MEF

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Time To Wake Up To the M-commerce Opportunity

October 5, 2010 - Mobile Marketing Magazine

In recent months, a flurry of announcements from a range of players in the mobile value chain has firmly placed the spotlight on the potential of the m-commerce market, highlighting it as a valuable revenue driver in a tough and competitive economic environment. Supermarket giant Tesco and the luxury US department store Neiman Marcus are two examples of big brand retailers who have entered the m-commerce market of late, further fuelling interest in this channel.

It is not without good reason that retailers such as these are beginning to pay more attention to m-commerce. ABI Research has forecasted 2010 N. American sales of physical goods purchased via a mobile device at over $1bn (£650m), a 33 per cent increase over its 2009 forecast of $750m. Similarly, by 2015, Fierce Wireless is estimating that the global revenue for mobile-purchased goods and services will reach $199bn.

The apparent consumer demand for mobile shopping is similarly encouraging for players in the m-commerce ecosystem. Growing mobile web usage, coupled with increased mass-market smartphone penetration, and the explosion of the applications market, are all factors facilitating the accessibility of m-commerce to the end-user. In addition, research conducted by Netsize last month among a mobile-savvy user base (termed ‘mobile professionals’) found that 94 per cent of respondents would be willing to pay for goods worth up to €25 (£21) via mobile, with over 50 per cent willing to pay up to €100 (£85) for goods via this channel.

Retailer reluctance
Yet spite of an apparent consumer desire to use the mobile device as a means for purchasing goods, retailer reluctance to develop a definitive m-commerce strategy is preventing this market from realising its predicted potential. According to April 2010 statistics from BT Expedite, just 5 per cent of UK retailers have an m-commerce presence, while only 24 per cent are planning to develop one. There are, of course, exceptions to this. Marks & Spencer recently reported that since May 2010, it has had over 1m unique visitors to its m-commerce site, with more than 13,000 orders. Overall though, the potential of m-commerce is seemingly being ignored by retailers, with the industry instead maintaining a strong focus on the more tried and tested success of the e-commerce channel.

A seeming reluctance on the part of the retailer may not be the sole reason for slow take-up of mobile commerce. Althoughit  is by no means a new phenomenon  - initiatives such as Orange Wednesdays illustrate how old it is in the context of the mobile industry - the coherent framework required to generate the revenue streams from this burgeoning market has yet to be defined.

The retail industry’s excessive caution may also be influenced by the apparent complexity of the mobile value chain. Broadly speaking, m-commerce encompasses any digital content, goods and services purchased and delivered on the mobile device, as well as any tangible products purchased through the handset but physically delivered. Within this, there are a variety of m-commerce channels: apps and mobile storefronts are the ones most regularly cited, but Premium SMS also plays a significant role, with a host of others, notably mobile coupons, mobile-enabled loyalty programs, location-based offers and mobile gift cards to consider also.   

The bottom line is that the revenue potential is too strong to ignore, and although it may seem overwhelming, there are guidelines which retailers can follow to help them develop a successful m-commerce strategy. These include:

Leverage existing consumer behaviour
Many consumers are intuitively using their handsets to access mobile web and SMS throughout their day in various locations. Rather than adopting the “We need to educate the consumer” approach, capture and leverage existing consumer behaviour.

Build the largest mobile install base
Grow your SMS opt-in community
Buy some mobile advertising inventory 
Use both to drive conversion solutions
Reach and frequency are the two words that you need to continually use in the same sentence as mobile advertising and marketing. 

Leverage existing promotions and CRM strategies
Use mobile APIs (application programming interfaces) and tie them into your existing communication services and databases. E-mail, IVR, SMS, MMS should all be fluid two-way opt-in channels.

Keep it short and simple
Apply the ‘one click principle’ wherever possible on the mobile device to keep your audience. Too many clicks and the sale is lost.

Make it an intimate, personal, one-to-one channel
The channel is digital gold. The consumer is now including you alongside their personal messages. You need to make a commitment to be as targeted and contextual as possible. 

Make it a ‘Trojan’ channel
Allow your consumer to reach you directly for product and service information. Guide the consumer to the sale. Additionally, allow the consumer to use this channel to post reviews, insights and tips to you. Use it for pop-surveys to gauge just-in-time feedback.

Build a horizontal channel
Mobile is a perfect medium to add to your existing media touch points. Do not manage your commerce channel in isolation. 

The future: more m-commerce
Fundamental to the m-commerce market capitalising on its potential is encouraging greater uptake among retailers: in essence, retailers need to do more of it, as the current consumer demand is not being satisfied.

Given the relatively small number of retailers engaging in m-commerce, it may be difficult for those looking to develop a strategy to benchmark success in this market. In reality, it is perhaps less a question of which retailer is doing it right, but rather a question of who is doing it right for their audience.

Tesco’s decision to launch its Grocery app on the Ovi Store ahead of other app stores reflects an understanding of the most popular mobile device among the supermarket chain’s target demographic. Such an integrated thought process, which takes into consideration consumers’ existing behaviours, is vital for unlocking the potential of this channel.

The m-commerce market is ripe for the picking, but retailers need to start preparing their strategy, or they’ll miss out come harvest time.

For more information on MEF activities around M-Commerce, please contact Suhail Bhat.








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