Making the business case for mobile commerce

mCommerce was born in 1997 when the first mobile-phone enabled Coca Cola vending machines were installed in Helsinki, Finland. The machines accepted payment via SMS text messages. The first mobile phone-based banking service was launched in 1997 by Merita Bank of Finland, also using SMS.

Since this time, the opportunities for mobile commerce have grown dramatically with the rise in use of Smartphones, tablets and mobile gaming.

In this chapter we’ll show how to set the scope for your mobile commerce initiatives. We’ll look at the range of mobile commerce applications available to retailers and how to use analytics, industry data and competitor review to support the business case for mobile commerce investment.

What Is Mobile Commerce?

To make a business case for mCommerce it helps to scope out the opportunities of mobile commerce. Some take a narrow view of mCommerce as limited to online sales or transactions using a mobile device, such as a mobile feature phone, a smartphone, or a tablet.

We recommend looking at the opportunities of mCommerce more broadly since there are a host of new ways to interact. We believe mCommerce isn’t just about sales on mobile devices, but that it plays a vital bridge between the gap created by eCommerce and in-store shopping, and is being utilised by physical retailers as a way to compete with the lower prices typically seen through online retailers.

Through creating an integrated ‘bricks & mobile clicks’ mCommerce approach, physical retailers can allow customers to harness the common benefits of shopping online (product reviews, information and coupons) while still shopping in the physical store.

The Applications Of Mobile Commerce

So what are the range of options to interact with mobile consumers?

These are some of the key applications:

• Consumer engagement with new products and offers through mobile messaging and push notifications
• Community interaction and sharing through social commerce features including recommendations, reviews and ratings
• Offline sales stimulated by use of location-based services that drive footfall in-store, and to alert shoppers in vicinity of time sensitive promotions
• Redemption of sales promotions based on barcode distribution notifying mobile users with time and locationbased sensitive offers matching their profiles to maximise conversion
• Use of QR code and image recognition services to provide real-time product information to those in store
• Repeat site visits to check stock availability, in-store sales, or to confirm home deliveries driven by push notifications
• Price comparison to reassure today’s bargain hungry shoppers that we are backing the right basket

mCommerce can help support sales through the whole purchase cycle from increasing awareness about a company, encouraging consumers to explore products and services and convert, and aid communication to support repeat purchase and advocacy.

After looking at the range of mobile marketing applications you must then use consumer usage to support your case.

Your analytics will show you the growth in visits to the site with different mobile devices, and you can also assess the content users are accessing and what they buy using Advanced Segments. We’ve spoken to many retailers who have seen the percentage of visitors accessing sites via mobile moving into double figures, which is where many start taking mobile seriously.

You can use the Audience, Mobile devices report in Google Analytics to find the relevant consumer usage including:

• Mobile device info (i.e. model of mobile)
• Mobile device branding (i.e. company
• Service provider (i.e. network or internet service provider)
• Mobile input selector (i.e. touchscreen or gaming)
• Operating system (i.e. iOS or Android versions)
• Other (includes screen resolution)

Advanced segments can be set for each of these to understand behaviour with a specific technology such as entry and conversion points.

Use Published Stats To Support Your Case

The latest IAB stats show that 25.2 million UK mobile users (52%) are actively engaged in mCommerce. Smartphone users are 63% more likely to engage in mCommerce than non-Smartphone users. According to Google, 17% of mobile users have changed their mind about purchasing a product or service in store as a result of information gathered using a Smartphone.

We could quote a lot more stats at you and likely they would be impressive, but stats date quickly. Instead we will direct you to three of the best sources for regularly updated mobile statistics so that you can see which the most relevant are for different countries and demographics.

1. Google Mobile Planet

A regular survey for different countries starting in 2011, this enables you to prepare your own reports.

2. ITU data

The International Telecoms Union data reports mobile usage including mobile broadband subscriptions to show growth in use of mobile. This is reported at country, continent and overall levels.

3. Xyologic App download reports

This is a great source for showing the overall level of App usage across platforms by country and drilling down into the popularity of individual Apps for different sectors like retail, banking and travel. We also recommend the Flurry blog (http://blog.flurry.com) for specific reports on trends in App usage.

Use Competitor Benchmarking To Review The Potential

Reviewing your mobile commerce capabilities against others can help support your business case. Key areas to benchmark competitor use of mobile using the Smart Insights RACE framework are:

Plan: How a company manages mobile commerce as a strategy. This includes targeting approaches, communication of mobile proposition and governance, i.e. how they structure and resource mobile marketing

Reach: The effectiveness of a company in reaching and influencing their mobile audiences online using search marketing, mobile discovery, Apps, partnerships, and location-based marketing for example

Act (Interact): Encouraging interactions with their audience through mobile content or Apps including social mobile commerce through reviews and ratings

Convert: Use of mobile to support sales through a mobile optimised site or Apps

Engage: Longer term engagement with mobile messaging leading to repeat sales. Advocacy through reviews and ratings completed on mobile devices

Direct competitor data may not always be the best source to inform your case if they have fallen behind. A recent scan through the headlines reveals the perils of failing to get to grips with changing consumer behaviour. Retailers affected include Clinton Cards, Game, Borders, Barratts, Jane Norman, Habitat, Oddbins, Principles, Sofa Workshop, Allied Carpets, Viyella, Dewhursts and Woolworths.

Mobile Commerce Success Story: Amazon And Ebay Show The Way

This isn’t the place to dwell on the reasons why our High Streets and shopping centres have lost these household names. But we should think very carefully about the effect on online retailers, and in particular the effect of eBay and Amazon on high street retailers. Amazon’s ‘online’ success in underpinned by a strong mobile performance, with sales via its mobile site and App hitting $1 billion in 2011. eBay is on-track to generate sales of $8 billion in 2012, a 25% increase on mobile sales in 2011. A portion of this growth is coming from traditional retailers’ tills. And a lot of revenue to eBay, it seems...

In the next chapter we will look at the mobile payment channels available to mobile users which are changing where, when and how they shop. We will then guide you through the decisions retailers must take in order to harness the power of mobile for themselves.

eBay’s senior director for EU mobile Olivier Ropars, reminds us of the real threat mobile presents to traditional retailers:

Almost 50% of people with Smartphones will check prices in-store. When something isn’t available on the rail, the smartphone is a more efficient way of shopping. The Smartphone is giving a lot of power to the consumer

Making The Financial Case For Mobile Commerce

To make the financial case for mCommerce to colleagues such as the Financial Director, Marketing Director or company owners is more challenging. What they will want to see are incremental sales from mobile not simply the increased costs of supporting another channel which is only substituting sales.

Arguments for gaining incremental sales from mCommerce can include:

• Reaching your audience at different day parts to increase sales
• Visibility of site in mobile search
• Delivery of propositions that work in mobile context of use. For example, Flash sales - as shown in the Boutiques example to the right
• Location-based marketing to encourage impulse sales
• Use of mobile coupons and barcodes to drive in-store sales

Mcommerce Success Story - Flash Sales Drive More Than 50% Of Sales Via Mobile

Internet Retailer reported6 that Fashion retailer Rue La La had achieved over 50% of its sales through mobile. On one day in April it achieved 53% mobile sales (Apps and Site) and on average now receives 30% mobile sales on weekends and 40% mobile sales on weekdays. Of course this business model involves time-limited discounts which would risk destroying margins for most retailers. But it shows the change in consumer behaviour well we think. It’s worth taking a look at how they use Apps and mobile messaging to achieve this.

Summary:

1. Keep the mCommerce scope broad

Review all the opportunities from mobile commerce to encourage interaction with mobile customers to lead to sales

2. Review consumer mobile usage to make the case

Use industry stats and analytics to show the growth in mobile interactions

3. Benchmark competitors

Review competitor use of mCommerce across the customer lifecycle, for example using the RACE framework

4. Show incremental benefits

Create a business case based on conversion models showing where additional sales will be delivered.

Creating effective mobile optimised sites

The popularity of Apps shows that there are clear consumer advantages in downloading Apps. Nevertheless there are still many compelling reasons for retailers to consider their mobile site as the primary channel to deliver branding, loyalty and mCommerce services.

In this chapter we will look at the considerations when building a mobile optimised site including the reasons why this is necessary and who you need in the team to create the site. In the final chapter on mobile conversion rate optimisation (mobile CRO) we return to this topic where we look at testing the effectiveness of mobile optimised sites on different platforms and review examples of mobile optimised sites with personalisation.

The mobile Internet (or web) refers to the use of Internet-connected applications, or browser-based access to the Internet from a mobile device, such as a Smartphone or tablet computer, connected to a wireless network

Reasons For Creating A Mobile Optimised Site

Optimising your site for mobile is no longer a “nice to have”. A survey conducted by John Lewis showed that one third of those questioned would shift allegiance to another retailer if their retailer’s mobile site offers a poor user experience.

Google’s UK Country Manager Peter Fitzgerald likens a poor mobile browsing experience to shutting up shop on a busy high street while other retailers offer an easier shopper experience on their sites, and attract all the traffic.

It’s true that the mobile web was slow out of the blocks. Its early years were hampered by a clunky coding protocol, WAP (Wireless Application Protocol) which made life challenging for developers, and limited the browsing experience for those brave mobile web users in the 1990s. Mobile web earned the unfortunate mantle “WAP is cr*p”, and not surprisingly, mobile web browsing stagnated.

Fast forward to 2012, and the prospects for the mobile Internet are very exciting. Flat rate data plans, fast expanding Wifi coverage, better handsets and screens, and more dynamic content make the mobile web a vibrant place for shoppers. Over half of UK mobile users are browsing the web on their handsets; mobile web usage grew 150% from 2011 - 2012.

UK mobile internet adoption exploding: 27m regular users, 54% of all mobile users, usage growing 150% year-on-year.

One of the key drivers of mobile usage is a better User Experience (UX), as navigation is critical. Let’s remember the obvious: with mobile you’re dealing with small screens, no keyboard and no mouse, so easy navigation is fundamental to success.

Superior browser performance allows mobile sites to look, feel and perform more like Apps, which levels the playing field between the two channels. Whether they’re using a Smartphone or a feature phone, mobile users can drag and drop an icon for a mobile site onto the home screen, which gives the instant ‘brand in hand’ appeal which Apps have enjoyed since their inception in 2008.

Mcommerce Success Story - Kiddicare

Specialist brands are also reaping the rewards of optimised mobile sites. Kiddicare.com is Europe’s largest online nursery and baby supply retailer, with further European expansion planned for 2012. It is one of the most successful brands to benefit from Google’s support in mobilising retail brands’ web presence.

In order to address these habits and make the online shopping experience accessible to 21st century parents, Kiddicare developed a transactional mobile site to replicate their website offering.

The overall strategy was to create a presence for the brand in consumer’s pockets via their mobile device, through which they could access the full range of Kiddicare.com products at any time, and compare prices with those of its competitors. The fully transactional mobile friendly version of the Kiddicare.com website automatically renders for mobile devices and isn’t a new domain, simply an extension of the existing site. This means that Kiddicare.com’s award winning SEO strategy maintains all of its link equity in mobile search.

The mobile version of the Kiddicare website took just seven weeks to design and build, from concept to launch and, once live, the first customer order was placed within four minutes. Within 12 weeks, mobile accounted for approximately 10% of all Kiddicare. com unique user revenue. Just over a year later mobile accounts for 12% of Kiddicare’s revenue, with this figure expected to grow to 20-25% in the following year.

Defining The Mobile Value Proposition

The mobile web has come of age. So how should retailers start building a presence on the mobile web, or how should they improve their existing mobile web presence?

The adage that “less is more” applies here. The art of building a popular mobile site rests on agreeing what to include, and critically what to omit. The “kitchen sink” approach will not be appealing to mobile users. The context (i.e. screen size) and mindset (i.e. quick browsing time) demand a rigorous approach to agreeing which content makes the cut. The content heading and order in which they are displayed could and should adapt dynamically, based on users’ browsing behaviour, thereby creating a more personalised experience.

Desktop site: suits detailed browsing

Mobile site: bite size content

Practical Mcommerce Tip: Make The Cut

Assembling The Team

A company’s mobile site is the core destination around which the whole mobile ecosystem operates. In large companies, you need to involve a wide range of internal stakeholders, who will all have input in the design, build and optimisation of your site.

“Design by committee” is destined to fail, but so is failing to consult those whose support or lack of support will derail a well conceived, well executed mobile site. Mobile sites, indeed whole mobile strategies, often fail to realise their full potential, and perish in their infancy, due to lack of attention and support. For many brands, mobile is an additional responsibility for those with other demanding digital and other functional responsibilities.

We have spoken to senior directors in global retail and financial services companies who have become embroiled in highly detailed and technical project management functions due to a lack of proper and sufficient resource allocation to developing the mobile solution.

Our browsing intent is very different on mobile, compared with a PC. A study by Microsoft suggests the Internet purchase funnel from initial search to task completion is one month on PC, and one hour on mobile, although naturally this will vary by type of product or service.

Whilst this will depend on the product and service in question (high involvement car purchase or mortgage selection versus ‘impulse’ handbag or shoes), the point is that on mobile, we want to find, access and buy quickly and easily. With limited screen size, navigation on the mobile web must be quick, easy and intuitive.

There is no substitute for understanding what your consumers are doing in mobile. Use comScore data to cross reference users’ mobile ownership and mobile behaviour patterns against existing personal profiles or any cut of the TGI data.

It’s always worth putting yourself in the shoes of your shoppers and asking what you’d expect the site to do, and how it should perform. Above and beyond all other considerations, User Experience must win through on mobile as the small screen size and immediate intent demand it.

Use your research budgets to identify precisely what your shoppers think of your existing mobile site? Is it user friendly? Consider running quick, easy surveys with your customers on their handsets, via a mobile survey to gauge opinion on their preferences. Offering an incentive for survey completion always helps boost completion rates. Market leader On Device Research2 runs bespoke and omnibus surveys for its B2B client base.

Remember that handset diversity presents a significant challenge to companies building mobile sites, and operating systems used to process and present content vary significantly. Retailers need to cater for the handset in question, maximising the handset’s capabilities, and not simply design and build for the lowest common denominator.

Make sure your CTO / IT Director buys into the mobile vision, and the lives of your shoppers, even if he or she is not a heavy mobile user.

Does your IT team use iPhones, Android, Microsoft handsets, tablets? Or are they all on standard issue company BlackBerrys? Mobile’s role in B2B marketing3 is changing fast, and the IT team sometimes block rather than assist mobile adoption, as they may be unfamiliar with all the mobile operating platforms. For reasons of company policy and data security, the CTO may be forced to block staff using their own handsets and tablets at work.

According to a recent Harvard Business Review study , the average project overrun of projects studied in 2011 was 27%. The research concludes, “one in six of the projects was a black swan , with a cost overrun of 200%, on average, and a schedule overrun of almost 70 percent.”

Having worked agency side building sites and Apps, we cannot over-estimate the importance of hiring (and retaining!) efficient, hyper-organised, diplomatic, firm and calm project managers. Whether you’re using traditional (e.g. PRINCE2) or waterfall (e.g. Agile) methods, it’s vital to develop a clear minded objective for the site, develop and follow statements of work, and communicate regularly with your developers, whether inhouse or outsourced. The following checklist should help for your project management requirements and technical specifications.

1. Prioritise ruthlessly - if a requirement comes near the bottom of the list is it really a requirement at all?
2. Ask yourself: does each requirement contribute to a specific project objective?
3. Are you articulating a requirement or have you started defining the solution?
4. Have you involved the people who really know what the system needs to deliver? Have you thought about asking the customer what they want?
5. Don’t be ambiguous; like SMART objectives, each requirement should be expressed in language (or pictures) that can only have one meaning, and each requirement must be capable of being tested to see if it has been delivered successfully.

Practical mCommerce Tip: Functional Specification

Think through every variable at the outset to avoid scope creep + additional cost

• Application logic - e.g. for a credit card App, permutations of business vs. consumer accounts types
• Platforms / OS / Devices
• Site maps
• File weights
• Dimensions
• Rotation speed
• Response times
• Types of code to be used
• Include all relevant data needed for the project

Every mobile interaction carries a time and location-based data trail, which allow retailers to track in real-time how, where and when their customers interact with them. We will examine analytics in detail in chapter 9.

This requires very close examination with mobile web. Retailers should be presenting sites with product offers which shoppers will have a higher/ lower propensity to purchase based on detailed algorithms linked to purchase history. Make sure your data team provides access to customer records, which can then be accessed on site via APIs .

The most accurate measure of what your customers think of your site is their browsing behaviour and trends - they vote with their thumbs. Monitor visits, unique users, repeat users, new users, page views, time spent on site and on page, journeys through site, checkout activity and basket abandonment.

These insights should then be used in real-time to help you decide to ‘promote’ or ‘demote’ content above and below the ‘fold’ to reflect usage. Critically, to provide the most popular content, use tracking data to give users easy access to the content they’re most likely to want. And think beyond the obvious handbags for girls, interactive electronics for boys.

Check also the profile of handsets used, which will determine which App operating systems to prioritise.

mCommerce Success Story - How M&S Aligned Their Stakeholders

The success of M&S in developing, monitoring and constantly improving its dynamic, transactional mobile site, can be attributed to a clearly defined mobile team, with open cross-departmental communication, and Board level support. Indeed, former Chairman Sir Stuart Rose took a close personal interest in the mobile program. When M&S launched its on-pack QR code trial, store staff across the UK were fully trained via the HR team to answer questions from shoppers on the purpose of the QR codes, and how to use them.

Defining The Mobile Optimised Site Version

It’s important that your mobile site identifies whether the browser accessing your site is using a desktop or a mobile device. Including a script on your site will detect the PC browsers, who should be served the ‘full fat’ version of the site, and the mobile browsers, who will be redirected to mobile optimised version of the site. There is no need at this stage to use a separate URL.

You then need to identify precisely which handset, running which operating system, is browsing on your server. This can be done instantly by matching the handset’s profile against a live, constantly updated database of mobile handsets. Device Atlas is one of several open source databases which contain handset profiles.

Defining User Needs And User Journeys

This is the most demanding step, and the one which distinguishes the average, vanilla-looking, templated sites from the high-end sites with complete customisation, which offer a richer and more compelling browsing experience for users.

Let’s Now Review Two Of The Key Decisions Of Mobile Site Design

Responsive design is an increasingly popular approach to building mobile sites since it enables a single version of the content and site to be maintained which adapts for different resolutions. Its value is best illustrated by an example. This Starbucks example illustrates it well. You can see that the full-screen desktop version has two main columns while the iPad and iPhone examples have a single column with the menus wrapping around.

Content must be quick and easy to find regardless of the screen resolution or browser used, as consumers browsing on mobile have limited time and immediate ‘intent’. Navigation is critical. Content should always be accessible within 3 clicks, and mobile sites should be built “on-tracks”, i.e. scrolling should be vertical only, not horizontal.

Let’s remember, there’s one Internet, not two. You should be aiming to build and maintain one CMS (Content Management System), which populates both the PC and mobile versions of the site. To deliver consistent content, whether a content catalogue, journey planner or rich media library, it makes sense to integrate the data held in the existing CMS back end with the PC Internet site and mobile site front ends.

Contrast this to what we often see when browsing using a Smartphone: tiny text and difficult to select buttons and navigation which require us to zoom in to select the next page.

Technically, responsive design uses cascading styles sheets, in particular an approach called media queries8 to specify how the page is laid out. If you want a more technical briefing on responsive design we recommend this briefing from Smashing Magazine .

The alternative to responsive design is a fixed-width template specifically designed for a mobile site. The screen scrape and personalised mobile optimised site examples in the next chapter use this approach. A personalised mobile optimised site has the benefit that specific features can be developed for mobile users. This is not the case with a basic responsive design approach.

A design approach where the layout of the page adapts to the different screen resolution of desktop, tablet and mobile screens based on a single version of the site. This contrasts with a traditional approach where the design is developed for a fixed number of pixels for each type of device

Mobile Web 1.0 (Screen Scrape) V Mobile Web 2.0 (Integrated Mobile Build)

It’s worth noting here that a number of high profile brands have opted for a temporary screen scrape approach, which involves dropping existing web content into a simple mobile site template without opting for back-end integration with the customer database. Therefore they are unable to offer a personalised experience or relevant promotions to their mobile users.

An approach to rapidly developing mobile experiences through re-using the existing desktop HTML code and repurposing it for mobile screen resolutions and browsers. It does not take advantage of the unique benefits of mobile for personalisation or real-time content delivery based on location and there is a risk of errors where technical problems with the copying arise.

The advantage of the screen scrape approach is that it presents a quick route to market, and avoids potential conflict between PC web and mobile web developers.

A screen scrape approach may be appealing in the short-term, but in the long-term it won’t provide an experience that adds value to the customer or differentiation for the brand

There are disadvantages of screen scraping when compared with the fully integrated approach, which provides the better long-term solution. The screen scrape option incurs additional time and cost to manage the site, as changes to the back-end content management system will need to be updated in batches on the mobile site.

A quick look at these screen scrape sites reveals an alarming degree of standardisation across the sites, and lacks the differentiation brands demand across their PC websites. Take a look at the two retail sites below, cover the headers, and you’ll see they all follow an identical template with a simple image and menu options without personalisation.

The fundamental advantage of the integrated approach ties in with mobile’s biggest strength as a marketing channel: personalisation. Ask a group of strangers to pass their phones round the room and you’ll detect a potent sense of anxiety. We don’t share our phones, with anyone. We don’t want others seeing the texts we send and receive, the photos we’ve taken, our social media pages, the sites we’ve browsed or the Apps we’ve downloaded. Our phones are highly personal.

One phone has one user. This means that we can develop highly personalised and customised sites. Back end integration, with APIs exposing individual customer records, can be used to build bespoke sites which match the profile of each user. Look no further than Amazon to see how brands can use purchase history data and apply intelligence to develop sites with highly targeted product offers. To make your sites highly relevant to users, you can apply behavioural targeting, with time and location sensitive messaging.

mCommerce Success Story - Ebay Personalised Site

eBay’s mobile site combines excellent user experience across Smartphones and feature phones. Content is personalised to the user, with offers presented reflecting the product category preferences identified through previous browsing activity.

previous browsing activity. eBay predicts that global mobile sales will exceed $8 billion in 2012. Its mobile sites handle one transaction per second. Users log into their account via secure log-in on their Smartphones and feature phones.

Olivier Ropars, eBay’s Senior Director for EU mobile, puts eBay’s success down to ‘feature triage’.