According to eBay’s CEO, John Donahoe, there will be more change in the way consumers shop and pay in the next five years than there has been in the last 10. We are currently at an inflexion point with the fundamental force driving change being mobile and the smartphone, says Arno du Toit.
eBay’s iPhone app boasts 12 million downloads and has generated $700 million in the first year, with $ 1.5 – $2 billion predicted for the second year.
All well and good, but I would argue that retailers who focus solely on smartphone users are missing a trick or two, and will certainly miss out on the real benefits that mobile can bring to their customers and their bottom line.
Let’s first consider just how mobile can be used to extend and enhance the retail experience.
e-commerce to m-commerce
As with eBay, mobile commerce can be used to extend e-commerce activities to wherever the shopper is, day or night, via their mobile phones. Donahoe describes this as: “Bringing the world’s inventory to you.”
Here, however, m-commerce is essentially providing a parallel access method for customers who already have desktop access to ‘traditional’ e-commerce. It would be interesting to see just how much of eBay’s mobile revenue had shifted across from the e-commerce platform. As well as cannibalised revenues, there is not much in the way of a reduction in cost of sales or other efficiencies – in fact, I’d argue that cost of sales would actually increase, thanks to retailers servicing substantially the same customer-base via two electronic channels.
But, especially in a country such as South Africa, with very high mobile internet penetration compared to desktop internet, m-commerce may very well be a shopper’s first, or only, experience with online shopping. What’s more, in such a big country, with large rural areas, m-commerce can give shoppers access to stores and brands they would have previously had to travel hundred of kilometres to reach.
Now the retailer truly starts serving a customer-base that hasn’t been served via an electronic channel before, bringing in cost-savings and widening their market reach substantially. But, to capture this mobile-first or mobile-only market, retailers can’t rely on a smartphone only strategy.
To offer m-commerce effectively, retailers need to understand their customer-base, know which handsets they are using, and devise a mobile strategy that spans across mobile apps, mobile web and possibly USSD all running on feature phones, smartphones and tablets.
Retailers shouldn’t overlook the huge benefits of bringing mobiles into their bricks and mortar stores. This cannot only give them a competitive edge over their rivals, but can help them profile customers, manage inventory and reduce the costs of servicing customers.
Some examples of retail application of mobile services include:
1. Augmented reality can provide the customer with nutritional information about a product, menus and recipes, healthier alternatives as well as tally up the total nutritional value of the basket.
2. Customers can budget better by scanning their items and having a running total of the price of their shopping basket. In addition, price comparison services can show shoppers if an item is available for cheaper elsewhere (great for shoppers and retailers offering good prices).
3. Loyalty and reward schemes can be consolidated onto the handset, giving retailers a better idea of who shops where and when, as well as which promotions are effective. For the customer, this can give them an excellent overview of their spending patterns.
4. Allowing store managers to access point of sale information while on the go can give them immediate view over inventory levels to allow faster restocking and also allowing them to react quickly to trends: making sure the ice cream freezer is restocked after a sudden hot spell, for instance.
5. Retailers can use money transfer services via mobile to not only provide their customers with a critical service, but also to help manage their in-store cash levels. In cash-based economies, retailers often end up with a lot of cash in their tills, which is both expensive to deposit and a security risk. If the stores in rural areas are paying out cash as part of a money transfer service, with the money typically deposited in more urban areas, this can go a long way to mitigating the cash level issue for the stores.
6. In the future, mobile payment options are also going to change the way people shop – for the moment though, it is still easier to pay by card or cash than via a mobile wallet, but this will certainly change with direct access to bank accounts and the introduction of NFC. Retailers need to gear up for this.
With both e-commerce and the in-store applications, there is unfortunately the misperception that only iPhone users have expendable income, and hence only these users should be targeted. Rather, retailers need to mobilise their businesses across their entire user base, from feature phones up, to really see the benefits.
Fortunately, using a mobile enterprise application platform (MEAP), a mobile retail service can be rolled out immediately across the board, allowing retailers to reach customers no matter what their handset type, with the most suitable version of the service.
Arno du Toit is Virtual Mobile Technologies’ chief commercialisation officer.