m-commerce report 2011
DESCRIPTION
ÂTRANSCRIPT
THE POWER TO HELP YOU SUCCEED
The future of m-Commerce
An introduction to m-Commerce 01
Introduction to mobile strategies 02
Mobile today 03
How m-Commerce breaks down across the sectors 04
The many uses of m-Commerce in retail 05
Are retailers ready? 06
Mobile tomorrow 07
The impact of mobile throughout the shopping process 08
Mobile as the ultimate cross-channel tool 09
How mobile bridges the gap between online and stores 10
Mobile strategies 11
Making mobile shopping user-friendly 12
Customer-centric mobile strategy 13
Personalising the mobile experience 14
The challenges of price transparency 15
Addressing security and privacy issues 16
Payment – assessing what is available 17
The four core mobile KPIs 18
Case Studies 20
eBay’s trend-setting mobile apps 21
Ocado leading innovation in grocery m-Commerce 22
H&M drives traffic to stores with mobile catalogue 23
Contents
For the purposes of this report, the term ‘mobile devices’ refers to any device that enables customers to connect to or purchase goods primarilythrough smart phones and tablets.
1
An introduction to m-Commerce
As little as two years ago retailers were questioning when to
invest in m-Commerce but, with £1 in every £10 now spent
online it is time for retailers, who have not already done so, to
make mobile an integral part of their offering.
Mobile remains a major challenge for many retailers, but
those who do invest will be at a significant advantage,
with estimates suggesting m-Commerce will be worth
£19.256bn within the next ten years, up from £1.35bn today.
Coupled with the limited amount of new shop space coming
into play in the UK in the near future, the genuine
opportunities for British retailers lie on the virtual high street
– consolidating mobile’s position as a critical channel.
The real value to be found in m-Commerce is through its role
as a multi-channel integrator and the indirect sales it generates
by connecting physical stores with online. As a result, I expect
to see retailers, particularly pure internet players and grocers,
beginning to borrow from their banks in order to make capital
investments to improve their e-tail infrastructure, whether it is
investments in technology to enhance the online experience or
investing in new distribution centres.
We have already seen a number of well-known brands moving
into m-Commerce. The most interesting developments to
date are in the pure play space. Ocado’s recent trial of giant
video walls in the City of London not only brought a new
meaning to the term window shopping, but also provided a
glimpse of how mobile will revolutionise the retail landscape
of tomorrow.
With conversations now firmly focused on how to implement
a successful m-Commerce strategy and how much it will
cost, this report seeks to answer many of the questions being
asked by the sector. I hope you find it insightful and that it
will aid your strategic thinking going forward.
Richard Lowe
Managing Director
Head of Retail & Wholesale
Barclays Corporate
07775 540802 (mobile)
2
Introduction to mobile strategies
The top ten trends in mobile strategy – covered in more detail throughout the report.
Mobile as a linking channel
Mobile strategies need to be aligned with the rest of a
retailer’s business, as the channels become ever more
blurred and mobile emerges as the connector.
1
Be innovative and reactive
In the fast developing m-retail market, we will see constant
advances. Retailers will need to be flexible to change and
accommodating to new trends.
2
Accommodate the multitude of platforms
To engage consumers using a variety of mobile devices,
websites need to be optimised for multiple platforms or
apps need to be developed.
3
The role of m-Commerce
It is important to clearly define what role the mobile platform
will play within a retailer, before developing functions.
4
Consumer-centric strategies
The consumer needs to be at the heart of all mobile
strategies. Developments should have the consumer in mind
and be responsive to their needs.
5
Extreme price transparency
As more price comparison tools become available to
empower the consumer, retailers will need to pay more
attention to pricing strategies.
6
Security can not be ignored
m-Commerce strategies need to provide solutions to the
security and privacy threats consumers encounter today and
resolutions communicated openly.
7
Payment procedures
Accommodating safe and simple check-out procedures
is necessary for the success of all mobile-optimised sites
and applications.
8
m-Commerce KPIs
m-Commerce strategies can be split into four main groups:
adoption and usage, engagement, conversion and customer
retention.
9
Barriers to traction
Usability and functionality are barriers hindering the take-up
of m-Commerce; retailers need to facilitate mobile usage
and include innovative measures.
10
Mobile today
Despite the UK still being in the early stages of smart phone
adoption, mobile devices have already had a significant
impact on retail. Over half of all smart phone or tablet
owners use their device at one or more stages of the
purchasing process, whether it be to research before buying,
compare prices in-store or actually make a purchase.
The rise of m-Commerce.
As you can see, mobile still only takes a small slice of the
total retail pie but the potential is there for it to have a
huge impact on the way consumers shop and interact
with retailers.
Percentage of UK shopping population that shop online
via mobile phone (making a transactional purchase)
2009-11e
Percentage of UK mobile device owners that use
m-Commerce (at any stage of purchasing process)
2009-11e
3
1,558
3,850
6,007
£199m £562m
£1,350m
2009 2010 2011e
m-Commerce market value (£m) m-Commerce population (000s)
3.8%
2009
7.4%
2011e2010
5.8%
28.2%
2009
62.9%
2011e2010
52.0%
The leaps in smart phone and tablet technology and the
ensuing consumer demand have been the major driver of
m-Commerce growth in recent years.
The m-Commerce population – that is, consumers using
web-enabled phones, smart phones and tablets – continues
to grow exponentially, from around 1.558 million people in
2009 to a projected 6 million by the end of 2011. This uptake,
combined with innovative shopping apps and retailers
learning to gear their websites towards mobile consumers,
has led to a significant rise in m-Commerce spending over
the same period, from around £199m in 2009 to an
estimated £1.35bn in 2011.
There’s no doubt m-Commerce is on the rise. The growing
number of smart phone users are slowly becoming more at
ease with using their mobiles to shop, while retailers are
grasping the opportunities mobile-optimised websites and
tailored shopping apps can provide to their business.
Perhaps unsurprisingly, grocery shopping represents the
greatest share of overall spend, with mobile technology
finding a natural bedfellow alongside online food shopping.
By allowing users to amend shopping lists and arrange
delivery times from their mobile, supermarkets have
created a useful and convenient tool for consumers to
manage their shopping.
The increasing digitalisation of books, music and video
content has made media another popular area for
m-Commerce, with users taking advantage of the facility to
download content to their mobile or tablet in an instant.
Mobile retail spend split according to spend
by sector (2011)
The degree of mobile penetration varies across sectors
and is largely dependent on the importance of the physical
stores to customers. For sectors in which the purchase
process demands a high level of interaction and advice,
such as electrical items and clothing, high street stores
remain pivotal. It’s sectors like music and video where
m-Commerce is already having its most significant impact.
Retail sectors shown in terms of mobile penetration and
the importance of stores to consumers
4
How m-Commerce breaks down across the sectors
Food and grocery
Electricals
Books
Music and video
Clothing and footwear
Other
Homewares
Personal care
DIY and gardening
Total mobile retail spend
£1,350m
£292.7m
£270.3m
£190.6m
£176.1m
£171.6m
£74.3m
£64.3m
£62.8m
£47.5m
Stor
e im
port
ance
Penetration HighLow
Hig
hLo
w
Clothes
Homeware
TV and audio
DIY
Electronics
Food
When you look at overall online spend, m-Commerce is still
a relatively small part, accounting for around 5% of total
online sales in 2011.
m-Commerce share of total online spend 2011
That share is set to increase dramatically over the coming
years as we’ll see later on, but to focus purely on direct
spend is to miss the true value of mobile as a retail tool.
Mobile plays a part in the way consumers shop at different
stages of the purchasing process, helping to boost retailers’
sales across their physical and online businesses.
The most common use of mobile devices for shopping is
stockist and price comparison research. 16.2% of mobile
device shoppers are doing at least part of their initial
research on their mobile devices, with a further 5.8%
turning to their devices for research while they shop –
a function facilitated by apps such as RedLaser, which
allows consumers to scan a product’s barcode in order to
compare prices across stores.
The growing use of mobile devices throughout the
shopping process highlights the importance to retailers
of making sure they have mobile-optimised websites
and up-to-date pricing info.
The ways consumers are using their mobile
devices to shop
Percentage of online shoppers using retail-related mobile
functions
5
The many uses of m-Commerce in retail
Total online spend: £26bn
Mobile share: 5%
Research 22.0%
12.7%
16.2%
Purchase*
Research while shopping
Reserve a product and later collect and pay for it instore
Reserve a product by text and later collect and pay for it instore
Purchase a product and later collect it instore
Reserve/ purchase and collect
Utilise vouchers/ discount codes
Research before shopping
5.8%
6.0%
3.2%
3.5%
6.9% 5.7%
* Excluding music downloads, ringtones, phone applications or games
6
While retailers undoubtedly recognise that mobile will
have a fundamental impact on how people shop, many
have yet to really take full advantage of the medium as
a tool for boosting revenues. For example, many of our
high street retailers have yet to implement sites that mobile
users can easily navigate through their mobile devices.
The retailers receiving the most mobile traffic are
generally those that have invested in making themselves
fully mobile-compatible through well designed mobile
websites and innovative applications.
Unsurprisingly, it’s established e-commerce players
like eBay, Amazon and iTunes who are leading the pack
when it comes to catering for the needs of the
m-Commerce market. For example, Amazon recently
incorporated a photo search function into its app –
simply take a picture of an item you want and ‘Amazon
Remembers’ will quickly find a match for it in their store.
Meanwhile fashion retailer ASOS recently launched a
mobile-optimised site when they noticed their traffic via
mobile devices had significantly increased throughout 2010.
Are retailers ready?
Stor
e im
port
ance
Penetration HighLow
Hig
hLo
w
ASDA TESCOSAINSBURYS
NEXT
ARGOS
APPLE
I TUNESAMAZONPLAY.COMOCADO
EBAYASOS
Strategic positioning of the most visited retailers in terms
of mobile penetration and the importance of stores to
their consumers
7
Mobile will be a significant channel.
Mobile tomorrow 19
1
176
48 64 270
63 172
293
163
253
351 69
9
648 97
7
1,01
9
1,25
1
610 88
0 1,34
7
1,73
5
2,18
2 3,11
5
3,47
9
5,06
7
Book
s
Mus
ic a
ndvi
deo
DIY
and
gard
enin
g
Hom
ewar
es
Elec
tric
als
Pers
onal
care
Clo
thin
gan
dfo
otw
ear
Food
and
groc
ery
2016
2021
£1,350m£5,822m
£19,256m
2011 2016 2021
2011
2016
2021
Key
Spending via mobile devices will affect some sectors more
than others, depending on the importance of the in-store
experience, but what’s certain is that all sectors will see
strong growth in mobile spend over the next decade. This
boom is going to be helped along by the increase in smart
phone penetration, as well as upcoming technological
developments such as 4G.
Forecast mobile spend by sector
With sectors such as entertainment, mobile will form an
integral part of the purchase process, increasingly becoming
the point of transaction and delivery. As digital devices
become further integrated around cloud-based services like
Spotify and Apple’s forthcoming iCloud, consumers will be
able to access their content more easily across multiple
devices. This integration will make customers more inclined
to purchase direct through their mobile devices.
As a whole, we expect spend via mobile to reach £19.256bn
by 2021. While this growth is impressive, direct mobile
transactional spend will still remain a small part of total retail
spend, with the bulk of sales continuing to go through
physical stores and online via traditional PCs and laptops.
The true value that mobile adds to retail will be through the
indirect sales it generates by significantly increasing
consumers’ ability to shop ‘on the go’, making shopping
quicker and more convenient than ever before.
Market value forecasts for m-Commerce
8
Mobile is set to reshape how consumers shop across
different channels in the years ahead. While mobiles and
tablets are becoming retail channels in their own right, their
real potential lies in how they influence shopping behaviour
across different channels, most noticeably in the
traditional store environment.
Pre-purchase impact
The biggest impact of mobile is that it provides consumers
with a huge amount of previously ‘wasted’ time – such as
lunchbreaks, commuting or time spent in front of the TV –
to browse and explore retail offers, so that when they get to
the high street they’re focused and fully prepared.
Tablets will prove particularly useful here as their larger
screen means they can function as portable catalogues,
with in-built interactivity in the form of videos, social media
connections and so forth.
Point-of-sale impact
As smart phone penetration increases, more and more
stores will realise the value of incorporating mobile
elements such as QR codes into their in-store displays.
Debenhams, for example, has incorporated a barcode
scanner into their app, allowing shoppers to access
detailed product information.
With mobile devices becoming a more commonly used
tool when shopping, retailers may be inclined to offer in store
WiFi access to facilitate mobile usage and support retailers’
mobile functions and services.
Post-purchase impact
As Amazon and iTunes have proved, consumers like to share
their views and opinions on purchases and the advent of
mobile offers the opportunity for instantaneous feedback.
For example, if a customer receives poor service when
in a store, this can be broadcast to a huge audience
within seconds via Facebook or Twitter. On the flip side,
a happy customer who posts a positive comment or ‘like’
can act as valuable and authentic ‘word of mouth
marketing’ for a retailer.
Retailers are increasingly using QR codes on POS signage to
encourage deeper customer interaction.
The impact of mobile throughout the shopping process
9
Mobile as the ultimate cross-channel tool
As recent high-profile disappearances from our high streets
have shown, sales from physical stores will continue to be
eroded by online. Today internet sales account for 8.9%, up
from 1.4% a decade earlier thanks to greater broadband
penetration and the growth of retailing websites. Over the
next five to ten years online sales will be boosted even more,
hitting 13.7% by 2021.
Forecast for online spend as a share of total retail spend
However, traditional physical stores have been the
mainstay of retail for centuries. Despite the increased
migration of retail spend online, bricks and mortar stores
will continue to play an important role, still accounting for
over three quarters of retail spend by 2021. The difference
will be seen in the make-up of the high street, with the
sectors most affected by the digitisation of content such
as music, video and books being the hardest hit.
As smart phone usage becomes more mainstream and
sales of tablets increase, the amount of transactional
spend via mobile devices will make it the fastest growing
retail channel over the next five years, albeit growing from
a relatively small base.
Despite this growth, mobile’s key benefit is as a tool to
blur the boundaries between different shopping methods.
Mobile will drive cross-channel integration, giving
consumers the freedom to switch from channel to channel
to get what they want.
Forecast for average annual retail growth across
shopping channels 2011-2016
2016£42.6bn
2021£53.4bn
13.7%12.6%
2011£26.2bn
8.9%
Physical storesMail order Online Mobile
+1.6%-1.2% +8.0% +55.2%
10
Mobile will make retail truly omni-channel through activity
such as in-store price comparison apps and QR code
special offers. It will act as a bridge between the two spheres
of traditional store-based retailing and online, allowing a
retailer’s online and offline presence to feed into one another,
bringing the two worlds closer together.
Mobile’s bridging impact between the online and physical
retail world
Online
Customer researches products, availability and prices online
Mobile
Uses mobile phone to check prices via comparison websites or
barcode scanner appCustomer finds online is cheaper and uses mobile to go online and buy the product or saves details for a later purchase online
Selects product and downloads details to mobile device
In-store
Customer goes to the shop to view/buy the product
Customer finds a desired product in a shop
Customer locates nearest shop with best price and availability using GPS map on phone, then goes there to purchase product
Mobile is so much more than a new channel for retailers to generate extra sales. Its real value isas a multi-channel integrator, influencing the whole shopping process at a variety of stages.
How mobile bridges the gap between online and stores
11
Because of mobile’s unique ability to blur the boundaries
between different retail channels, it’s essential that retailers
develop their mobile strategies in line with the rest of their
business, rather than view it as a standalone channel.
Mobile’s use as a connector across channels means
functionality across every consumer touch-point is vital.
Developing dialogue between retailers and consumers
Mobile devices do more than simply let consumers access
retailers whenever and wherever they want – they also offer
retailers a chance to connect directly to their consumers.
This two-way interaction opens up a host of new and
exciting possibilities that simply weren’t feasible in the past.
At the same time it also creates challenges for retailers ,
such as tackling the logistics of real-time stockchecking and
price comparison.
Strategy in practice – Argos
With almost half of their total sales now arriving through
a multi-channel route, Argos built their mobile app around
their ‘Check & Reserve’ service.
By featuring real-time price and stockcheck information,
customers can shop wherever they wish and reserve a
product for collection at their nearest store, with the
guarantee that it will be there.
After reserving an item, customers receive a reservation
number for use at in-store payment kiosks. This smooth and
efficient application can also be combined with online or
catalogue browsing, adding the reassurance of reservation
to the standard process.
Mobile as a multi-channel integrator.
Mobile strategies
Mobile needs to be integrated fully into all areas of a retailer’s operations and seen as a cross-platform tool.
12
As m-Commerce continues to develop, an important aspect retailers must address is theusability and functionality of their mobile offerings.
Even the keenest mobile user will soon be put off by a site
where no consideration has been given to the needs of
visitors viewing it on a mobile device. The current trend is to
develop HTML5 websites that can be optimised for different
platforms, including iOS, Android, Blackberry and Windows
Phone 7.
Retailers need to ensure their sites are not just relevant and
useful but easy to use. The mobile interface and user
experience should be simple and intuitive for first time
visitors, focusing purely on necessary functions, stripping
out any excess elements more suitable for laptops and
desktop-based shoppers.
In addition to mobile functionality, retailers also need to look
at providing in-store WiFi to facilitate the use of mobile
shopping apps. Giving customers access to product and
sales information while in-store keeps them on-site rather
than using the WiFi services of other providers (such as
fast-food chains) and helps facilitate purchase.
Strategy in practice – Amazon
Amazon were one of the pioneers of m-Commerce, first
launching a mobile website in 2006 and working hard ever
since to create a user-friendly mobile shopping experiences
through their innovative app ideas. To save mobile shoppers
from extensive typing, Amazon’s app includes a number of
search options such as barcode scanning, voice search and
auto fill-in for typed searches, as well as the ingenious ‘Amazon
Remembers’, which uses photo recognition to search for
items viewed in real life.
Making mobile shopping user-friendly
Issues to address Solutions
Ease of navigation Specific mobile-optimised site
Slow load times Zoom in/drop down box content expander functions instead of linking to another page
The bother of typing on a phone Include options for quick access –e.g. ASOS’ ‘save for later’ function, ‘Amazon Remembers’, ‘Wish List’
Weak/unreliable mobile Provide free WiFi access to aid the use of mobile shopping appsnetwork access
It’s not enough for a mobile platform to just beuseful. For it to be a success among consumersit must also be easy to use and well designed.
Customers can easily access their stored ‘Wish Lists’,
delivery and payment details. The multi-platform
connectivity between Amazon’s core website and their
mobile app works because it accommodates all the ways
in which consumers use Amazon to shop.
13
With consumers turning to their mobile phones for a range of
shopping activities, it’s imperative that retailers configure their
mobile strategy so that it ties up with the way the phones are being
used to shop. All developments in regard to mobile need to be
taken with the customer in mind and in response to their needs.
What customers most commonly look for from their smart
phones is the ability to research products, locate stores and
check prices, so these functionalities need to form the basis
for mobile apps or mobile-optimised sites.
Tablets, on the other hand, are more a tool for inspiration
and browsing. As such, a tablet-optimised site would ideally
put the focus on product rather than pricing. Retailers trying
to cut corners by imposing a one-size-fits-all framework will
find their offering failing to satisfy users of either device.
Optimising mobile for consumers
The key to success is to develop mobile strategies that keep
the core customer needs in mind. For example, electrical
retailers should focus on multi-channel integration, such as
the Reserve and Collect services offered by Argos and Currys.
Grocery retailers like Tesco and Ocado have focused on the
‘on the go’ nature of m-Commerce by enabling mobile
customers to continuously add products to their online cart,
in the same way you’d update a shopping list as you
remember new items.
Mobile access is of particular importance to flash-sale sites
like Gilt Groupe, Rue La La and Amazon’s My Habit, which
offer short time frame sales, so acting ‘on the go’ is often
essential to consumers getting the offer they want.
Strategy in Practice – ASOS
Online fashion retailer ASOS was quick to recognise the
importance of smart phones as a channel for connecting
with customers, launching a dedicated platform, ASOS
Mobile, in response to the spike they saw in mobile visitors
to their standard site.
This awareness of the needs of their mobile consumers also
led them to overhaul their online magazine in August 2011 to
make it more useable for their growing market of tablet users.
The new e-magazine app is tailored towards consumers
browsing for inspiration and features click-through
functionality, linking clothing in articles to the e-store, so
customers can shop directly from fashion editorials.
Customer-centric mobile strategy
Mobile Tablet
Browsing for fun
InspirationPrice checking
Product infoMobile strategy must be customer-centric in order to be relevant and engaging for targeted consumers.
Personalising the mobile experience
14
A more personalised mobile experience is a great way to make
consumers feel more valued and boost their perception of a
brand. Uninspiring mobile apps with poor design will soon
drop off the radar. Only the apps that are relevant and
engaging will become established and regularly used over the
long-term.
The retailers at the cutting edge of app development, like eBay
and Amazon, have already incorporated personalised aspects
into their mobile apps, such as wardrobe function and
‘Remembers’. By tailoring app functions to their customer
specific needs, people will see the app as a valuable tool to use
when shopping.
Mobile marketing – getting the balance right
Because consumers carry their mobiles at all times, particularly
when shopping, they become a powerful tool for retailers to
build a rapport with their shoppers. Thanks to ever-improving
network connection speeds and WiFi access, mobiles these
days can support images, sound and video, giving retailers a
diverse range of ways to interact with their customers on an
ongoing basis.
This continued interaction can be encouraged by asking
customers to join SMS messaging lists or follow the retailer on
Facebook. It’s important to always be on a customer’s radar
and mobile access makes it easier for retailers to make their
presence felt in an increasingly competitive market. The trick is
to keep communications as targeted and personalised as
possible and not to sour the customer by bombarding them
with an excess of irrelevant marketing.
Using CRM technology to target discounts
Mobile discounts can be highly targeted and personalised by
analysing CRM data. This data offers a rich source of insight
into shopping patterns and habits, letting retailers drive loyalty
by tailoring communications to specific consumer groups,
rather than offering a discount to the masses.
Mobile lets the more engaged customers request exclusive
discounts through QR code or downloadable e-coupons which
they can redeem at the point of sale in-store.
Better targeting through location-awareness
Location-based services such as FourSquare and Shopkick
enable retailers to target discounts and promotions to
customers when they are in the vicinity. The opt-in nature of
these services, where customers have to actively sign up or
‘check in’, means that retailers gather valuable data about
consumers and can more easily target deals and offers to
customer types. Mobiles can also incorporate the social aspect
of shopping, linking applications to social networking
platforms so customers can share their shopping experiences
with their friends.
Personalising the mobile experience is vitalto ensure that a retailer’s mobile strategy istargeted at the right consumer.
The challenges of price transparency
15
Barcode scanning and recognition applications allow customers
to compare online and offline prices in an instant, making
them more price-sensitive than ever before. This extreme
transparency leads to shoppers using stores as a changing
room prior to a later online purchase, or diverting them to a
competitor’s store offering the same item at a lower price.
It’s therefore important that retailers make sure there’s a
level of consistency across their own offline and online
pricing strategies to avoid this cross-channel cannibalisation.
How to respond to increased price comparison
Defensive response
• Emphasise value added services – draw a customer’s
attention away from direct price comparison with
product bundles to create a better overall offer
• Differentiate your offering – unique items or private
labels make it difficult for customers to make direct
comparisons with competitors
• Facilitate multi-channel shopping, e.g. enable
customers to make an online order in-store if a product
is out of stock, before they go to a rival store or
online competitor
Acceptance response
• Open pricing policies – increasingly, retailers are
embracing the price-conscious, tech-savvy shoppers and
becoming more open and transparent about their pricing
• Free comparison functions – retailers who integrate free
shopping comparison functionality into their apps, such
as Amazon and eBay, give customers the reassurance
of total price transparency
• Advertise on comparison apps – US electrical retailer
Best Buy pays for their ad to show up whenever a
customer scans an electrical item using the shopping
comparison app, TheFind
Determining the most efficient level of price transparency will vary from one retailer to the next.The exact make-up of their approach and response will depend on their industry, products soldand the competitive environment.
16
Addressing security and privacy issues
Security
Our research shows that one of the biggest barriers to
m-Commerce growth is the security fear of consumers, with
87.8% identifying it as a significant factor deterring them
from shopping using a mobile device.
Losing a phone can pose a security threat, but simple
safety measures like passwords and automatic sign out
can eliminate much of the risk. Furthermore, the rapid
sophistication of mobile devices and their security
measures now equals the same level of protection offered
by laptops or personal computers.
Just as the associated risk with online shopping decreased over
time, so too will it with mobile devices as market penetration
increases and consumers become more aware of the safety
measures in place. This process can be aided by retailers doing
their part to communicate what security measures they have
in place to protect their customers’ details.
Privacy rights
When it comes to shopping on mobile devices people are
particularly wary of disclosing personal details. Retailers
need to make consumers fully aware of what data is being
taken and how it is being stored. Giving consumers the
choice to opt out of entering some information may
also help to increase mobile usage.
Reassuring consumers about security and privacy
Make mobile users feel secure
• Phones and apps must be sufficiently password-
protected and consumers offered the same level of
protection as seen with credit cards
• Communicate the ease with which an account on an
app or mobile site can be deactivated should security
issues arise
• Include trusted online payment options such as PayPal
or YourCash, where customers feel more comfortable
storing credit card details
Communicating about privacy
• Educate consumers about their privacy rights
• Specifically gain consumers’ consent before requesting
personal information needed to proceed
• Ensure consumer data is protected and communicate
what is being done to prevent hacking
Communicating openly to consumers about securityand privacy issues will be key to increasing numbersand frequency of mobile shopping.
17
Payment – assessing what is available
The projected growth of m-Commerce over the coming
years makes it essential for retailers to simplify their mobile
device check-out procedures to a one-click process, while
also ensuring maximum security.
With new technology such as digital wallets (NFC, Visa’s
e-wallet, the Google Wallet app) and mobile payment
options such as PayPal, YourCash and Square, there’s no
shortage of choice when it comes to payment processing.
The stumbling block is getting consumers to trust these
new payment methods. As we saw in the early days of
PayPal, there will initially be a high level of abandoned
purchases, but as word spreads about these new methods,
consumer confidence will grow. Using sites such as PayPal
adds an additional layer of security, instead of storing bank
details directly on an application or mobile site.
Using a mobile device as a portable digital wallet has been
made possible through Near Field Communications
technology which enables quick-touch payments in store
and is suitable for small purchases but is not as secure for
larger transactional values. Retailers with smaller
transactional goods and a focus on quick service will need to
identify the demand and benefits of installing and upgrading
their infrastructure to accommodate these POS terminals for
contactless payment.
Strategy in practice – PayPal for secure mobile payments
PayPal is a platform that can be utilised by retailers as a
secure payment method. Starting out as the secure
transactions measure for eBay, its use has since spread to
many multi-channel retailer sites. PayPal uses passwords
and PINs so consumers’ payment details are easily
accessible, yet secure for the individual to make an
online purchase.
Strategy in practice – Barclaycard transforms buying on
Britain’s high streets
Barclaycard, in conjunction with Orange, launched the UK’s
first contactless mobile phone payment service in 2011.
The service allows customers to make high street purchases
up to £15 nationwide simply by tapping their ‘Quick Tap’
mobile handset against a contactless reader at over 50,000
stores. It uses a secure SIM-based approach, providing a
single point of contact for customer care as well as ensuring
enhanced payment security. A revolutionary integration of
mobile devices and retail, the service gives customers the
ability to purchase goods without card or cash and has
already attracted the involvement of major brands such as
Wembley Arena, EAT, Subway and McDonalds.
Retailers need to choose appropriate payment methods for their mobile service and identify if NFCterminals would be beneficial if installed in their stores.
18
The four core mobile KPIs
Useful metrics to monitor
Even though measuring the performance of mobile
strategies is still in its infancy, its imperative for retailers
to set out KPIs unique to their business and consumers,
before a mobile platform is designed and launched. With
clear objectives and an understanding of consumer
behaviour and demand, m-Commerce will have longevity
and develop into a lucrative channel.
The core KPIs can be split into four main groups: Adoption
and Usage, Engagement, Conversion and Customer
Retention. Monitoring of these metrics will feed back into
various areas of the business to influence strategy. Not all
measures available will be useful for all retailers; it depends
on how the channel will to be used in the wider business plan.
1. Adoption and Usage
Downloads
• The number of times an app had been downloaded is a
useful metric to quantify interest and reach
• When, how and where (through which mobile platform)
the application has been downloaded. This provides
useful data to measure the success of advertising,
updates and launches
• Installation of updates to an app shows the extent of
retention and ongoing usage by customers
Visitors
• The numbers of new and returning visitors to a mobile site
• The number of visitors to a standard website by mobile
device users will tell retailers whether they need to invest
in a mobile-optimised website
Usage
• The numbers using the app and repeat usage will quantify
the audience attracted, showing peaks and troughs
2. Engagement
Traffic
• The frequency of consumer visits over time, the
functions used, and screens viewed, along with how
long they spend on each section can all be used to
measure levels of engagement
Abandonment
• The number of people giving up on an app or site before
completing their journey, and the point at which the
drop-out occurs will highlight failings and identify how
this can be addressed
3. Conversion
USP
• The conversion metrics of an app’s USPs are a great way
of measuring engagement and loyalty and gives an
indication for ROI. USPs can be based on a variety of
things including:
– revenue through purchases
– driving footfall into stores through check-ins
– registration and use of coupons
• Quantity of product reviews, browsing time and
customer satisfaction through added services and
support are USPs being leveraged by retailers such as
ASOS, who communicate heavily with consumers via
social networks. ASOS can also be used as an example of
driving conversations between consumers and
capitalising on sales by flexing stock levels using the
indications of consumer preferences through ‘likes’
4. Customer Retention
Feedback
• Feedback from consumers gives a retailer tangible
insight into what consumers want, like, dislike and
would use more if improved
• iTunes, Android Market and Windows Marketplace
allow customers to post app reviews of apps, which
can be a valuable source of information for making
future improvements
Maintaining Interest
• Acting on feedback makes it possible to retain potential
dormant app users by showing a willingness to take on
their suggestions. There is then also an opportunity to
educate them on new developments and reward loyalty
Case Studies
The following case studies provide a detailed overview of
how retailers have put some of the aforementioned key
mobile strategies into place and reaped the benefits of
being at the cutting edge of m-Commerce.
Each retailer has fulfilled certain requirements with their
mobile strategies to make them successful. eBay’s
innovative apps excel in the aspects of personalisation and
functionality. H&M’s app taps into the demands of its core
customer base while integrating a social media element to
maintain a customer-centric focus. Meanwhile Ocado’s
mobile app has simplified the purchase process whilst
offering benefits to today’s more environmentally
conscious consumer.
21
eBay’s trend-setting mobile apps
eBay was one of the first retailers to launch a mobile
platform across all parts of its operation. ‘eBay Marketplace’
was first to become mobile enabled in 2008.
In April 2010 eBay unveiled a revamped Marketplace fashion
site with the aim of making it more visually stimulating for
their target audience. Buoyed by the success of the original
Marketplace mobile app, eBay wasted no time in launching
a Marketplace fashion mobile app just three months later.
The eBay fashion application is arguably one of the most
advanced of its kind and is widely used. Shoppers can
browse, buy and even virtually ‘try on’ an assortment of
designer, vintage and branded merchandise. Features such
as ‘The Closet’ and ‘The Style Gallery’ have added
interaction and personalisation to the proposition.
The Closet has created a shopping medium which engages
consumers in a way that, hitherto, was very much the
province of the traditional store. And it does so in a way that
makes it even more personalised than a traditional store
experience and with more product options too.
‘The Style Gallery’ is eBay’s online runway and fashion
directory, showing the latest trends and styles with click
throughs to similar products at discounted prices. In this
sense, the application allows consumers to browse and
gather inspiration and ideas around what they’d like to buy.
‘The Vault’ is another initiative and offers a range of
limited-time sales and exclusive products.
eBay’s mobile apps have not only created additional
revenue streams, they have also tapped into a consumer
need for instant information, constant newness and
on-the-go stimulation.
22
Ocado leading innovation in grocery m-Commerce
As a specialist internet retailer in the grocery sector,
m-Commerce is at the core of Ocado’s service offering. As of
September 2011, over 16% of all their transactions were
through mobile devices. After re-launching its iPhone app in
April, the retailer has continued to tap the market in 2011 by
developing apps for the iPad and Android platform.
The apps are loaded with innovative features aimed at
making product selection and the path to purchase as
simple as possible. A barcode scanner allows shoppers to
scan products anywhere at any time and add them to their
basket. There’s a jotter function that provides a product
search for complete shopping lists and the Android app also
includes a voice search for products via Google Speech
Recognition. Not to be restricted by connectivity, the app
also has an offline sync function that allows customers to
update their shopping list with changes once they are back
online. The app also recognises that not all shops are the
same and offers adjustable shopping lists for different
occasions, such as birthdays or the weekly shop.
Being a solely online provider, Ocado is very aware and
astute about its green credentials. A new feature
incorporated into the app alerts customers to an Ocado
van already scheduled to make deliveries in their area
when they are choosing a delivery slot. This leads to a
significant reduction in fuel costs, emissions and Ocado’s
overall impact on the environment.
To raise awareness of its new app, Ocado ran a pop-up
‘Shopping Wall’ at One New Change in London from
August 26 to September 1. The exhibit consisted of
the retailer’s most popular products and respective
barcodes on a wall that customers could scan using their
mobile devices. Products scanned were then added to the
shopper’s basket for delivery. The event gained significant
press interest while actively promoting the usability and
capability of m-Commerce solutions.
23
H&M drives traffic to stores with mobile catalogue
In the summer of 2010 H&M debuted its first mobile
application with the intention of driving traffic to its store
locations. The app enabled users to view fashion videos and
photos of products which could be enlarged to show more
granular detail, along with price and product information.
The ability to locate the nearest H&M, view opening hours
and create wish lists that linked to social network sites,
helped turn the app into a compelling, interactive catalogue.
H&M made the decision to not make the application
transactional. However, through the hidden coupons
incorporated into the app, H&M has a quantifiable measure
of engagement through the number of coupons redeemed
in stores.
Transactional functionality can be added at a later stage
once the popularity of the app justifies the significant
additional investment in inventory systems that will
be needed.
More recently, H&M has focused its attention on mobile
advertising spend to drive footfall to its stores. A banner ad
showcasing in-store discounts has been run on the Pandora
mobile app. A click takes the consumer to a mobile landing
page where they can browse the advertised products and
download the H&M app.
The H&M app delivers all the functions necessary to meet its
consumers’ demands. The consumer-centric app has been
designed with a great understanding of its users and their
lifestyles, as reflected by the strong presence of social media.
24
This report has been produced by Verdict Consulting for Barclays Corporate. All content has been
researched, developed and produced by Verdict Consulting at the request of Barclays Corporate for the
purpose of this report. All charts, data and statistics featured in this report are the product of this research.
October 2011
Verdict Consulting
119 Farringdon Road
London EC1R 3DA
T. 020 7551 9000 F. 020 7551 9090
E. [email protected] W. www.verdict.co.uk
ALL RIGHTS RESERVED. Whether in printed or electronic form: no part of this publication may be copied, stored in a retrieval system, or transmitted without the prior written permission of the publisher or under the terms of a licence issued by the publisher – Verdict Research Limited.
All abstracting of the data for republication must have prior permission. In order to apply, an application form (available from Verdict) and draft copies of the proposed document must be submitted, together with full details of circulation and audience. All information will be treated instrictest confidence. Please note, consent is not given automatically and in certain instances a charge may be applicable.
Reports are sold on the condition that they will not be circulated outside the staff who work at the address to which it is sent. An order for additional copies at reduced rates constitutes an undertaking by the subscriber that such copies will not be exported or distributed so as to avoidtaking full price subscriptions elsewhere without prior agreement with the publisher.
Printed reports are subject to the Copyright, Designs and Patents Act 1988 (CDPA). Please note, the Fair Dealing provisions of the CDPA do not allow copying of any part of printed publications for commercial usage of any kind.
While information is compiled with due care, the publisher will not be liable for the consequences of anyone acting or refraining from acting in reliance on any information.
© Verdict Research Ltd 2011
The views expressed in this report are the views of the author alone, and do not necessarily reflect the views of the Barclays Bank PLC Group nor should they be taken as statements of policy or intent of the Barclays Bank PLC Group. The Barclays Bank PLC Group takes no responsibility forthe veracity of information contained in the third party narrative and no warranties or undertakings of any kind, whether express or implied, regarding the accuracy or completeness of the information given. The Barclays Bank PLC Group takes no liability for the impact of any decisionsmade based on information contained and views expressed in any third party guides or articles.
Barclays Corporate is a trading name of Barclays Bank PLC and its subsidiaries. Barclays Bank PLC is registered in England and authorised and regulated by the Financial Services Authority. Registered number is 1026167 and its registered office is 1 Churchill Place, London E14 5HP.
barclayscorporate.com