Tesco has started a research initiative that will see independent software developers creating applications that link to its web site to create new opportunities for online shopping.
The grocery API (application programming interface) project is initially a trial with a limited number of developers but could be expanded if successful.
Last week, the retailer hosted an innovation day, dubbed T-Jam, attended by more than 100 developers looking to share ideas and make money by joining an affiliate scheme.
Some 70 Tesco online grocery customers attended the event and generated 800 ideas around topics such as how to make the online shopping experience better than in-store; making better use of social media; and how to harness the potential of mobile and tools such as internet TV and set-top boxes.
Developers were also briefed about online shopper characteristics so they could aim to make applications that would be successfully used.
Delegates also learned about new features in Tesco’s forthcoming API beta version, such as the ability to search on nutritional information.
The objective is to create programs that generate suggestions to be loaded into an “ideas inbox” within a customer’s online account, that could later be used to help buy related grocery products, said Tesco.com head of research and development Nick Lansley.
“Ideas are best described as ‘media fragments’ such as text, images, audio, video or HTML snippets that the customer wishes to capture as they think of a product – but are not yet linked to a particular grocery item,” he said.
“For example, an application could be used by a customer who is enjoying the wine they are drinking in a restaurant. They could take a photo of the bottle with their camera phone, which is uploaded to their ideas inbox. Or customers might say the word ‘carrots’ into their mobile phone which becomes a sound file and is uploaded,” he said.
“When placing an order at Tesco.com, customers can check their ideas inbox and search for real grocery items, or allow the help of a third-party application and use the specialist intelligence to suggest products based on those media items.”
Lansley cited examples of possible developer applications such as a speech recognition service or a site specialising in deciphering wine labels or photographs of barcodes.
The retailer maintains that cutting cost is not the main driver for the API project. The aim is to work with customers’ ideas and the developers to speed time to market for Tesco.com applications while overcoming the hurdles of limited time and resource.
“We are not running the API project with a view to cost savings; we are running it with a view to bringing a step-change in the customer experience online – but doing this in a reasonable timescale,” said Lansley.
Future milestones for the project will see beta versions of the API interfaces in August and September, followed by a phase two beta of the ideas system in October.
Other improvements around syntax, performance, security and additional features will be made before Tesco locks down changes to the API and creates a blueprint for commercial development during 2010, leading up to a working API on Tesco.com.
“We need to be sure the business is happy,” said Lansley. “It is a research project for a good reason: this has not happened in grocery before and we need to be sure we don’t have something that runs out of control in some way – financially, legally, or security-wise.
“So this project will take slow, careful steps so we do not rush into the unknown.”
How to become a Tesco.com developer
By joining the affiliate scheme, developers can be rewarded for attracting new customers and for generating orders.
The retailer is still defining final figures, but approximate remuneration stands at £5 for each new customer who places an order via an application and 10p for every checkout above a certain value – at least £50.
As a measure of earning potential, the firm uses its end-of-year results, where an average of 250,000 weekly orders were delivered in 2008. So if an application took 0.1 per cent of the orders based on what was delivered last year, with 10 new customers a week, a developer could make £75 a week.
Tesco will select the applications that have the best commercial potential via feedback, but expects developers to seek niche markets where their application will stand more chance of being visible.