In anticipation of Magento’s forthcoming mCommerce product announcement, this post is part of Magento’s mobile-commerce insight series, where we review emerging mCommerce developments & best practices. We also invite you to follow us on twitter at @magentomobile.
With all the excitement surrounding mobile commerce this year, we wanted to provide our community with some key insights on where the industry is headed and how online retailers should be thinking about everything from the iPad to integrated mobile-commerce solutions. So we sat down with one of the industry’s leading eCommerce and mCommerce analysts, Brian Walker from Forrester Research, to discuss these topics and more. For retailers looking to build the right mobile-commerce strategy, or merchants who are already establishing their mobile presence, this interview is a must read.
The Industry
Magento: Let’s start with the basics. Why should merchants invest in mobile as a channel for their business?
Brian: Well, it’s a good question. The basic answer is that consumers are already there, and the numbers are increasing as the experience improves. As smartphones and web-connected devices grow in use, customer expectations change. We have data showing typical retail traffic from mobile devices is already averaging between 3-5%. At that point it becomes meaningful. We see many retailers already driving meaningful results through mobile – with revenues in the 2-4% of eCommerce range. As a result, nearly seventy-five percent of retailers are focused this year on defining their mobile commerce strategy and starting to execute against it. Revenues from mobile are already in the 2-3% range for many larger scale retailers, and we are early.
Magento: And how would you define “mobile commerce” or “mCommerce”? What is the breakdown of the industry?
Brian: There are essentially three buckets I focus on. First and foremost is the mobile web – accessing Web sites through mobile devices. The second is of course the use of applications to deliver content and commerce to consumers in a device specific way. And the third is digital content sold for use on the device – media content and software such as casual games or productivity apps. But it is important not to get wrapped up in the mCommerce label. We are really talking about commerce here, and mobile is another touch point we need to optimize for the consumer – just as we have been doing with stores, call centers, and the web for years now. Yes, the tools are different, different technology comes into play, and the consumers tasks may be different – but the most successful businesses will be focused on an integrated approach where mobile is another of many touch-points with the consumer and not thought of as a standalone channel. Customers don’t see it that way, so businesses shouldn’t either.
Magento: Are all types of retailers investing in mobile, or just a few? Do you see any differences in how a online-only merchant might invest in mobile commerce vs. a multi-channel retailer?
Brian: We see multichannel retailers getting very serious about mobile, and of course pure-play online retailers have a great opportunity in mobile to compete in-stores with price comparison, product information, and reviews. But we also see financial services, media and entertainment, publishing, and travel companies getting very focused on mobile. I also have worked with a number of B2B-focused companies who are exploring mobile commerce as an important area for growth and differentiation. So there is a wide range. No question though that retail will drive much of this.
Magento: How is technology evolving in the mobile space? Are there any noteworthy advances in IT to support mobile-commerce around the world?
Brian: This is a really good question. We are seeing more experimentation with location based features, advertising, social features, and applications for mobile devices in the US now. In Asia we are seeing more experimentation with near-field communications and payments. In Europe we are seeing mobile used as a way to skip traditional distribution challenges. Lots of innovation happening, keeping us all very busy.
Magento: What are some of the major pain points for merchants that want to invest more in mCommerce?
Brian: For many, the issues are really fairly simple. First, how to organize around mobile – is this an extension of my eCommerce operations, a separate channel, or a marketing initiative? Second, how can I best leverage my existing assets – technology, people, operations – to drive mobile commerce efficiently. Maybe third, how do I measure this? And certainly having the expertise in-house or through partners to optimize sites, use CSS effectively, and develop applications across platforms.
Magento: How about these recent success stories that we’re hearing about, in particular eBay, which is anticipating $1.5B in revenue from mobile this year. Some think that Amazon’s mobile revenues might be even larger. Are these sales cannibalized from their web stores or are these actually from new and lapsed customers?
Brian: Well, it is not all incremental. But as we know from research into multichannel retail that you have a multiplier in terms of customer value if you can get them to interact and transact with you across multiple channels. But really, the argument should not be about cannibalization or not. The issue is whether your customers are trying to interact with you via mobile or not. If they are you better be thinking about this, or else you may lose them entirely. That’s the risk. This will not be important for all, but will be for many.
Building an Effective Mobile Strategy
Magento: What are two or three device(s) that a merchant needs to establish an mCommerce presence on right now?
Brian: Well, I would start with just making sure your sites are optimized for mobile browsers. That is not necessarily easy for everyone, but it is critical whether you are going to build apps or not. In terms of apps, the place to start for now is the Apple ecosystem. iPhone, iPod-Touch and iPad now collectively represent the largest and easiest platform to focus on. Next would be Android, which is coming on strong. Lastly would be RIM and the Blackberry ecosystem. Even though RIM has a big market share – something like 20% now – the mobile web experience is not great for the consumer, and the apps are too hard to develop with each device having a variation on the operating system. For some, depending on the market and consumer they want to reach Symbian may be important, but not for the US.
Magento: You mentioned the Apple ecosystem. How should merchants think about the iPad?
Brian: Merchants should recognize that the most important feature of the iPad for them to be focused on is the web-browser. Make sure your site is usable and that your content is accessible and your site shoppable via the web-browser on the iPad. This is certainly not isolated to the iPad. Applications can be important too, especially if you have a sticky site with lots of loyalty – think Gilt Group, eBay, or even Amazon. – but won’t be important to all. But as the next gen iPhone apps are built, they should be built in a universal fashion so the iPad user can effectively take advantage too. We are also hearing merchants interested in the iPad as a sales assist or POS replacement, very interesting to see where that goes.
Magneto: Smartphones also seem to offer a lot more in terms of unique features. How are new mobile-specific features such as augmented reality and digital coupons affecting the shopping experience? Are these features important for retailers right now?
Brian: Not yet. But I expect we will see some advancements and experiments that will change that in the next few years. Mobile couponing is beginning to see some traction, but the adoption thus far is small. A lot depends on your category and customer here at this point.
Magneto: How about unique metrics for the mobile channel? Are there any new KPIs for mCommerce?
Brian: Good question. For the most part we see the same KPI’s that are important to eCommerce being important to mobile. Revenue, traffic, conversion rates, average order value, repeat visit are all critical KPIs for mobile commerce. But we also see merchants tracking reach with the number of downloads of apps, opt ins for SMS marketing and coupons, and even some looking at mobile site/app satisfaction closely.
The Future of Mobile Commerce
Magento: What will the next 2-3 years look like for mCommerce?
Brian: Time to get out the crystal ball, eh? Well I expect we will see the traffic and revenue numbers for mobile commerce climb steadily. I expect we will see more multichannel merchants looking to link their channels together with mobile – product research, info, service. And I expect location based and social tools like Foursquare and Gowalla to bring a whole new group of businesses “online”, driving eCommerce and mobile commerce even further. Consumers are going to get comfortable transacting through their phones and more and more of us will just expect it. Lastly, I expect this will go beyond retail and consumer facing business and become important to commerce as a whole. It should be interesting to see where we are in a few years. I think we are set to go through a few generations of mobile commerce initiatives and implementations, much like we did with eCommerce.
Magento: Thanks so much for your time. Where can our readers go to learn more about the intersection of eCommerce and mCommerce?
Brian: I post actively on my Forrester blog, which is open to non-subscribers. You can also follow me on twitter.
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