A Forrester Research report analyzes the early successes and failures of Apple’s mobile payments system.
PC-like smartphones make it a breeze to access the web. That`s making mobile commerce an increasingly viable strategy to
Put simply, mobile commerce gives retailers a competitive advantage.
A shopper looking at HDTVs in a Best Buy store can access Sears2Go.com to compare prices at Sears, or vice versa with m.BestBuy.com when at a Sears store. Once he decides, he can make a purchase on the phone or head to the other store to get a better deal. A forgetful husband on the train to work can send chocolate overnight to his wife by using the Godiva mobile app on his iPhone. A film buff out with friends who’s told of a great new flick can order the DVD on the spot from Amazon.com via text message.
Pioneering retailers say they are gaining customers and building loyalty by putting their storefronts in consumers’ pockets and purses.
“We would be missing a golden opportunity if we did not offer customers mobile access to Newegg,” says Bernard Luthi, vice president of marketing at Newegg.com, which last year launched an m-commerce site. Luthi is marketing mobile to customers, encouraging them to comparison shop in competitors’ stores, then buy then and there via m.Newegg.com. “M-commerce is a powerful tool.”
Retailers have heard that before-but this time there’s a difference, and it’s called the smartphone. These phones, including Apple Inc.’s iPhone and its imitators, have significant computing power and make accessing the Internet from a mobile phone far easier than with conventional phones. Just as broadband made shopping online far more attractive, so, too, do these powerful smartphones change the game for m-commerce. Now retailers must learn the rules of the game, and quite a few are getting started.
A key to the growth of m-commerce, many retailers and analysts agree, is consumer adoption of the smartphone. Last year, North American consumers purchased 25.8 million smartphones, according to Yankee Group Research. The firm predicts consumers will buy 32.5 million smartphones this year, 41.9 million in 2010, 54.9 million in 2011 and 67.3 million in 2012.
Traffic statistics underscore the tie between mobile commerce and smartphones. 95% of traffic to m-commerce sites created by Usablenet comes from smartphones. The company’s retailer clients include 1-800-Flowers.com, Dell, GameFly, Ralph Lauren, Rugby, Sears, Strand Bookstore, Tickets.com and Victoria’s Secret.
“In the past, a lot of retailers that invested resources and effort in mobile were disappointed in results, which came from consumers having poor experiences on conventional phones,” says Dan Shust, director of emerging media at research and consulting firm Resource Interactive. “But the latest smartphones with their great visual experiences and added functionality like GPS location awareness change everything. Greater adoption of smartphones will lead to greater adoption of m-commerce.”
Here and now
Some retailers are jumping in. At least 40 online retailers, including 19 of the top 100, now have web sites optimized for mobile phones or offer shopping applications that can be downloaded to select smartphones.
Some of these retailers-including 1-800-Flowers.com, Amazon.com, Godiva Chocolatier, Newegg.com and Skymall-are reporting they are pleasantly surprised with sales coming in via m-commerce.
And several have more than a few months of experience to draw on. M-commerce actually began some time ago, in 2001, when Amazon.com launched its Amazon Anywhere site (consumers punch in Amazon.com on a mobile phone, which auto-redirects to a mobile-optimized version). In 2004, Moosejaw Mountaineering (which operates m-commerce site m.Moosejaw.com) sent its first marketing text message.
But it wasn’t until 2007 that m-commerce really began to grow, helped in large part by significant growth in the adoption of smartphones, led by the iPhone. In the last two years, a flurry of retailers have created text message marketing programs, m-commerce sites and downloadable mobile applications to reach out to consumers who keep wanting to do more with their phones.
In response, more vendors began offering m-commerce technology. These include mobile-focused companies like Digby, mPoria Inc. and Usablenet Inc., as well as e-commerce vendors that have added mobile functionality, such as CardinalCommerce Corp. and Escalate Retail. Industry analysts expect their number to grow as retailers in m-commerce today-most of whom rely on vendors for mobile offerings-achieve success, creating a wider market for mobile technology.
Messaging via text
For many retailers, text messaging has been the entry point for mobile commerce. American Eagle Outfitters, CVS, Drs. Foster and Smith, Fragrancenet.com, Gaiam, Ice.com, Karmaloop.com, Meijer, Moosejaw Mountaineering, Vans and Walgreen are but a few of the growing number of retailers using text messages in marketing because the short messages engender immediacy (consumers tend to text messages much more quickly than they do e-mail) and intimacy (consumers virtually always carry their phones, much more personal devices than personal computers).
And text messaging offers something that m-commerce sites, mobile apps and even e-commerce sites and e-mail cannot offer: access to consumers sans the Internet. Text messages travel over the same wireless networks as mobile phone calls, and require no Internet access.
But text messaging is primarily a marketing vehicle. When it comes to making purchases, the action is in mobile web sites. Fully transactional m-commerce sites enable consumers to shop more or less like they would on an e-commerce site, except on a pared-down version. Still, m-commerce sites can provide shoppers access to the same number of products as e-commerce sites.
Such is the case with Skymall. Many of its potential customers are browsing its catalog while sitting in an airplane waiting to take off or stuck on the tarmac. The question becomes: What do they do when they find a product they want? Skymall answered that question with an m-commerce site, Mobile.Skymall.com.
“It’s a great opportunity for us for mobile selling-customers can complete transactions sitting on the plane,” says Jay Scannell, vice president of information technology at Skymall, which launched its m-commerce site, as well as a text messaging program, in July 2007 with the aid of CardinalCommerce. Later this year it will introduce a BlackBerry mobile app built with CardinalCommerce and Digby.
Skymall is ahead of the game when it comes to mobile applications, commonly called apps. Retail mobile apps are where m-commerce sites were three years ago-on the cusp of growth. But there’s no doubt mobile apps in general are popular: Apple’s App Store stocks 15,000 apps (including a handful for m-commerce, all free), with 500 million downloads since it opened in July. And Microsoft (Windows Mobile), Palm and Research in Motion (BlackBerry) are creating app stores for their devices.