Mobile accounted for 25% of Ulta's e-commerce revenue during Q2.
The complex order processing and sliding scale pricing of many mobile payment systems introduces a level of uncertainty most small retailers are not comfortable with.
Everywhere, it seems, evidence abounds of mobility's dominance and the unstoppable rise of mobile commerce. In the U.S., mobile penetration stands at 102%—we have more mobile devices than people. By 2017, according to a forecast by research firm eMarketer Inc., sales made on mobile devices will hit $41 billion in the U.S. and $110 billion worldwide. Here in the states, the one noticeably missing element in this vibrant market: small business.
American small businesses, responsible for $1 trillion in revenue annually, generate almost none of that mobile commerce income, or, for that matter, any type of online sales. Small businesses are a huge and highly diverse group with revenue ranging from $100,000 up to $4.5 million per year. Yet just 8.8% of small business retailers sell via mobile commerce, according to research firm StatisticBrain. Just as surprising: Nearly half of all small businesses lack a web site, and of those that do have a site, most don't bother with a mobile-friendly version, StatisticBrain says.
On the surface, it's easy to write off small businesses' m-commerce inertia to competitive fears. For example, feeling intimidated by Amazon.com Inc. and other giants in the mobile retail space. Other factors may be grounded in concerns about security, risks and cost.
Does news on the hacking of customer accounts at large retailers like Target Corp. cast a chill over online commerce? For newcomers contemplating m-commerce, it may indeed. Word of the Heartbleed Bug's ongoing threat to data security hasn't helped, either. Nor, perhaps, has a recent federal court decision in New Jersey preserving the right of the Federal Trade Commission (FTC) to hold businesses liable for an online security breach that leads to the theft of customers' identities or credit card information.
But perhaps the greatest barrier to small business m-commerce is one they fear they'd be living with long after today's data security frights become ancient history: mobile payment systems. The complex order processing and sliding scale pricing of many systems introduces a level of uncertainty most small retailers would not be comfortable with.
Yet few mobile payment companies devote effort to reassuring smaller retailers. It is rare to see a program expressly designed for local vendors, including features centered around the presentation of goods or services through a mobile device, or explaining how small businesses can gain the mobile marketing edge.
Why not make m-commerce simple, safe and open to any retailer regardless of size or savvy? The model for what might be called "m-commerce for the small business masses" is already around and available. You can find it in, of all places, the late night infomercial.
Telebrands, one of the world's largest infomercial brands, recently launched a payment gateway that provides a new mobile point of sale for customers tired of dialing 800 numbers and waiting on hold. Through an agreement with Bumeno, Telebrands now lets customers use their smartphones to order and pay for an item seen on TV. A customer uses the Bumeno app, punching in a 4-digit code (seen on TV) in the search bar for a product they want to buy. The payment is verified and made via PayPal, which securely stores the customer's payment and shipping information and notifies Telebrands of the purchase. Customers who aren't fans of infomercials have the option to buy direct from Bumeno's network of retailers spanning a range of consumer interests.
For retailers, the allure is a free m-commerce platform and flat-rate pricing on all transactions. In the not-too-distant future, perhaps small businesses will take advantage of the ability to advertise directly on such mobile gateways.
Whatever lays ahead, it is important to recognize that when 90% of an important niche fails to show interest in a trend that's sizzling everywhere else, something is amiss. When m-commerce becomes as transparent and even unnoticeable as ringing up a transaction on the old cash register, perhaps that is the moment that m-commerce for small businesses will take off.