Navigating the Mobile Channel

Retailers and consumer packaged goods (CPG) companies must feel like they’re treading water trying to keep up with recent advancements in technology.  The speed of innovation in this industry is really amazing.

First, retailers invested massive resources gearing up for online sales…and for good reason.  According to eMarketer’s 2009 Retail E-Commerce Forecast, in less than a decade, e-commerce has matured to the point where over 85% of consumers shop online and 80% of those online shoppers hit the “buy now” button. 

Including travel, e-commerce is expected to rack up over $300 billion in yearly sales by 2013.  Building the infrastructure required to sell in that space has been an immense challenge, and many retailers are still investing to build or improve their systems.

Just as it seems everyone was beginning to understand how to buy and sell on the Internet, the cheese started moving again.  Within the past few years, cellular networks and technology improved to the point where mobile devices could reliably access the web.  These improvements have ushered in the era of the smartphone.  What started with the Blackberry was vastly improved by Apple’s iPhone.  Then Google got in the mix with its Android operating system and the result has been mass adoption.  By the end of 2011 The Nielsen Company forecasts that over 50% of mobile users will be utilizing these devices.

With smartphones come several important innovations.  First, while feature phones can support SMS messaging (text messaging), smartphones have improved the experience.  They’ve also made email mobile.  And while those features provided early inertia, its the web that is really driving the explosion in smartphone growth.

Feature phones and some early smartphones allowed users to access the web, but the experience was lacking.  Web pages designed for big, stationary screens were difficult to navigate.  Pages using anything other than basic HTML wouldn’t load, and users couldn’t access many types of files for animation, audio or video. Recently, mobile browsers have come way up the curve.  Smartphone screens are now big and beautiful.  Better bandwidth, processing power, and improved browsers let smartphone users take in the full multimedia experience.  With all of that innovation in place, web developers started optimizing websites for mobile use.

Over the past few years developers began building applications (app’s) that allow these devices to combine the web with other features including global positioning satellite (GPS) sensors and the built-in cameras found in smartphones.  This mash-up has created new opportunities for entire businesses including location-based services (Foursquare, Yelp, etc.) and 2D bar code scanning (Microsoft Tag, QR code, etc.)

Together these tools have created an entirely new set of opportunities for retailers.  First, consumers have proven willing to purchase online directly from their smart devices, resulting in mobile commerce.  Second, the popularity of smartphone applications has retailers scrambling to release their own branded app.  Finally, the SMS text and bar code scanning capabilities of these devices create an opportunity for interactive marketing. 

For brick & mortar retailers, this could be the holy grail that integrates point-of-purchase with mobile marketing.

With opportunity comes challenges.  Engaging in mobile commerce requires different technology than selling in-store or – I can’t believe I’m even writing this – via “traditional” e-commerce platforms.  Also, building apps for smartphones requires a different set of tools.  As a result developers must learn a new language and unlike the web, develop for multiple platforms.  Even the metrics retailers use to measure success must change to fit the new mobile model.

Consider apparel and accessories retailer, Steve Madden.  According to a recent article from Internet Retailer, their mobile commerce site directly racked up $521,000 in sales in the past 6 months and influenced between $2.5 million and $3 million in other sales online and in-store. The mobile site has received over 880,000 visits with each lasting an average of 7 minutes.

According to Steve Madden’s President of e-Commerce and Customer Experience, Andrew Koven, “Mobile is not a tactic, it’s not the stepchild of the e-commerce business, it’s a step toward understanding highly personalized customer behavior and as a result a way to learn how to make initiatives across channels work together.”

To implement a mobile commerce strategy, retailers might start by asking some basic questions, including:

• What mobile features should be offered?
• How will the retailer communicate the benefits of their new technology?
• Can their layout, in-store merchandising systems, and signage support interactive marketing?
• Will customers adopt the retailer’s program?
• How will the retailer measure the success of their initiative?

While these are only some of the questions, the benefits of determining the answers and developing a mobile strategy is clear.  Consumers have embraced mobile commerce and retailers must navigate this channel to maintain their share of their customers wallet.

Need to develop a mobile strategy for your business?  CONTACT US today.  We’ll review your business goals, make technology recommendations, help launch your platform, and give you the tools to analyze and communicate the return on your investment.