mobile commerce: can new technologies deliver it
I ran a session on opportunities in mobile commerce or as some people call it m-commerce at mobile camp boston #mbc4 this weekend held at MIT Sloan. The event was its usual annual affair. 500 calorie donuts, large containers of coffee, sponsors, meat sandwiches only. The discussion in classrooms and in the hallway was the best part of the conference.
Lots of great sessions to satiate the hunger of over 600 mobile enthusiasts attending the conference. See the menu on offer. I could not suppress the urge to have an audience. So what should I talk about.
mobile technologies this mobile marketing that, mobile payments this, mobile banking that….. Hang on. I know there is a real issue to discuss. At a retailer conference recently, I heard time and time again that mobile internet traffic is going through the roof (quadrupled in the US), but the conversion is pretty low. In my own experience when I launched www.tixmob.com – a mobile ticketing portal, we had over 98% purchases done through internet, and paltry 2% through mobile. Granted that was pre iphone era. So I titled the session “Opportunities in mobile commerce” and found myself in a room full to capacity (well I took the smallest room at the conference that housed 50 people). The session was highly interactive and generated some great ideas. There were many mobile commerce pros in the room. Here is the output from the session.
- Global mobile data traffic grew 2.6 fold in 2010, nearly tripling for the third year in a row. Source: cisco study here. The picture is even more dramatic in the US.
- ebay, amazon, wal-mart and many others have a credible mobile commerce offerings and are generating sizable revenue. ebay generated $ 1.25 bn through mobile in 2010 source: http://bit.ly/dNYuJe.
- Smartphone has been a big driver of the change in mobile usage across the board. There were 63.2 million smartphone subscribers in Q4 2010 in the US. The penetration is expected to reach 50% in the next 2 years. MetroPCS has launched a $ 150 smartphone with Android 2.2 on a pre-pay account. This is only going to bring smartphones to the masses.
- Google searches conducted on mobile phones centering on shopping-related keywords grew more than 300% from January 2010 to January 2011.
2) Trends and Observations
- Small retailers are less excited about launching mobile apps and are considering launching mobile commerce enabled internet sites.
- 74% of app downloads are used more than once. i.e. 26% of apps downloads will not see light of day again. data courtesy of www.localytics.com. First impression and setting expectations is very important on mobile.
- Less than 2% sites or apps are mobile commerce enabled – huge opportunity.
- Despite many mobile payment services like PayPal, Amazon, billing revolution, apple app store, operator billing and many others, there is no credible mobile payment service that is cost effective and universal for commerce of physical goods. PayPal and Amazon are much lower transaction fees, but still not cost effective for small item purchases.
- NFC roll outs are happening as we speak and likely to be game changing for mobile payment and commerce industry. Even though we have heard of NFC trials as far back as 2004, now many of the major players are making a big push. Andriod, Apple, RIM, Nokia and Samsung are including NFC in their upcoming handsets. Estimate range from 300 million to over 750 million handsets to be NFC enabled by 2015. ISIS the consortium between US cell operators and Barclay card are committed to the use of NFC for secure payments. Verifone the payment terminal provider is integrating NFC reader in many of their upcoming terminals. There are also application developers launching NFC enabled services by signing up customers to attach a small NFC sticker on the back of the phone to get around the penetration issue.
- Developers and brands are expecting to offer NFC enabled transactions within 18 months.
- 30% of restaurant related searches are done through mobile now – courtesy of @adamcompain .
- 59% of smartphone owners used their devices for holiday shopping activities. see google report here. (thank you Keith at www.unboundcommerce.com for sharing the report).
- Smartphone owners who made a purchase during the holidays bought a wide variety of products, Google says. 22% purchased electronics, 17% apparel, 17% toys, 16% gift cards, 15% books or magazines, 12% fashion accessories, 11% beauty and cosmetic items, 10% watches, 9% sporting or fitness goods, 9% home appliances, 8% jewelry, 8% pet supplies, and 7% home furnishings (see google report here).
- The majority – two-thirds – of respondents favor using browsers over downloadable mobile apps for accessing product and other shopping content – source: Adobe survey of mobile shoppers, see here (thank you Keith at www.unboundcommerce.com for sharing the link).
- Most smartphones are now shipping with HTML5 browser.
- Cross channel use of mobile is key. Cross channel refers to the use of mobile either as a complement to other channels (outdoor, radio etc.) or to use different types of mobile communication e.g., click to call, text alerts, combining mobile with social media etc.
- Fraud or stolen identity is a major concern for consumers. While 45% of the most active and advanced mobile phone users would like to be able to pay for goods and services using their mobile phones, 73% have significant privacy and identity theft concerns, according to new research by Accenture see details here
- Despite the growth in mobile internet traffic, the number of businesses that are mobile commerce enabled are tiny. And even where they are mobile commerce enabled, conversion rates are pretty low, primarily driven by poor user experience and other concerns highlighted in this summary
- It is difficult to drive customers back to the app or mobile commerce site in a meaningful manner. Promoting and distributing mobile commerce content is in infancy stages.
- Integration of mobile channel with other channels requires extensive training of retailers’ staff and back end systems – important to get right and no trivial task.
- HTML5 is bringing down the cost barrier for launching rich mobile shopping experience. Instead of spending $50K – 70K per app for iphone, android, windows, RIM and any other emerging operating environment, the cost of deploying an HTML5 enabled site across all formats can be as little as $ 15K – 20K. And above all, you can do many native app based features e.g., offline cache, offline storage, geo-location API, multi-touch, and be able to add a wrapper to turn the browser based site into a native app. This is going to bring huge opportunity to many small retailers and brands and allow them to test the market.
- Integrating POS and back-end systems offers a huge opportunity to seamlessly integrate into retailers existing customer fulfillment engines, CRM programs, offline stores, and promotions etc.
- Well thought through CRM offers and triggers offer a unique way to engage customers at the right time and in the right context (only possible through mobile). Response rates have been upto 40% higher when using the data and running CRM programs on mobile (courtesy of my experience at ActiveMedia Technology and 2ergo)
- View mobile not only to allow customers to complete the transaction, but to aid the conversion e.g., drive customers into stores, click to call, comparison shopping, marketing and promotions to entice the customers etc.
- Address the privacy and security concerns by registering customers into the system or developing secure mechanisms
Exhaustive enough? Please leave your comments here if there are other points to consider as we think about opportunities in the mobile commerce space.
I am also working on a study to match objectives with what mobile offers today vs. in the future. So if you are thinking or working on launching a mobile commerce site, please come forward and be part of the study.