E-commerce grew 20% for Costco in fiscal 2015—20 times faster than store sales.
The new capacities of mobile devices and a cultural shift promise to re-shape online retailing.
With the rise of 800-numbers in the 1970s, the telephone revolutionized retailing. No longer were customers tied to mailing in catalog orders and waiting weeks for their merchandise-or to hear that the item was out of stock.
The Internet promised to cut the phone out of the ordering process and it looked for a while that the telephone’s days as a commerce vehicle were numbered. Now the phone is making a comeback as a shopping tool-but not in the role that it originally played.
Today, the mobile phone is beginning to supplant the computer as the link between consumers and shopping. In Japan, for example, 10.5% of all e-commerce sales last year took place on mobile devices. And what Japan has been experiencing also is occurring in China, India, Brazil and other countries across the globe. “You don’t have to be a visionary to see the day when the mobile phone will be the ultimate converged consumer device,” says Mike Baker, CEO of mobile advertising technology and services firm Enpocket Inc.
It’s about the future
Just as skeptics 10 years ago asked why retailers would go online when their stores and catalogs were thriving, some are asking that question today about mobile shopping, or m-commerce. Outdoor gear retailer Moosejaw Mountaineering has the same answer to m-commerce today that it had to e-commerce in 1995. “When we launched our Internet site in 1995, people asked us why we would put money into the web when our stores were booming,” says Jeffrey Wolfe, COO. “It’s not about cost and it’s not about the short term-it’s about trends. It’s about anticipating customer demand and jumping on it long before the competition.”
Based on inquiries from abroad, customer feedback and intuition, executives at Moosejaw Mountaineering made the call to go mobile nearly four years ago when they started using mobile phones as a marketing tool. Today they’re putting the finishing touches on a full-blown m-commerce site, slated to launch for the holiday shopping season.
“Our goal in electronic commerce is to find as many distribution channels as possible,” Wolfe says. “We don’t expect an explosion of traffic from the start, but we expect significant revenue down the line. Until then, because our store will be listed on wireless carriers’ shopping portals, our name will literally be in the hands of millions and millions of shoppers.”
Unlike Moosejaw, the American retail industry has yet to embark on m-commerce. The fact that the majority of retailers are staying put as m-commerce booms overseas puzzles some industry observers.
The U.S. lags
When Japan’s m-commerce sales exceeded 10% of all e-commerce sales last year, it represented not only a nice round milestone number but also the first time that sales via mobile phone of merchandise exceeded sales via mobile phone of digital content, according to the Japanese government’s annual “Information and Communications in Japan” report. In addition, 69.2 million Japanese accessed the Internet via mobile phone last year vs. 66 million who accessed the Internet via PC. “When it comes to mobile commerce, the U.S. is lagging the rest of the world,” Baker says.
M-commerce, a subset of e-commerce, is the newest retail channel to hit the States; it offers merchants the potential for increased sales and heightened brand awareness. While many in e-commerce may think it’s the giants pioneering m-commerce in the U.S., in actuality it’s forward-thinking smaller retailers-along with a handful of larger players-that are showing the industry the possibilities.
“Statistics from around the world don’t surprise me at all. Our overseas customers tell us about this all the time,” says Moosejaw’s Wolfe. “The success of m-commerce in so many other countries has driven Moosejaw’s decision to invest in m-commerce. We’ve put a lot of thought and work into our mobile strategy and expect to see big profits down the road.”
Founded in 1992, Moosejaw Mountaineering sells apparel and gear for outdoor activities and operates seven stores, three catalogs and an e-commerce site. With examples of success from around the world and plenty of feedback from U.S. and overseas customers, company executives examined the long-term potential of m-commerce, decided to take the plunge, crafted a general strategy to incorporate m-commerce into its e-commerce operations, and reviewed mobile commerce vendors.
Moosejaw selected mPoria Inc. to launch it into the mobile commerce realm. The mobile technology and services vendor takes design guidance and text and image content from retailers, creates mobile commerce sites, negotiates with wireless telecommunications carriers, which work on commission, for placement on the carriers’ mobile shopping portals (or launches freestanding mobile sites not dependent on carriers), and opens and maintains the m-commerce sites. It charges retailers nothing to do this work, opting instead to take commissions on the retailers’ sales via m-commerce.
“The mobile site itself literally is costing us nothing,” Wolfe says. “What we pay for is marketing, order fulfillment, communicating with customers and so on, just like we do with all e-commerce.”
To enable its web site to be accessed by and displayed on mobile browsers, sometimes called minibrowsers or microbrowsers, Moosejaw worked with mPoria on site design. It then sent the vendor its catalog data feeds, images and other web content, communicating which products, content and images were highest priority for the limited screen space of a mobile browser.
The result will be a new, pared-down version of the e-commerce site optimized for display on mobile phones. The retailer’s m-commerce site initially will appear in a few of the country’s major telecommunications carriers’ shopping portals, hosted by the carriers and separate from the Internet. The m-commerce site also will be accessible directly via the Internet through mobile phones’ browsers, independent of carrier-based shopping portals-though portals greatly boost the presence of a retailer in the mobile world as it now stands. Generally, 80% of m-commerce sales worldwide today stem from carrier-based stores while 20% come from standalone m-commerce sites, according to Telephia Inc., a mobile communications industry research firm.