Getting to mobile commerce: The build vs. buy decision

By Andy O’Dell

If you hop into the Wayback Machine and transport yourself back 15 years in time, you will find out that there was quite a bit of teeth-gnashing taking place that is very similar to what is happening now.

That is when merchants everywhere were figuring out how to establish their ecommerce presence. Return to today, and we are at the same point with mobile commerce.

Now, almost all small to midsized merchants are asking the question, "How can we get a mobile commerce presence like Starbucks?"

After all, Starbucks pioneered the ability to gain tremendous visibility into the purchasers of its loyalty and gift cards by bringing them to its mobile application through which they can receive offers and make purchases.

It is a daunting question.

As it stands now, most merchants have no visibility into who purchased their gift cards or who the ultimate recipient is.

This lack of visibility represents significant loss of opportunity for merchants to distribute targeted promotions, incentives, discounts and special offers to their best customers.

Most are sorting through the issues and concerned with whether to build or buy the technology to help them get there.

Hard reality of building it right
When retailers are looking at the build versus buy scenario, the decision quickly boils down to economics.

For merchants to build their own Starbucks-type mobile commerce app, they have to find a shop that has the capability to build them an app based on a defined specification and are looking at a six-figure price tag.

For that, they get a static app that they have to manage themselves. If they want to add to it – because it is never going to be perfect the first time – the hard-dollar cost increases. And this is not counting the soft-dollar costs, including the distraction from strategic initiatives.

There is a deeper issue, however.

Most retailers do not have the internal skillset to understand how mobile is different than ecommerce. They say, “We need mobile because we need mobile, this is what we think our consumers want and this is what we are going to build it.”

However, marketing approaches and use cases are not the same as an ecommerce experience.

Until now, merchants executed marketing strategies for three channels – in-store, out-of-home such as billboards and display advertising, and online.

With the emergence of mobile, merchants trying to figure out where to fit it in typically consider two options. Do they treat it as a separate, fourth silo, or do they wedge it into their online mix?

It is important to understand that mobile is not a fourth channel, but rather it is a means of engagement that cuts across the three existing channels.

With mobile, merchants not only can do online communication, but also can promote and leverage in-store and out-of-home promotional channels.

Mobile represents a completely transient marketing opportunity, meeting the consumer wherever they are with their mobile phones whether it is in the store, out of the home or in the home.

It is equally important for mobile commerce to provide consumers with a unified experience that incorporates a digital wallet, shopping, gifting, loyalty, daily deals and social within an app.

This not only makes it easier for them to shop, it gives merchants a richer amount of information to engage their most loyal customers.

What about the buy decision?
What we will see this year and beyond is the emergence of white-label platforms for all other merchants that want the same capabilities of a mobile commerce app such as Starbucks, but lack budget, time and know-how.

This new platform will provide the brand direct contact with the card buyer and the card recipient. This 1:1 relationship increases brand awareness, amplifies consumer mindshare and engages customers in real-time.

This platform will include a private-labeled consumer mobile app that integrates shopping, gifting and loyalty solutions with users’ real-time location, preference and friend data.

Indeed, this empowers merchants to provide relevant and timely information to customers to help them get better offers and give better gifts.

Merchants benefit from a direct-to-consumer marketing channel informed by rich data across retailers, gift lists created by the app user and their Facebook friends, past responses to offers and geo-location information.

Additionally, the platform will include a registration process so that gift card buyers and recipients are no longer anonymous, enabling brands to identify and engage more of their customers.

At the end of the day, merchants get a custom app that costs tens of thousands of dollars versus six figures, and is hosted so they do not need to worry about the skillsets and learning curve.

ONLY THROUGH a white-label and integrated, functional platform can merchants of any size effectively get into the mobile commerce game without having to build it all from the ground up.

This will help them realize the potential of highly targeted, personalized, local and actionable promotional campaigns and messaging to the individual consumer.

It will be interesting to see how the build versus buy dynamic develops.

Andy O’Dell is chief commercial officer of Clutch, Philadelphia. Reach him at andy.odell@clutch.com.