StorefrontBacktalk: M-Commerce Looks Healthy for the Holidays – But Not That Healthy
Through a special arrangement, presented here for discussion is a summary of a current article from StorefrontBacktalk, a site tracking retail technology, e-commerce and mobile commerce.
‘Tis the season for mobile-commerce hype: On Tuesday (Nov. 8), Sybase and the Mobile Marketing Association announced that, according to an October survey, 62 percent of consumers are “poised to make purchases with their mobile devices this holiday season.” Well, sort of. In fact, the survey of 1,000 consumers offers a slightly grimmer view of m-commerce: Only 22 percent actually plan to use a mobile phone to buy anything — and that includes people who will just phone a retailer’s call center and order that way.
How are the numeric differences justified? The 62 percent actually said that if retailers offered coupons, discounts, gift cards, loyalty points or e-mail alerts, those things would “influence” their decision, not that they would actually make an m-commerce purchase. And that number also includes just-call-in-an-order customers, which the survey says is the form of “mobile commerce” that has been used by more consumers than any other (28 percent have done it).
Indeed, depending on the source, the definitions of mobile payment run the gamut from legitimate ones — actual mobile purchases, in addition to find store, product research, QR/barcode scans, price comparisons and mobile coupons — to not so legitimate ones, such as using an Android to call a call center. But the only figure that your bosses will see are purchases made directly from the phone. At StorefrontBacktalk, we’re projecting that — at most — eight to 12 percent of consumers will make true mobile purchases this year.
The overwhelmingly strongest factor that will determine mobile transactions will be the creativity and aggressiveness of this season’s m-commerce incentives. You want to make a lot of your customers earnestly experiment with m-commerce? Offer a 20 percent discount if a purchase is made via mobile compared with in-store or on the traditional web. Delivering a coupon? Make it for $50 instead of 50 cents.
Mobile transactions are still going to be, for most customers, a significant behavioral change. Set expectations appropriately for your senior management, but remember that also includes funding marketing incentives to push your customers out of their comfort zones. Once they discover the ease of well-executed mobile transactions (and you wouldn’t offer any other type, right?), the incentives can certainly be scaled back. But if you’re conservative and cheap this season, you’ll find it ten times harder to change customer behavior next year. Displease them now with low-ball discounts and flood them with irrelevant offers, and you may find yourself not even making realistic projections.
Discussion Questions
Discussion Questions: What level of incentives do you think retailers will have to offer to get consumers to try m-commerce this holiday season? What other steps should retailers be making to ensure positive trials?
Thanks for deconstructing the hype. The other one will be how online sales grew by 80% — when actual percentage of all retail sales is much much lower.
Madison Avenue was able to sell that smoking was healthy and lawn darts were safe. Hype is nothing new; mobile is just the latest flavor. It’s just that now, to get trial, they believe discounting must be the hook. Giving a better deal on a phone is a slippery slope to becoming a showroom.
It totally depends on the retailer in terms of what the required offer is to drive m-commerce this holiday. For those already established on mobile as a platform, especially for payments (e.g., Starbucks, Amazon), it’s not going to take much. Starbucks, for example, already gets 25% of its sales through its private tender and an increasing amount of that through its mobile app.
Our view is that mobile commerce, both for holiday and beyond, is largely a function of customer relationships that have begun to “root” in mobile as a channel. Without a foundational relationship in the mobile channel, it’s going to be a greater leap required of the customer. When mobile becomes an app-driven form of payment, as with Starbucks, it’s a lot easier.
M-Commerce is an emerging channel that must be taken seriously. The challenge for today’s e-commerce smart marketers is to build out their channel team of experts to ensure that what is displayed is compatible to the device. That means you need to capture the data from your identified customer base. It is a basic block-and-tackle work effort, but worth it to establish a level of trust and preference with the mostly under 35 consumer who is the bulk of the adoption universe — ready, willing and able to transact through their smartphone.
I love the recommendations of the authors — $50 off, not $0.50! I wonder if they ever did a cost/benefit analysis or a response projection in their business class taken as an elective while in j-school! I think not. You don’t need to give it away to generate trial. Plus, the U.S. market is treated as a third-class device market. Phones with mag strip capabilities, tap/go and reliable screen scanning — now that’s the ticket. We get excited about “improved” processors, better cameras and sturdy screens that won’t crack so easily. Give me a fully m-commerce ready phone that will boost adoption and grow the channel.
I look at this opportunity a bit differently in that I have found throughout the years that it is much easier to get the consumer to do more of what they are already doing than ask them to do something totally different. To that end, I would value-add a traditional purchase with a mobile incentive. If I were the marketing strategist of a company that is not sure of how engaged their shoppers are in mobile commerce, I would offer a series of mobile only “bonus incentives” triggered by either store purchases or even e-commerce purchases. This could be done in the form of a rebate or even loaded to card or account.
For those retailers that are more confident that their shopper is receptive to m-commerce, I think the next step is to create a series of Mobile Only incentives, whereby the shopper is continually offered a set of mobile exclusive offers, perhaps several each week for a number of weeks. The incentives will need to be generous compared to other promotions, to engage new mobile shoppers.
I agree with others I have talked to that this Holiday season will yield a much higher percentage of mobile engagement vis-a-vis last year. But stair-stepping the consumer into this new comfort zone will be important to accelerate this process!
At this point, mobile devices are probably best employed as mechanisms to drive traffic to retail, to drive engagement with brands, and to offer competitive deals when a customer is comparing products on a handheld. Actually purchasing on a mobile device is the least of it.
Having retailers talk about m-commerce doesn’t mean that customers are going to use it, at least not this year. After there’s a breakout success story, expect improved numbers.
This is one of the clearest and most well-written discussion topics I’ve ever seen on RW, and there are many, many good ones. It makes it easier to get down to brass tacks (that’s a retail term, BTW). Kudos to Frank and Evan.
Purchase incentives given to some and not to others can irritate customers. All purchase-behavior incentives are commonly available to all customers. “I’m a good customer and I should get that discount, too.” Ever heard that one? We heard it incessantly when loyalty cards were introduced, but that’s pretty much faded away with acceptance over time. But how about a new complaint that goes something like this: “I can’t afford one of those fancy smartphones, so does that mean I can’t get the discount?” Discounts for smartphone use is like rewarding customers for different types of payments. Is there a discount for paying with cash instead of cards or checks? There should be, because additional store costs are associated with cards and checks. But stores don’t do that because it would irritate customers. (Or, is the armored car cash pick-up an additional cost for the use of cash?)
I still have some catching-up to do, though, regarding the basic premise of this topic. I’ve somehow forgotten the benefit to retailers of “true mobile purchases.” Why would they want to incentivize shoppers to use smartphones to make purchases? What’s in it for them? Data? Yeah, they’ll use that.
Mobile retail will become an integral part of retail. But, not this year. Perhaps the term grim is overstated or premature. It’s not a failure. The issue is behavioral, and we’re just not there yet.