23% of e-retail transactions on Thanksgiving and Black Friday came from mobile devices.
Apple’s new mobile operating system may presage a bigger step into mobile commerce
Its iOS7 will enable consumers to store payment card and address information.
Topics: AirDrop, Apple, Authentication, Biometrics, conversion rate, fingerprint, iCloud Keychain, iOS7, iPad, iPhone, m-commerce, Mobile, mobile checkout, mobile commerce, Retail, smartphones, Square
Apple Inc.’s new version of its mobile operating system, iOS7, may provide components that make it easier for consumers to shop using their iPhones and iPads, analysts suggest.
Specifically, two features of the operating system, due out this fall, could enhance the mobile commerce shopping experience. One is iCloud Keychain, which can store passwords, addresses and payment card information on secure Apple servers accessible via any Apple mobile device; the other is AirDrop, a file-sharing service.
ICloud Keychain is a new version of Keychain, currently only available on Apple’s desktop and laptop computers. The new version enables user access to the encrypted data stored in iCloud Keychain regardless of the Apple device they use. It will work similarly to auto-fill capabilities employed by many web browsers, where stored data automatically populate data fields. Keychain itself can be password-protected.
“The overall impact is that it should streamline mobile checkout,” says Rick Oglesby, an analyst at consulting firm Aite Group. “Lots of consumers use the auto-fill capabilities on their desktops and laptops, but don’t have this data available on their mobile devices. So when shopping via mobile they need to manually enter this information.”
Indeed, consumers don’t convert as often on mobile devices. Among the retailers in the Internet Retailer Mobile 400 guide the average conversion rate is 1.69%, about half of the 3.29% average conversion rate for retailers in the Top 500 Guide, which ranks retailers on their total online sales. Apple is No. 2 in the Mobile 400 and No. 3 in the Top 500.
“Anything that Apple does that moves customers to having a strong mobile cloud wallet is a positive,” says George Peabody, an analyst at consulting firm Glenbrook Partners. “A wallet that’s in the cloud, that has payment credentials and other information in it, like rewards points, becomes an enabler for this blended commerce approach that we’re starting to see, that mobile is making possible.”
AirDrop also is a service currently exclusive to Apple desktop and laptop computers. It enables users to drag and drop a file to send it wirelessly to another user on the same network. This makes file sharing easier by eliminating the need for users to connect by using complicated network configuration commands.
That ease of sharing, when it comes to Apple’s mobile devices, also may mitigate some mobile commerce hurdles, Oglesby suggests. AirDrop will enable users to share photos, business cards, Passbook tickets and coupons and other information within the Apple mobile ecosystem, he says. “By embedding this capability into the operating system and by locking out other technologies that make sharing easy and efficient, Apple can own the sharing experiences from start to finish,” Oglesby says. “It hopes to become the de facto sharing service for any application offered on iOS devices.”
Similarly, Peabody also sees potential in AirDrop to expedite mobile commerce. “The in-store component that AirDrop represents could be a new way to pay, or a new way to originate a transaction,” Peabody says. With a tap, a consumer might send her payment and identification information to an in-store Apple device operated by the retailer. The retailer could verify the consumer’s identity using a photo included in the AirDrop content, he suggests. It might mirror the Square Wallet from Square Inc. where the consumer’s payment and photo appear on the merchant’s Square Register software, he says.
The question whether such a system could handle high volumes, Peabody says. “It’s hard to imagine the Square model scaling inside a Wal-Mart on a busy Saturday.”
Peabody also thinks Apple’s next iPhone could make mobile commerce easier if it includes a fingerprint reader. In 2012, Apple bought AuthenTec, a company that provides biometric fingerprint recognition technology, leading to much speculation about how Apple might make use of that identification expertise. A fingerprint reader built into the iPhone would add another layer of security because of the uniqueness of fingerprints.
“That’s pretty much a strong indication we’ll see a fingerprint reader to unlock iPhones, that doubtless too will be used to unlock apps inside the phone,” Peabody says.
Apple did not respond to Internet Retailer inquiries.