Mobile strategy becomes a must for retailers

Mobile commerce is taking off in a big way, as shoppers use smartphones to compare prices, make purchases and find deals

Having a mobile strategy is becoming essential for retailers, as more and more shoppers use Web-friendly smartphones in stores and malls to compare prices, seek deals, read reviews and make purchases.

Although still a nascent phenomenon, mobile commerce has grown rapidly in 2010 and its influence on the retail market is expected to increase exponentially in coming years, eventually becoming a core element of everyday shopping.

Retailers that are slow in optimizing their Web sites for mobile commerce and that fail to take advantage of the opportunities it offers will risk hurting their sales volume, damaging their brands and harming their relationship with customers.

"Mobile commerce is becoming mainstream," said Greg Girard , IDC's Retail Merchandise Strategies Program Director.

Among people with Internet-enabled mobile phones, about two-thirds will use the devices while shopping this holiday season for a variety of things, from finding store information to buying a product, according to a recent Yahoo survey.

For example, more than half of U.S. smartphone users will use them to compare prices, and 40 percent will call up product reviews, a recent Google study found.

People also use their phones to find coupons from sites like Groupon and score deals from stores that reward customers who do location-based "check-ins" through sites like Foursquare and Facebook.

Through their phones, people are also tapping their social connections for shopping input, snapping and sharing photos of products and joining online communities where shoppers congregate to share tips and recommendations.

Ultimately, mobile commerce bridges the gap between online and offline shopping, in theory marrying the best of both worlds. "Mobile commerce is disrupting the shopping process because it's bringing offline and online shopping closer together," Girard said.

This offers potential benefits both to shoppers and to merchants.

Shoppers now can make better informed decisions about purchases while they're out and about and be more aggressive about seeking deals, while merchants get a valuable and more holistic view of customers.

"We're going to start to see the mobile device as a sort of augmentation of the online experience," said Altimeter Group Consultant Susan Etlinger .

It's up to retailers to do their part by optimizing their online stores for mobile browsers and by developing mobile shopping applications.

Although mobile commerce is an emerging trend, user expectations are already sky high, according to Matt Poepsel, vice president of performance strategies at Compuware's Gomez division, which provides products and services for testing and optimizing Web application performance.

For example, shoppers expect mobile sites to load as quickly, if not faster, than sites on PC browsers. "Because mobile applications are somewhat streamlined [feature-wise], users expect speed in return," Poepsel said.

It's also important for retailers with both online and offline stores to offer a unified view across the two channels, Etlinger said.

For example, mobile customers should get a consolidated picture of product variety and availability, from the Web store down to the inventory at the local shop level, she said.

Retailers should also become active at test-and-learn pilot programs, for example trying out ways to boost their existing customer loyalty programs with mobile check-in applications, she said.

Unfortunately, mobile user expectations generally aren't being met today, impacting sales and hurting brands, according to Poepsel.

"The mobile shopper is often the most desirable demographic for retailers. They have a modern phone, a pricey data plan and tend to spend a lot of money," Poepsel said.

"Yet, some retailers are providing their worst experience to their best shoppers. That doesn't make sense," he added.

IDC estimates that the savviest mobile shopping users will account for almost 30 percent of all retail spending -- online and offline -- this holiday season, IDC's Girard said. And yet, "most retailers' mobile sites aren't enabled for mobile commerce," he said.

The National Retail Federation (NRF) announced in April the launch of a formal "mobile retail initiative" to help retailers develop and implement mobile commerce strategies in areas like business and technology. That effort yielded a 176-page mobile commerce "blueprint" this summer.

In July, Forrester Research in partnership with the NRF's released a study on online retailing that revealed that only 20 percent of U.S. retailers had implemented a mobile commerce strategy, while 10 percent had a strategy and were starting to implement it and 8 percent had just a strategy. The rest -- 62 percent -- were either developing a strategy or didn't have one at all.

At that point, retailers were getting 2.8 percent of their overall site traffic and 2 percent of their online revenue via their mobile browsers, according to Forrester.

While mobile commerce will continue to grow, some issues are holding it back currently, including security concerns about data transfers and transactions, slowness in page loading and lack of habit in using phones while shopping, said Sucharita Mulpuru, vice president and principal analyst of eBusiness at Forrester Research.

"It'll take a while for the infrastructure to catch up and improve slow page downloads," she said. "Also, most people aren't used to busting out a phone when shopping -- but that will change."

Moving more quickly are some providers of online services that see opportunities in mobile commerce's popularity.

Google has been busy this year sharpening its mobile product search capabilities through tools like Goggles, which lets people run a query by snapping a product photo, and Shopper, which features barcode scanning, voice search and local-store inventory data.

"The smartphone has become a personal shopping assistant," said Dan Schock, Google's retail industry director.

EBay, which expects to finish 2010 with a 200 percent increase in mobile transactions -- exceeding US$1.5 billion -- added barcode scanning to its mobile application right before the Thanksgiving holiday in the U.S. and in July launched a fashion-specific mobile application.

EBay plans to launch other mobile shopping applications for specific vertical markets, including cars, said Steve Yankovich, mobile vice president at eBay.

"Mobile commerce is still nascent but it's got so much potential and we're seeing such tremendous growth ourselves," he said. "The opportunity is enormous."

Mobile commerce is at an inflection point right now, poised to take off in a major way, said Avin Arumugam, senior product manager for PayPal mobile.

"It's early days but we're definitely seeing some really good traction," he said.

Retailers that are ignoring mobile commerce do so at their own risk. "They'll get a rude awakening," Arumugam said.

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Juan Carlos Perez

IDG News Service
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