In The News

By Eric Holmen, Chain Store Age Guest Commentary

Mobile commerce is one of the most visible and talked-about aspects of the mobile industry, not to mention one of the most exciting trends facing the retail industry in the coming year. And yet, it’s also the one aspect that has yet to achieve critical mass. The sheer number of mobile users comprises a market of unprecedented size (82% of Americans), creating a high rate of acceptance for shopping, selecting and completing purchases on a mobile device. Undoubtedly, this represents huge revenue potential for all players in the mobile ecosystem -- and especially retailers. When mobile commerce (or mCommerce) does reach that potential -- and it is a matter of when, not if -- it will eclipse mobile communications services (both voice and data), mobile advertising and mobile marketing as perhaps the highest growth-rate sales channel for U.S. retailers.

Mobile commerce certainly is destined for explosive growth. The technology is already in everyone's pocket or pocketbook, so why aren't Americans already using their mobile phones as turnkey commerce solutions? Why aren’t Americans adopting the mobile device as a viable shopping tool the way they flocked to online sales channels in the last two decades? The ubiquitous mobile device, the ultimate portal to all media channels (marketers call it the ‘third screen’), should be central to every facet of the purchasing process, from promotion to selection to payment -- just as it is in other parts of the world.

It isn’t yet, but it will be. And in order to get there, retailers need to take a leadership role in educating their customer base, making security and privacy the No. 1 priority, and aggressively implementing mobile commerce initiatives.

Smartphones= smarter shopping?
The explosion of the smartphone may bring mCommerce to full-fledged reality for U.S. retailers much sooner than anticipated; the prevalence and utility of iPhone apps (just to take the most visible example -- most other smartphone platforms feature apps as well) has certainly spurred this along. But most of this discourse approaches the smartphone app phenomenon from the perspective of the device, the platform, or the carrier. How these apps can be leveraged and monetized for retailers has yet to be fully explored -- but their potential to usher in a mobile commerce revolution for the retail industry should not be underestimated.

Safe and secure
Even with smartphones effectively taking the Internet to the mobile device, security concerns continue to present a major barrier to universal acceptance of mobile commerce. Consumer education represents a partial remedy to privacy concerns, though improved technology, sound information protection policies, and responsible practices must come along if mCommerce is to truly take off.

In terms of security and privacy, mobile commerce can only get hot by keeping consumers cool. In our society, privacy is a foundational, defining guarantee and we take great exception when that right is breached. Nowhere is this attitude more prevalent than in the commercial sphere, where the U.S. public is increasingly shunning unwanted advertising, securing their identities against theft, and enjoying the anonymity of e-commerce to an unprecedented degree.

Setting standards and lessons learned
The trials and errors of the Internet retail boom -- and the hundreds of data breaches and identity thefts publicized each year - have almost made the American public immune against hodgepodge security measures. For something as tricky as mobile commerce to manage, and for a device as notoriously easy to misplace as the mobile phone, serious consideration must be paid to universal security standards.

Fortunately, the mobile industry is working hard to implement these very standards. The retail sector must also focus on consumer privacy with respect to mobile commerce activity if critical mass is to be reached.
Security and privacy, however, are just one aspect of the mobile commerce revolution, though they may represent the single greatest hurdle to universal adoption of mobile commerce practices. Other aspects of the current mCommerce world point toward greater acceptance sooner than we expected.

Generation Y (why not?)
The youth of this country -- with their exceptional buying power -- are more likely to conduct a mobile commerce transaction than their parents are. Born into a digital age where a keyboard controls just about everything , the majority of Gen Yers feel at least somewhat secure about making purchases on their mobile devices. Many would prefer to conduct financial and retail transactions on their mobile devices rather than through more traditional channels.

Retailers are recognizing this comfort zone, and the brave are attacking it. Starbucks made news this month with their iPhone app, complete with scanable barcode technology for payment. Banks are pitching their own apps to college students and twenty-somethings with smartphones. Hotels and airlines offer rooms and flights through specifically designed mobile sites. Many retailers use mobile coupons to generate in-store sales, but only a few currently sell their products directly through the mobile channel.
This, however, is changing.

A new channel
For retailers, mobile commerce represents a wholly new sales channel, if it is allowed to achieve its full potential. Just as online sales revolutionized the industry, mobile sales, although perhaps not as disruptive, will demand new marketing strategies, dedicated sales departments, and new platforms for revenue collection. In this respect, retailers that already engage in mobile marketing or mobile couponing are ahead of the curve in leaps and bounds.

Mobile is highly attractive to retailers as a marketing tool because it reaches consumers at the point of sale, where the marketing effort can make the most impact. With mobile commerce capability, the efficacy of this marketing strategy is doubled; the marketing medium becomes the point of sale. If this sounds similar to e-commerce, that’s true. But mobile commerce is more personal, by virtue of the platform itself. This accounts for any lingering public concern over privacy; apart from their social-security numbers, people are least likely to give out their mobile number than any other number.

Of course, what is most closely guarded is often the greatest treasure.

Once that treasure is unlocked- through universal compliance standards, better education about privacy concerns, new sales and marketing strategies and mobile-specific sales platforms -- the potential for mobile commerce is virtually unlimited. Mobile commerce will revolutionize the way retailers do business by opening a new sales channel and unifying highly efficient mobile marketing initiatives with a revenue component.

It is the future for retailers. And the future is now.