Jeremy Black, director of retail at Xtreme Labs, details the three things every retailer needs to know to achieve mobile commerce success.
By Jeremy Black
Mobile commerce's share of total e-commerce sales has doubled in each of the past three years. But still some retailers have not taken the right measures to address mobile.
Maybe that's because the problem looks more complex than it really is. In reality, there are just three main things every retailer needs to do to create a winning mobile strategy.
Understand 'Why Mobile' Retailers should clearly understand why they are investing in mobile. M-commerce's rapid growth is a good place to start, but the business case is not quite as simple.
A friend who works for Google once told me that in retail if 1% of traffic comes from mobile devices you'd better be thinking about a mobile strategy; if 5% of traffic comes from mobile devices you'd better be executing your mobile strategy; and if 10% of traffic comes from mobile devices and you don't have a great mobile experience you are losing market share to your competitors.
The shift from desktop to mobile alone is enough to warrant some investment in mobile. But many retailers are having a difficult time understanding how their customers specifically, and the way they engage with them, translates into a great mobile experience.
Karmaloop.com is a great example of a retailer that uses the most natural way to extend a desktop experience to mobile. Xtreme Labs first started working with Karmaloop in the fall of 2011 when one of its executives began looking at its mobile opportunity based on a shift in the retailer's customer behaviors. Consumers in Karmaloop's primary customer demographic, those mostly between ages 17 and 28, were shifting their attention from desktop to mobile faster than any other, and Karmaloop had already experienced good results from a previous mobile optimization of its sites. As more customers used mobile devices to access Karmaloop, the team had to figure new ways to do many of the things they had done successfully on its desktop site.
After looking at traffic sources, conversion funnels, e-mail marketing strategies and other data points for each of Karmaloop's brands, it became clear that many of the key drivers of the retailer's success weren't just replicable, but could actually be enhanced through mobile apps. For example, because Karmaloop customers are motivated by discounts, a mobile app that features push notifications speeds up the delivery and increases the relevance of its discount offers. The retailer also made mobile enhancements to its Karmaloop Rep Team—an affiliate program made up of Karmaloop fans that accounts for a meaningful percentage of the e-retailer's sales—to strengthen that channel.
Karmaloop's decision to further invest in mobile was focused on enhancing areas of its business that were already successful. The retailer sought to understand how mobile fits with, and extends, its existing customers' experiences so that it would know where to focus its mobile investment.
Focus on Customers Retailers need to focus on building experiences that customers want. Understanding the relationship between business operations, customer relationships and mobile is the first step toward developing a mobile strategy. The second step is to translate this understanding into an offering that customers want. The mobile channel represents a great opportunity for retailers to engage deeply with customers and drive more revenue.
Montreal-based web-only retailer and lifestyle brand Frank & Oak provides a great example of how retailers can create experiences that put the focus on customers. The Hunt Club, Frank & Oak's risk-free membership service, is a natural fit on mobile. Simple but sleek product discovery, purchasing and account management are core pieces of its mobile experience that sees customers snap up the latest apparel from the e-retailer's monthly collections. Frank & Oak's great customer experience on mobile is enough to make most retailers envious.
Key to Frank & Oak's success is its ability to articulate the lifestyle preferences of young adult males with a bent towards technology, says co-founder and chief operating officer Hicham Ratnani. For mobile, this included developing iPhone, iPad and Android apps over the last year that focus on delivering great lifestyle content to help Frank & Oak build trust and engagement with its customers.
Get Executive Commitment Its critical for retailers to commit to the mobile channel as the number of consumers who use mobile devices continues to grow.
To make the mobile channel an area of strength, retailers must secure the commitment from their executives because developing the mobile channel requires significant effort, both in terms of cost and the time it will take to get results beyond just a return on money spent. Mobile must become part of the company's DNA, not because the executive team believes it has to be there, but because it understands the lasting value that this type of customer experience can offer.
I'm always pleased to see retail executives talk about mobile successes publicly. It is particularly encouraging when executives like Howard Schultz, CEO of Starbucks Corp., mentions success in mobile payments and loyalty on quarterly calls with analysts. There is no mistaking that Starbucks is committed to mobile, and this commitment gives its teams the freedom to build experiences that matter to customers and deliver long-term business value, not just a return on a project budget.
So where to start? Kevin Bates, president at sports apparel e-retailer Fanatics Inc., considers mobile important enough that he gives it his hands-on attention. Bates and his peers have validated every decision related to the Fanatics mobile app experience over the last six months. But the executive-level commitment Fanatics has for mobile only tells half the story. In July, Fanatics appointed former Groupon Inc. mobile chief David Katz as the company's general manager of mobile and announced the creation of a mobile innovation center near San Francisco.
The executive team at Fanatics is committing to a future where success in mobile means they're not just sailing alongside their competitors. The rising tide only lifts all boats if they're in the same body of water.
Mobile commerce is expected to grow to more than $25 billion and make up more than 10% of total e-commerce this year. The winners in mobile will exemplify the understanding, focus and commitment required to be successful in mobile.
Jeremy Black is director of retail at Xtreme Labs, a mobile strategy and product development firm, which was recently acquired by Pivotal.