Stewart Hunter, group operational performance officer at mobile marketing agency Somo, argues retailers need to embrace m-commerce but risk missing out on sales with ineffective apps
Mobile commerce, or m-commerce, is fast becoming the hottest trend in retail as almost half of people in the UK now own a smart phone and consumers become more tech savvy.
Retailers are reacting to it, but the majority need to take more effective action to make the most of what is an unmissable opportunity. A successful multi-channel brand will have mobile at the heart of its marketing strategy, using it as the connection between the physical and the digital.
This is the future for the high street.
Today, £1.3bn is spent through m-commerce, but Barclays Corporate predicts, in a decade’s time, that figure will be £19.3bn. Around £300m worth of groceries have been bought on smart phones so far in 2011 and there’s still Christmas to come. By 2021, this is expected to reach £5bn.
Most brands have taken a shot at it – whether that’s with an application or mobile site – but many have not exploited the full potential this medium can offer. As always, customers will expect a great experience when browsing or purchasing via their mobile device and, if retailers are creating ineffective apps or poorly optimised site, they risk losing out.
According to Ian Carrington, EMEA head of mobile at Google, 83% of top advertisers do not have a mobile optimised site – a website created from scratch or repurposed to work with mobile devices. This is one of the basics for those wanting to engage with modern consumers.
The temptation for retailers is to include as much information as on their traditional website, but they shouldn’t just cram everything onto their mobile offering. They have to understand the different context in which mobile users are browsing and tailor it accordingly. It’s a balancing act to get the functionality right.
Comscore found the top m-commerce activity performed by one in five UK smart phone users in August 2011 was using their device to locate a store. Google’s Our Mobile Planet research shows, in the UK, a quarter of smart phone owners intentionally have their phone with them to compare products and prices in-store. As a result of the information gathered using their smart phone, a fifth changed their mind about purchasing a product. Mobile’s effect on offline sales here is plain to see.
Multi-screen consumers as outlined by a Microsoft Advertising white paper are affluent brand advocates who use mobile devices while watching TV. Microsoft estimates there are currently 19m adults across seven European countries spending 46 hours a week engaged with multi-media channels, a figure that has doubled in two years.
The report states: “Multi-screen consumers believe the smart phone keeps up with their needs—and they expect marketing content residing on this device to evolve just as fast.”
Mobile is a key shopping channel but not yet a primary purchasing channel
While some consumers are still cautious about the security issues related to buying products and services through their mobile, this is improving with the participation of big players like high street banks and the introduction of Google Wallet.
Vodafone’s new advertising campaign carries the strapline ‘Would you rather lose your wallet, or your phone?’ and just a few years ago, that might have been a no-brainer. Increasingly the two are becoming one.
In September, Internet Advertising Bureau research found although m-commerce uptake had been relatively flat from 2010-2011, the amount consumers are spending per transaction increased by £5.29, a rise of 43.3% to £17.49. People are generally becoming more trusting of the process and are happier to use it. The main reason m-commerce is not booming is because retailers are failing to keep up with developments in mobile and do not have the right assets to offer solutions to their customers.
Let’s look at the technology
Technology in the mobile market evolves on a daily basis and it is becoming increasingly fragmented, so it can be tough for retailers to future-proof themselves.
The Pew Research Centre found 11% of American adults now own a tablet device – the fastest selling technology of all time. With the launch of Amazon’s Android app store in March 2011, along with its new Kindle Fire Tablet, this is yet yet another opportunity within the m-commerce landscape. While the number of different operating systems can be daunting, the development of cross-platform solutions, like HTML5, give scope to integrate across this complex ecosystem.
At this stage, retailers across all sectors are struggling to integrate the necessary payment functions into their apps. Quick service restaurants including Domino’s, which made £1m in one day through online sales, 13% of which was from mobile devices, are leading the way. Domino’s has added Pay Pal into its mobile offerings as an answer to mobile payment infrastructure issues.
Industry standards are still being developed across many areas, not least in NFC (near field communications), which gives smart phones the potential to act like electronic wallets. One of the most successful yet perhaps overlooked uses of NFC is in public transportation, London’s Oyster Card system. Technology works best when it becomes invisible in our everyday lives. Integrating NFC payment technology into mobile allows customers to pay for items under a certain value without additional verification.
The retail industry has the opportunity to capitalise on the introduction of NFC chipped mobile devices, increasing transaction speed during peak hours with a positive effect on sales. NFC can also be useful in marketing, enabling brands to offer consumers a coupon or further information when they pass their phone over a certain area. Currently only the Samsung Nexus S has this capability built-in, with Apple expected to integrate its take on NFC into the next iPhone. By 2013, with retailers’ active investment in their POS infrastructure, the use of NFC could become an everyday occurrence for shoppers.
The development of HTML5 has increased the attractiveness of mobile sites ten-fold; consumers can now get the same quality features and richness that can be achieved with mobile apps no matter what type of smart phone. A mobile app can provide far better user experience for something like gaming, while mobile sites can reach a wider audience. It is also cheaper to create one cross-platform mobile site rather than lots of apps that need to be suitable for each different operating system.
Utility of phones
The operations that can be performed using mobile have constantly developed since the Nokia revolution brought mobile to the mass market. Augmented reality (AR) is one of the most imaginative technologies to be embraced by mobile. Originally, specific triggers were needed in order to start an augmented reality programme, but today just using the camera in your phone can bring a product to life. This can initiate marketing messages, promotional offers or information in one very simple move.
AR could really come into its own when looking at cars in a showroom. By pointing a phone’s camera at a car, a consumer could potentially bring up all the technical information, change the paint job, interior materials or choose alloy wheels.
QR code scans have increased by 4549% since 2010, a phenomenal rise, which further demonstrates how some brands are taking note of the potential in mobile. Many smart phone handsets now have QR code readers built-in and they have been well embedded into mainstream advertising.
The US is forging ahead when it comes to businesses incorporating QR codes into their mobile strategy – 14m US adults used QR codes in June 2011. With budget-concious consumers increasingly looking for a bargain, using QR codes as vouchers is something retailers can easily do.
The future holds a massive opportunity – both in terms of revenue and brand building for forward-looking marketing executives.
Those retailers who take heed of the education on offer about fully integrated digital strategies – and take action – can reap the benefits of being part of a revolution in the commerce landscape of the high street, the home and consumers’ busy lives.