May 16, 2011
A new level of customer interaction has been spawned by the growth of Web-enabled mobile phones, giving retailers an opportunity to tap into new unrealized revenue streams driven by mobile commerce.
In this new, digital, always-connected-age, consumers want to feel empowered to use mobile technologies to make the shopping experience easier and more pleasurable.
Specifically, consumers are looking to shop whenever and wherever they choose while expecting a consistent, relevant and timely interaction with their brand of choice, regardless of the channel.
With power shifting to the consumer, compressing margins and changing paradigms, retailers are employing a smarter commerce approach to buy, market, sell and service the right products at the right price, time and place. And this now includes mobile.
Devising mobile
To remain relevant, retailers must put the customer at the center of operations, act on insights generated through mobile and be quick to respond to their growing demand for information and services in this mobile world in which we now live.
First, they need to evaluate the relative value and cost of the available mobile commerce implementation options.
Next, they must determine how to best link new mobile initiatives to their overall customer strategy to continue to maintain a single brand experience―not an easy task.
At this point retailers should embark on a learning exercise that focuses on the capabilities provided by the latest mobile devices and how consumers are using these devices.
Here retailers need to ask themselves a series of questions ranging from what their customers value most, mobile for voice, data, or Web browsing, how frequently are they using text messaging (SMS), whether or not they are using mobile Web and, if so, how much, and what activities are they engaging in while browsing.
Another important question is what type of smartphone do their customers own.
Here it is important to keep in mind that consumers replace their mobile devices on average every 1.5 to 2 years, which makes it essential that retailers continually monitor the market share of mobile platforms in different geographies and adjust their mobile implementation plan accordingly.
At this juncture, retailers should sharpen their focus and develop a better understanding of their consumers’ mobile shopping habits and how are they using their mobile device.
For example, are they using their mobile device to simply call a retailer to inquire about product availability, or are they using it to glean more specific product details and read reviews?
Maybe the consumer is searching social networking sites to gather advice from a friend or news source before purchasing.
Having the answers to these questions will allow the retailer to better formulate their own mobile commerce strategy.
The fact is consumers are continuing to engage in cross-channel shopping and retailers have the chance to strike gold by providing mobile commerce solutions that let their customers seamlessly shop for products and services across all channels, thereby increasing sales opportunities, customer service and customer loyalty.
Cracking the code
Mobile shopping scenarios that retailers may want to consider include:
• Location-based services: Retailers can leverage GPS, Wi-Fi, Bluetooth, RFID or other technologies to detect the shopper’s location with their permission and find the nearest store. Retailers can then offer promotion information or coupons when customers are passing by the store.
• Self-scanning: Customers can use the camera in their phone to scan bar codes in 1D (UPC) or 2D (QR, Datamatrix, or other) formats on the store shelf, in-store signage or printed catalog. In doing so the consumer can connect directly to the retailer’s Web site for product information, promotions or marketing campaigns.
• Notification: Consumers can opt to receive order status, product availability, marketing and promotion information via SMS, MMS or direct mobile messaging.
• Digital wallet: Consumers can manage the following digital content on their mobile phones:
o Shopping lists: Add items by browsing the mobile Web site or by scanning bar codes on the product label and possibly share the list with others
o Gift lists: View and update a gift registry while shopping in the store or online
o Coupons: Organize coupons and redeem them in the store or online
o Flyers: Receive and manage weekly flyers in the digital wallet
o Mobile payment: Pay by direct mobile billing, Near Field Communication (which allows contactless communication between phones and special readers), pre-filled credit card or other payment information stored in the user profile.
At this point retailers face some challenging decisions.
Platform issues
The first is to decide which mobile platforms their organization should support for mobile commerce.
Whether it is the Apple, Research In Motion or an Android-based device, the fact is that the type and sheer number of consumers that a retailer can reach may depend directly on the mobile platform selected.
Once that decision has been made, retailers have a second big decision―which mobile technology they should chose to create their mobile store.
One option is to deploy a mobile Web application which is developed with the standard Web programming model and the same programming artifacts as the traditional Web site.
The big difference is that the content, user-interface layout and navigation flow are tailored for mobile users with a smaller screen and a subset of browser capabilities on the smartphones.
As emerging standards are implemented in mobile browsers, mobile Web applications will be able to leverage rich Internet applications technologies such as GPS location detection, offline storage, drag and drop, as well as native media playback.
Native scene
Retailers can also select mobile native applications.
With the popularity of the App Store distribution model at an all time high, most mobile platform providers have enabled their users to download device-specific applications though places such as the iPhone App Store, the Android Market, the Blackberry App World and others.
These are called native applications and are typically developed leveraging specific functions of a particular mobile platform.
Native applications can perform better than Web applications but their reliance on a single platform limits their reach.
Next are hybrid applications, which as the name indicates take advantage of both Web and native applications and provide Web content in Web views and access to the device capabilities, such as the address book, GPS or camera.
This model also provides a platform-unique UI layout and navigation flow which wraps around Web content in the application. All of the leading mobile platforms support this hybrid approach.
For mobile commerce we recommend either the mobile Web or hybrid application approach.
The final and least attractive option are mobile transcoding services which engage third-party managed services to extend (‘transcode’) the output of their main Web site to selected handset display formats.
This approach is typically employed by the retailers as a tactical quick-to-market implementation which lets them solve the problem by converting selected areas of desktop Web store content to a mobile-ready format for the selected mobile devices, including feature phones with limited browser capabilities.
The major limitation here is that it does not leverage the advanced capabilities and user experience offered by the latest generation of smartphones and also does not allow marketing and merchandising managers to use integrated business tools to manage marketing campaigns and sales catalog across channels.
Walk, then run
Mobile commerce’s impressive growth and adoption will continue for the foreseeable future.
This growth is being fueled by ubiquitous wireless broadband coverage, affordable all-you-can-eat wireless data plans, the success of the Apple iPhone and iPad, the Android-based smartphones and the availability of application stores being deployed by smartphone vendors, wireless carriers and operating system providers.
As brands begin to make their move into mobile commerce, they will quickly identify a tremendous opportunity to effectively strengthen the bond between their brand and its consumers.
Before taking the leap, however, it is essential that retailers take their initial steps with caution.
By first gaining a strong understanding of its consumers, selecting a solution that addresses their immediate habits and desires and defining a roadmap, the company will be in the best position to succeed in the long-term.
Luis E. Rodriguez is product manager of IBM WebSphere Commerce, Durham, NC. Reach him at lurodrig@us.ibm.com.
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