the train, Margolis said.

One debated point was the technology to be used. QR codes have become popular with retailers that want to do quick mobile trials. Indeed, Home Depot and Macy's in October 2011 were exploring using QR codes that would display different things based on a shopper's CRM profile. And JCPenney got QR clever with an effort in November to track where gifts ended up.

But as much as retailers love QR for its ease-of-use and platform agnosticism, consumers have been confused and generally unenthusiastic.

Peapod was practical about the QR code decision, after initially briefly considering NFC. "Our Web team decided (to use QR) because it was the easiest way to track" shopper activity, Margolis said, adding that the relatively short duration of the trials made it a no-brainer. It's not as though QR codes would disappear by the end of the trials.

The trials have only been supporting two smartphone platforms (iPhone and Android), and Margolis said it's been no contest about which platform was more popular. "Thus far, it's been 90 percent iPhones and 10 percent Android," she said.

The products are using the same UPC codes that Peapod uses on the app, so it's easy to keep track of products purchased.

When observing consumers trying to use the QR codes, Margolis said the age differences were extreme. "All of the young people going through, they had no problem," she said, adding that she witnessed one customer ("a guy probably in his 50s") who was struggling.

He "was trying to do it and he was asking someone else for help. The problem seemed to be that he wasn't holding his scan steady enough," Margolis said.