June 2, 2011, 11:41 AM

Ho ho no: Don’t count on NFC for the holidays, m-commerce vendor says

Kony says focus instead on how mobile can help seal in-store sales.

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A smartphone must contain a Near Field Communication, or NFC, chip in order to conduct NFC-based mobile payments. Only a handful of smartphones today contain such chips.

Lately there have been many mobile payments developments, many centering on Near Field Communication, or NFC, the subject of a great deal of buzz. Most recently, Google Inc. announced Google Wallet, a system that enables consumers to wave an NFC chip-equipped smartphone near an NFC reader terminal to pay for merchandise and in the process receive coupons and special offers.

Kony, a mobile commerce technology provider, is advising clients not to concern themselves with NFC as they plan for a mobile 2011 holiday season. Even though the company integrates mobile payments systems, including NFC programs, into its mobile app platform, it says there still are too many hurdles and not enough serious interest in the wireless technology.

“In the near term we’re not going to wake up one day and everyone will have NFC phones,” says David Eads, vice president of product marketing at Kony. “It will happen slowly in the years to come.”

Even if a program like Google Wallet were to take off quickly, it can only do so in a limited fashion because today it only works with one NFC chip-equipped Google smartphone.

“Say some customers walk in and want to use the Google payment model; some might not have a supported credit card, some might not have the right type of phone, and most stores don’t have NFC at the point of sale,” Eads says.

Instead of worrying about this much-ballyhooed wireless payment scheme, retailers should be preparing holiday mobile commerce strategies that target how shoppers use smartphones in stores, Kony advises.

“Retailers need to be thinking about multichannel commerce,” Eads says. “Mobile commerce is different than e-commerce in that it is tying the e-commerce and bricks-and-mortar channels together. Customers are standing in stores looking up product information and prices and reviews, and that is having an impact on sales online and in stores.”

Kony recently surveyed U.K. retailers and found that 42% said mobile commerce was already affecting their online and store sales. 45% said m-commerce will affect online and in-store sales within two years.

“No matter what you do, shoppers are going to be checking prices in your store on their smartphones, and if they don’t like your in-store experience, they will stop coming into your store,” Eads says.

The cure for retailers for the busy holiday season when millions of smartphone-toting shoppers flood bricks-and-mortar stores is to ensure their mobile sites and apps include as much information as possible on products to sway shoppers to buy in-store or via mobile, Eads says. This can also mean using technology like two-dimensional bar codes that link smartphones via bar code scanning apps to web content such as product videos. Further, retailers should make sure that shoppers can buy products that are sold out in stores via mobile sites and apps to dissuade the shoppers from leaving a store for a competitor.

“Retailers should enable consumers’ smartphones to become virtual sales associates; this is tremendously important if you don’t want to lose business to the competition,” Eads says. “And retailers should have not just a mobile web site but also a mobile app. If you are not doing an app in addition to the mobile web, you are probably missing sales.”

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