Frictionless Mobile Commerce

By Walter Rogers
President and CEO
Baker Communication

With the books now closed on 2010, industry analysts can officially report that 2010 was a good year for sales of smart phones – a very good year. How good, you ask? How about 55.4% growth year over year, which is approximately 10% above analyst predictions at the beginning of 2010? Put another way, 270 million devices shipped in 2010 compared to 174 million shipped in 2009. Preliminary estimates already peg smart phone growth to be at least another 25% for 2011. If you are a sales or marketing executive in any organization – both consumer and B2B – what should your immediate reaction be to this news? If you are not calling a team meeting tomorrow to revisit and revise your mSales and mMarketing strategy, there is a very good chance you are going to late to the mParty.

Mobile commerce (or "mCommerce," in case you haven‘t been paying attention) has been quietly building momentum for several years. However, mCommerce is driven by users of mobile devices, and in 2010 consumers finally seemed to resolve their concerns about the added complexities and higher price points for smart phones – hand held computers that make mCommerce possible, and which also happen to make phone calls – because the benefits of owning them are now so clear. The result: mobile and wireless communication technologies are being adopted with unprecedented velocity. The worldwide smart phone market grew 50 percent year over year in the last quarter of 2010, and a study by Juniper Research estimates that nearly half of all mobile phone users worldwide will pay by mobile for digital and physical goods by 2014. When you figure in the number of tablet computers now being sold – a device no one was even sure would be viable 2 years ago – it is now clear that the mCommerce ecosystem is about to explode.

This explosion represents a huge and largely still unrecognized (by many B2B marketing and sales executives) tectonic shift in the way the world is now doing business. No market sector will be unaffected. By 2015, it‘s estimated that shoppers from around the world will spend about $119 billion on goods and services bought via their mobile phones, according to a study by ABI Research. In the United States alone, mobile shopping rose from $396 million in 2008 to $1.2 billion in 2009, and mobile marketing investments also increased by 25 to 30% over the past year, with companies shelling out just under $313 million according to the same study.

Retail shopping is already experiencing a major change, with consumers using their smart phones to not only pay for goods but to use them to scan bar codes and consult the internet via their smart phones to gain information about products to help them make a choice. Customers are also receiving special offers before going into stores, and, through a process called location based services (LBS) they can even receive push notifications for special offers based on what businesses they happen to be in close proximity to at the moment. Apple recently announced that iPhone users will soon be able to use their phones instead of a credit card to purchase goods in a physical store with a tap of their phone screen, and other mobile platform users are expected to announce similar capabilities in the near future.

The good news for businesses is that everything from the supply chain to the customer leaving the store with the product can be traced, providing firms with detailed research they never had access to so easily before. It is expected that within three years every business will have to have some type of mCommerce application or site to remain competitive. This involves several components: some GPS capability, searchable offers and opportunities, appealing interface design, savvy marketing and frictionless – which is to say easy, no hassle – ways to complete the sale.

Now that we have your attention, how are you taking your business mobile? There is no doubt that customers today expect to be able to interact with you from any type of communication platform, any place, any time. If your company is not able to accommodate the needs of customers who want to interact using smart phones, tablets, and other mobile devices, you can be assured that your competition will. It is urgent that your organization begin developing some kind of robust, integrated eCommerce strategy, and the sooner the better. If you are only now beginning to explore this area, here are a few trends that began to get traction in 2010 and are only going to accelerate over the rest of this year:

1. Bargain Hunting
Bargain hunting has become extremely popular with apps like RedLaser that allow users to scan product bar codes and discover how it is priced with other vendors. Shoppers are already combining mobile shopping with physical shopping to make sure they get the best prices. A customer can now stand in the Target electronics department, scan in the bar code of an LG flat panel TV, and get a read out of the price every other store in the area is charging for the same TV. And here is something even more troubling to retailers; if the customer finds a better price at Sears, he can then use his smart phone to purchase the TV from Sears while still standing in the Target electronics department.

2. Mobile Ticketing
No doubt, the convenience of mobile ticketing, where customers can order, pay for, and validate tickets anywhere or anytime from their cell phones, is one thing that is driving consumers to adopt mCommerce. When tickets to the concert event of the season first go on sales, there is now no need to camp out all night when you can buy them with your smart phone from the comfort of your favorite Starbucks. Mobile commerce is also driving sales of movie tickets. Industry sources say that mobile ticketing can account for up to 10% of ticket sales for major movie openings. "It‘s a small but growing percent of overall ticket sales," said Harry Medved, director of marketing at Fandango.

3. Banking
Most people are comfortable with the idea of online banking, at least to the extent that we know how to look up our balance online and transfer money between accounts. But according to data released by comScore, 13.2 million people on average accessed their bank accounts from their smart phones during 2010, which is a 70% increase from a year ago.

4. Tangible Goods
Smart phone users have long been adept at purchasing apps and ringtones for their phones; no surprise there. The growth now is in two areas. The first is using smart phones to obtain product discounts and coupons, a new and powerful marketing tool being rapidly adopted by many companies. The second area is even more significant; the purchase of tangible goods for any use imaginable. So what are people actually buying with their phones?

eBay has been the leader in mobile commerce since their iPhone app launched in 2008, with their Blackberry and Android applications following in 2009 and 2010. In 2009, the company sold more than $600 million dollars in goods via the mobile app, which was a 200% increase from 2008.

"As mobile shopping peaked this year (2010), eBay led the way by becoming the go-to shopping destination," said Steve Yankovich, vice president of mobile for eBay. "With more than 30 million downloads of eBay‘s mobile apps worldwide, eBay is clearly a barometer for mobile shopping trends. We see people buying everything from designer apparel to cars and trucks on their phones regularly, and purchases being made through eBay mobile every second."

5. Marketing
Mobile commerce is growing and it is directly related to the amount of mobile marketing that companies are investing in. A reported 74% of online retailers either have in place or are developing mobile commerce strategies, while 20% have already implemented their complete plans, according to a study by the National Retail Federation.

Already, text message marketing, where customers opt-in to receive news about deals or coupons, has been widely adopted because it is a direct way to engage with consumers. Sales organizations are also investing more time and money into creative ways to reach consumers via their mobile phones with campaigns that enhance the brand identity or the buying experience.

However, this is not the time to jump in blindly and just start flailing around with mCommerce solutions. Make sure your goals and objectives are aligned with you‘re the real world needs of your organization. Also, be certain you have a plan that has the full agreement and backing of the whole organization.
For B2B organizations, any move to mMarketing carries the potential for confusion and competition among the organization‘s stakeholders. Going forward, it is urgent that all these stakeholders sit down together to formulate an integrated strategy for leveraging mCommerce going forward. This strategy should address:

What is the best opportunity for our organization to leverage the mCommerce ecosystem?
What mCommerce tools and practices will you choose, and how will they be applied?
What will the timing be, and who will be involved in designing, managing and measuring the play?
How will success and ROI be measured?

On final note: Most organizations can no longer do an adequate job of rolling out and managing an mCommerce or social networking strategy by adding a couple of bullet points under a general admin or even an IT job description. If you are serious about running a successful social networking/mCommerce initiative, you will need to dedicate an FTE to implement, monitor and update these initiatives.

Action Items - Create or review your mCommerce strategy by answering these questions:

What is the best opportunity for our organization to leverage the mCommerce ecosystem?
What mCommerce tools and practices will you choose, and how will they be applied?
What will the timing be, and who will be involved in designing, managing and measuring the play?
How will success and ROI be measured?

Walter Rogers is the President and CEO of Baker Communications. Baker Communications is a sales training and development company specializing in helping client companies increase their sales and management effectiveness. He can be reached at 713-627-7700.

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