Stop me if you’ve heard this before: 2011 is the year of mobile. No really, says M-retailing’s Editor Paul Skeldon, it is going to be the year that smartphones and their ilk come to play a hugely significant role in retailing – perhaps even laying the ground work for mobile’s eventual take over of ecommerce.
THE REASON for my optimism is that during 2010 mobile in retail has gone from nought to business-critical in nine months. Back in March, when Internet Retailing magazine started its own dedicated m-retailing coverage online, most retailers had an inkling that mobile was important, but didn’t really have much in the way of strategic vision for it.
By April that had changed: retailers knew that they all needed something mobile – probably an app – just to show willing. Spring 2010 brought the beginnings of the app verses m-web debate: with everyone asking themselves ‘If you’re going to mobilise your brand should you just optimise your website or should you build an app?’ June, July and August all saw a raft of launches of apps, mobile optimised websites and so forth from many a brand, while the Autumn saw this process move from a trickle to a torrent until, by Christmas, we found ourselves literally and metaphorically snowed under – with both snow and mobile offerings.
And this is what gives me hope for 2011 being the year of m-commerce. Christmas 2010 saw a sudden spike in consumer interest in using mobile as a shopping channel. A Tesco survey in November predicted that 10% of Christmas spending would be done on mobile. Tamar Research said it would be closer to 20%. Halfords predicted 13%. In the US, IDC suggested that 23% of ecommerce spend over Christmas would be from mobile.
With these figures flashing about, retailers fell over themselves to get apps, m-web or, often, both to market before the Christmas rush – all suddenly on board with the idea that consumers want mobile commerce and they have to deliver. Driven by this sudden realisation that consumers want more m-retailing than retailers had been prepared to give them, 2011 marks a very rapid maturation – certainly for tier one and two retailers – of mobile commerce strategy, often with some dramatic consequences.
For instance, ecommerce platform integrator PortalTech has seen a huge upswing in the number of RFPs coming its way at the tail-end of 2010 for whole new ecommerce platforms that feature mobile either at their centre or as an integral part. “Often we are seeing retailers coming along and actually wanting to junk their existing ecommerce platform – even though many aren’t that old – and replace it with a newer, multi-channel platform, because they no longer see mobile as an add-on, but rather part of the whole commerce process,” says Mark Adams, Sales and Marketing Director at the company.
“We are also seeing retailers discovering that not only do they have to integrate their e and mcommerce channels, but they also have to integrate both with their customer service and marketing systems too – so they can offer a holistic approach and build relationships with consumers,” he says.
This move towards full integration shows that, for some at least, the fact that mobile is more than just an extension of their ecommerce platform is being realised. While for consumers mobile offers everything and more that ecommerce has to offer but in the palm of their hand, part of mobile’s charm for retailers is that this consumer love affair with mobile is also something that a retailer can exploit through customer service, marketing and logistics – using the device to holistically build a relationship with the consumer.
Which brings us neatly to the second facet of mobile retail’s rise in 2011: the fact that almost as soon as it is begun, the apps verses m-web debate is dead. You need both.
Mobile consumers have rapidly become very discerning and rather sophisticated in their approach to retailers through the mobile channel. Where it took five to ten years to get ecommerce to a critical mass, mobile looks like achieving the same in around two years – by the end of 2011 in fact.
“There are two very different ways consumers will approach your brand on mobile,” says Dan Lowden, Vice President of Marketing at Digby. “Many will find you by browsing on mobile, typing your name into Google on their phone, or simply, if they know it, typing in your URL. For these people you have to have a mobile optimised website.
“Other, more brand loyal, customers will go looking for you through apps stores or you can market to them directly through email or even SMS – and these people demand a much richer user experience. For these people you need an app,” Lowden says.
This is echoed by Business Development Manager for New Technologies at M&S Direct, Sienne Veit. “Apps are good for bespoke offerings, but the web is great for real-time purchasing. It is the way I see people using software verses browser. At some point, the web will be able to do all that apps can, but until HTML5 is up to speed apps are good for remembering, caching and a lot of the engaging editorial content that builds a relationship.” Watch this space for M&S to start offering apps in 2011.
Children’s retailer Kiddicare, meanwhile, has effectively set this process in motion with the simultaneous launch of both an app and a mobile optimized website just before Christmas. The retailer fully recognises that there is a very different way that each is used and that both are essential to maximising ROI on mobile and developing mobile relationships with customers.
The Kiddicare mobile website is basically the company’s transactional ecommerce site optimised for mobile, so that customers can use it much as they would the online version to search, browse and buy. The fully transactional app, meanwhile, allows consumers to do all this, but also to scan barcodes in any store and compare prices with Kiddicare and order for next day delivery if they so choose.
Debenhams has taken a similar approach, opting for an all encompassing app rather than m-web (though this is coming soon) to build on the brand loyalty it sees it has with its customers, offering them, instead, a much richer experience through an app that keeps them coming back to the mobile, but more importantly also helps drive them back into the store.
SHOP FLOOR EXPERIENCE
And this is emerging as perhaps the biggest trend in mobile retailing for 2011 – the use of mobile to get people back into stores and, once there, to embellish the in-store experience so that it brings together the best of both the real and virtual worlds.
“It’s the web-enabled store,” says PortalTech’s Adams. “You can look for stock updates by scanning barcodes, find out more about the goods you are looking at and even order them if they aren’t in stock there and then. It is simple to do and creates a whole new experience.”
“In store is where retailers really see an opportunity to create unique experiences through mobile,” agrees Digby’s Lowden, who thinks that beyond simple stock checking, lies a whole world of mobile-based loyalty. “The real power [of mobile in store] lies in the app letting you ‘check in’ to a store and get loyalty points, special deals and so on. The use of barcode scanning for app users helps build loyalty around the app – if you have the app you are getting a better in-store experience, better deals and more info. You are rewarded.”
There are already several notification based trials and services in place that are being used to drive people into stores on mobile but developing the actual in store process is still just on the drawing board.
While there is much to be said for using mobile to get customers through the door, the potential at point of sale (PoS) for mobile is also huge and already we are starting to see it being put into practice, with much wider use predicted this coming year.
The use of mobile as an in-store PoS looks set to be one of the technology’s real triumphs in 2011. The latter half of 2010 saw a number of iPhone based solutions for queue-busting and mobilised PoS launch in the US and the UK market is set to get its own versions early this year. All typically revolve around an app downloaded to the phone and a sleeve that the phone sits in that allows for card reading. Payment can be taken securely and quickly with the device on the shop floor.
But, there is much more to it than that. While these mobile card payment solutions that turn an iPhone into a card terminal are going to be a boon for market traders and plumbers, what mobile PoS offerings really bring to bear within retail stores is the ability to not only let customers pay on the shop floor, but also to allow shop assistants to stock check, order out of stock items, link into the CRM and marketing servers to offer deals and personalised experience and hopefully then offer up and cross-sells as well – all dressed up as part of a better customer experience.
Leading the charge in the US is PayMa$ter for App Masters. The system uses a barcode scanner, card reader and software solution built into a clip-on iPhone or iPod touch case to offer retailers who have sales force on the shop floor the ability to not only offer stock and price checks but also to allow for full check out from wireless devices, cutting queues and offering an unprecedented level of personal service.
According to the company, transactions take only moments, allowing sales associates the opportunity to up-sell. They can also accept any combination of cash, credit, gift cards, and storebranded cards. The system can rapidly scan all universal barcodes using an integrated laser scanner and retailers can apply discounts, product warranties or recycling fees.
Currently the service is being trialled by some leading retailers in the US, including Skechers. “Skechers was looking for a state-of-the-art Mobile PoS solution that would heighten customer service, satisfaction and retention by utilizing the latest technologies and products available,” says Walter Tondu VP of IT, Sketchers USA. “We partnered with App Masters because they had an established application and deployment map and they understood Skechers goals. Our Mobile PoS solution is a modified version of their PayMa$ter solution, which is customized to our exact specifications.
“It is revolutionary and helps our stores to eliminate lines, accelerate checkout and increase customer satisfaction. The people at App Masters and the PayMa$ter technology are great, and I highly recommend them to retailers of any size,” Tondu says.
So this, along with all the other things mobile looks set to offer does make it look like 2011 is going to be the year of mobile… hopefully now you believe me. Oh, but wait, there is one small fly in the ointment: the mobile network operators. As mobile – well smartphone – use accelerates and m-retailing does take off, especially in store, network operators face a problem: overloaded networks. Already the data networks around large shopping malls are not up to the job on a Saturday afternoon. Add in a whole load more data use and you have a mall fall of disappointed punters. The answer would appear to be to wifi and WiMax enable shops and shopping centres, but this is costly and disjointed if each store undertakes it itself. So, while I am convinced that retailers will embrace mobile in 2011, we have to hope that operators also embrace retailers.
SOME OTHER KEY MOBILE TRENDS TO WATCH OUT FOR IN 2011
Mobile Social Location (MoSoLo) commerce.
Location, location, location was the watch word of the 2000s’ property boom, but it takes on new resonance now with mobile retailing. The use of the phone’s location is starting to come into its own now, with a brace of solutions for marketing and targeting all coming to fruition on mobile. The latest buzz is around combining social networking and geolocation – so called Mobile Social Location (MoSoLo, or sometimes just the more pithy SoLo), which brings together the customer’s social media and phone location to offer ideas, discounts and messaging as they move between shops.
UK mobile operator O2 has pioneered this with its O2More service which uses PlaceCast’s ‘geo-fences’ technology to surround various retailers – most notably Starbucks – with a virtual fence. When a user who has signed up to O2More and has selected coffee as one of their preferences walks through one of these ‘fences’, they get an offer sent to their phone for a coffee. The offering is person and location targeted, but Starbucks is also changing the offer depending on the time of day. It is also sending messages that seem a bit more personal.
Augmented Reality (AR)
Augmented reality (AR), the overlaying of digital information onto images of the real world through the phone’s camera has taken great strides since its ‘invention’ back in 2007. And now it is being seen as one of the key tools to bring the online experience into the store and get customers to use their mobiles in store. From barcode scanning to get more data on a product, to full blown over-the-air delivery of vast amounts of information about the store and act as a contact channel between the retailer and their customer.
Yellow Pages have trialled such as service to add information to street views, but no one has done it in store. Yet. eBay, meanwhile, thinks that AR has huge potential. “We will see a lot more AR adding to the shopping experience in 2011,” says Roeland Loof, Senior Manager for Mobile at eBay Europe. “We are not seeing much of it today, but we will soon see apps that overlay data onto the real world very soon. We are trialling a simple AR service that lets the user ‘try on’ sunglasses virtually, but we will soon see a lot more.”
Paying for things is obviously one of the key issues with m-commerce and mobile retail. While much of what is happening with mobile optimised websites mimics the web and so we are seeing a proliferation of the use of pre-registered credit and debit cards and PayPal, there are still high hopes that payment chips will very soon by built into phones – allowing for payment from the phone while online, as well as using the phone as a wallet/payment card.
Nokia has, with limited uptake, already built RFIDenabled payment chips into some handsets. Apple has a patent out to include an NFC-enabled chip and PIN chip into iPhone 5 (although that’s not expected until April 2012 – April 2011 will be hogged by the roll out of iPad 2). But it is expected that more and more native phonebased payments will start to arrive through 2011.
The other area where mobile payments will come into their own is the rise of the use of alternative payment tools, such as operator billing, WAP billing and other forms of payment that use the phone’s existing connection.
The other key thing we will see in mobile this year is the entrance of mobile network operators (MNOs) into the payments fray. MNOs have the phone’s bill and credit rating on their systems for post-paid phones; they have the money in the bank for pre-paid – using this to put payment for goods and services through the mobile phone bill will be key in 2011. What has stymied it so far is that, to date, operators tend to want to take about 30% of the transaction as a fee. Compared with the 0.5 to 3% charged by cards, this is clearly unworkable. However, now that the networks are making flat profits from content sales they are eyeing retail – but the only way they will stand a chance of competing with cards and PayPal is to slash charges. One to watch.
Paul Coxhill, Director at Ukash, believes that the next big development in mobile payments in 2011 will be the use of location to inform the user of the most appropriate – and cost effective – way to pay in any given location. Coxhill also suggests that 2011 is going to see a surge in the use of mobile airtime as a means of paying for or being paid for content and services.
Christmas and other M-Retailing developments
Paul Skeldon takes a tour around the latest happenings in the mobile retailing space.
A Merry Mobile Christmas
The run up to Christmas 2010 saw retailers falling over themselves to get apps, m-web – and often both – out there into the market to try and mop up some of the huge interest in m-retailing shown by consumers. The bad weather in the UK proved a boon to online retail and mobile snapped up its fair share of those who were possibly snowed in.
Leading the pack was Kiddicare, which rolled out both m-web and an app, with the view that they serve very different purposes: something we are going to see a lot more of in 2011. The mobile web site was aimed at browsers looking, usually via Google, for children’s things. The app, meanwhile, was designed with a barcode scanner so that consumers could use it while out and about to compare prices.
Supermarket chain Morrisons also rolled out both m-web and an iOS app. Although not transactional, the company says it is doing both to build on the browser traffic and to offer more loyal customers a richer experience. Expect an announcement from Asda in early 2011.
JD Sports rolled out a mobile optimised website in early December, saying that m-web was the way to go, since JD’s strategy is to be a multichannel retailer, and that mobile web is the best way to achieve this – not least because it future proofs it against new operating systems and devices expected on the market in the coming 12 months.
eBay meanwhile combined its two apps – one for buyers and one for sellers – into a single v2 app, now featuring Red Laser’s barcode scanner so that you can use barcodes to search or to create sales profiles “while walking round your house looking at things you want to sell,” says Roeland Loof, eBay’s head of mobile in Europe.
As sister company Argos got slammed for a misleading advert, Homebase entered the mobile fray with an app, based very tightly on Argos’s offering, that allows shoppers to price check and click and reserve from their handset. However, things have moved on in m-retail since Argos launched its app in the summer: these days consumers expect a lot more from mretailing, not least the ability to actually buy and get stuff delivered. The Homebase app feels a little passé. We look forward to version 2.0.
Rising to this challenge, Halfords has been very quick to add transactional capabilities to its m-web site, just four months after rolling out nontransactional v1.0. The company says it was part of the plan, but having seen such huge increases in mobile traffic over the autumn – and tapping into customer feedback – the company seems to have moved very fast to add this. Hats off to them.
Who do you love?
Mobile is playing an increasing role in driving consumer choice as to which brands they buy when they go shopping, with 59% of UK shoppers having not decided on the brand they will purchase before researching new products or heading out to the shops, suggests a study commissioned by RichRelevance and Bazaarvoice, and conducted by Forrester Consulting. According to the study, nearly half of UK shoppers (42%) have used their mobile phone while shopping, 16% of which used it to compare prices with other stores. The study – the first of its kind to measure mobile shopping habits – also indicated that most UK shoppers (82%) will visit more than one website before purchasing a product; 17% will visit as many as four. The study also revealed that shoppers rely on three types of content when making buying decisions: product details, user reviews and personalised recommendations. 86% indicated that they used user ratings and reviews for online purchases, while the majority of those surveyed (84%) had researched or purchased products online using recommendations, and 42% of UK shoppers made a purchase that was recommended by an online retailer.
It’s a mystery
The vast majority of retailers’ mobile websites are at best “well kept secrets” and at worst impossible to find behind counterintuitive URLs, prone to inexplicable crashes, unable to complete transactions or simply too complicated to navigate, says e-tailing group’s first annual mobile commerce mystery shopping study. On average, of the 150 parameters on 50 mcommerce sites tested, the sites scored just 4.5 out of 10, showing considerable room for improvement.
On a positive note, most sites deliver a mobile experience that is consistent with the brand and enables an adequate shopping experience, even if it isn’t ideal. However, with some exceptions, the necessary ingredients for a successful mobile experience – such meaningful retail locators, inventory-sensitive store product locators, relevant search functionality, snafu-free checkouts, and ease of contacting customer service – are lacking or being inconsistently executed, potentially leaving a negative customer impression of the “4th” channel.