October 28, 2009, 12:00 AM

Mobile commerce has arrived

Numbers don’t lie: 112 retailers have mobile sites or apps that are attracting millions of visitors per month. But what about sales?

Lead Photo

 

Ready or not, retailers have to create a mobile commerce strategy. In the past 18 months, m-commerce has jumped from experiment to reality. Here are the facts:

  • On any given day, 57.8 million American consumers access the web via mobile devices, according to the Pew Research Center.
  • There are 112 retailers, 58 in the Internet Retailer Top 500, with 153 m-commerce sites and/or apps.
  • North American mobile commerce sales will top $750 million this year, according to new data from emerging technologies consulting firm ABI Research.
  • Retailers in mobile commerce report consumers are not just browsing or comparing prices, they’re buying-and sales are growing. EBay, for example, reported a whopping $380 million in sales through its iPhone app and m-commerce site for the first nine months of 2009.
  • EBay’s mobile site and app combined received 5.4 million unique monthly visitors in August, according to The Nielsen Co. Amazon.com received nearly 3.5 million, Gamespot about 2.5 million, Fandango nearly 2.4 million and Netflix just over 2.2 million.
  • Up and down the line, vendors that specialize in mobile commerce technology report business is booming.
  • And the biggest e-commerce technology vendors are falling all over each other introducing m-commerce technology: Escalate Retail in April, Demandware Inc. and ATG in September, MarketLive Inc. in October, Fry Inc. and Venda Inc. in early 2010-and more to come.

“The industry is seeing m-commerce maturing right now,” says Kevin Ranford, director of web marketing at 1-800-Flowers.com Inc., which runs a mobile site and app and employs text message marketing.

 

“From the response we’ve gotten to the types of things people are buying to the feedback we’ve received from customers, we’re there,” says Sam Hall, director of Amazon Mobile at Amazon.com Inc., which operates a mobile site and app and text message marketing and selling.

“There’s no question m-commerce has arrived,” says Steve Yankovich, vice president of platform business solutions and mobile at eBay Inc. “If you are a retailer today and you’re not offering the customer the ability to participate in commerce whenever and wherever they want and another retailer does, you’re going to have a problem.”

To be sure, it’s still early days for mobile commerce, and most retailers are not revealing revenue figures, a sign that sales directly through the phone remain relatively modest. But the retailers that have jumped into m-commerce are learning valuable lessons about the best designs for mobile phones, how to market to consumers through mobile devices, and the special opportunity to tie the mobile phone-which most consumers carry with them always-with in-store shopping.

Growing up

It’s now clear that the turning point for mobile retailing came with the introduction two years ago of Apple Inc.’s iPhone, the first mass market mobile device that made the Internet fun and easy to use, especially on sites optimized for mobile phones. Other manufacturers more recently introduced their own smartphones, with PC-like functionality. And the use of the web from mobile devices exploded.

 

Already, 32% of Americans, 97.3 million of 304 million, have used a conventional mobile phone or smartphone to access the Internet, according to the Pew Research Center’s Internet & American Life Project. This is up from 24% when the survey was last conducted in 2007. On a typical day, 19% of Americans, or 57.8 million individuals, use the Internet on a mobile phone, up from 11% two years ago.

However, that growing use of the web on the go doesn’t necessarily mean it’s ready to become a retail channel, some say.

“Mobile commerce is still in its infancy,” contends Jeffrey Grau, senior analyst at research firm eMarketer. “Web-enabled mobile phone users are much more likely to employ their devices to get weather forecasts, read news, find movie times and bank online than buy products.”

And perhaps mobile commerce is not for every retailer, adds Nikki Baird, a managing partner at Retail Systems Research LLC who follows m-commerce.

“Retailers have to look at their customers and mobile traffic to their e-commerce site,” Baird says. “If you have young customers with thumbs glued to phones 24/7, then mobile is a good bet. If you have baby boomer or retiree customers with moderate or fixed incomes, then it’s probably not a big priority.”

But increasingly, analysts are urging retailers to develop a mobile strategy.

Retailers must decide when-not if-they will launch m-commerce sites or apps, says m-commerce analyst Ian Fogg in a Forrester Research Inc. report titled “Why Mobile’s Time Has Come.” “Failure to pick the right approach now will lead to others seizing control of the new landscape that extends to every minute of consumers’ lives, 24/7,” he states.

Join the club

Whether they are moving out of fear of falling behind competitors or because they see a big opportunity, more and more retailers have been unveiling mobile initiatives. And size does not matter.

Small retailers like BikeSomeWhere.com and SonicElectronix are in the game. Mid-size merchants like Karmaloop and Moosejaw Mountaineering have established mobile sites. And heavy hitters such as Amazon, Sears, QVC, Foot Locker and Newegg are leading the way. (Click here for chart of The Mobile Commerce Universe.)

“M-commerce is likely to follow the history of exponential growth previously experienced by the e-commerce surge,” says Adam Boysen, project manager at e-commerce and m-commerce research and consulting firm Acquity Group. “Given the significant amount of growth in the mobile channel we’ve already seen this year, I believe the tipping point for online retailers to start developing a mobile strategy has already passed. The online retailers that have already invested in the mobile channel are poised to benefit the most from marketing their mobile presence to early adopters, and the exponential revenue growth rates that will soon follow.”

While 102 retailers have built special web sites designed for conventional mobile phones and/or smartphones, many of these same merchants have also gone the route of building dedicated applications-or apps-for specific phones, mostly for the iPhone. Some merchants have gone the app route without building a mobile-optimized site.

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