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Prevalence of smartphones, tablets taking mcommerce to the next level

April 13, 2011

Chipotle enables credit-card transactions via its iPhone app

Apps, games, music and ebooks currently dominate mobile commerce, but mobile as a medium for sales of physical goods and services is growing, driven in the near term by mobile ticketing for events and travel, per Gridley & Co.

While mobile commerce reached $1.2 billion in 2009 in the United States, a fraction of the $134 billion in total ecommerce sales, according to eMarketer, the sharp increase in smartphone adoption will lead to a new wave of development in mcommerce.

Consumers are using mobile devices at different points of the purchase cycle—discounts and deals, product/experience discovery, store locator, comparison shopping, reviews and checkout. Each point of the purchase cycle provides an opportunity to engage, redirect and add value to purchase decisions for shoppers, per Gridley & Co.

Mobile Commerce Daily interviewed Linda Gridley, president/CEO of Gridley & Co., New York. Here is what she had to say:

What factors are driving the growth of mobile commerce?
The surging growth of smartphones has major implications of consumers’ access to information at any given time.

We are carrying devices that know more about our environments than we do. We no longer print out pages from MapQuest before we leave the house, we Google Map our destination while on the go.

We stand in the aisle of an electronics store and look at reviews and recommendations in order to help us make our purchasing decision.

Knowing this behavior, retailers and ecommerce sites have made mobile catalog browsing and shopping much more convenient and streamlined, making it easy to complete the full cycle of browse to checkout.

Obviously, the quality and functionality of apps will convert more online consumers to mobile consumers and continue to drive the growth of mobile commerce.

In addition, we believe apps that combine social media, in-app billing and location-based services will also be a huge driver of mcommerce in the coming year.

What is the outlook for mobile transactions/payments via the mobile Web and apps this year, next year and beyond? What about contactless mobile payments via NFC at the point of sale?
This year will be a trial year for new mobile payment standards. There are many different methods of mobile payments that have their benefits and weaknesses, including carrier-based billing, contactless—2D bar code scanning and NFC—and bridge technologies that are hybrids of mobile-based and card-based such as Square and VeriFone.

But, there has to be clear standards in order for consumers and merchants to adopt. Otherwise, each merchant will have to have different devices to accept different types of mobile payments.

The winning payment standards will have the following key components:

1.        Ease of use: If it’s not as easy and as fast as pulling out a wallet, taking a card, swiping and signing, consumers will not adopt it. End of story. This is especially true in the U.S., which has a very established credit and debit card infrastructure in place.

2.       Economic benefit to the merchant: Credit card transaction fees range from 2-3 percent. Debit transactions are on average 1.14 percent per transaction—approximately 44 cents on average. For merchants to adopt a mobile payment standard, there must be consumer demand and similar or better economics.

3.        Economic benefit to the consumer: Mobile payments and mobile marketing will go hand in hand. In order to replace credit cards with reward systems that consumers are familiar with, the new standard should have loyalty and promotion components as well.

4.      Security: The smartphone is a digital device as security-challenged as a desktop PC, but its portability augments the inherent security risks of transacting online. The reality is that the industry needs to seriously look at developing security standards immediately to maintain the growth and levels of consumer and retail confidence. Ultimately, to get the shopper to be comfortable on new technology, shoppers have to be confident in the security of the device.

How does mobile help move consumers through the purchase funnel?
One way that mobile helps move consumers is the real-time access to information and product research.

Mobile information can influence purchase decisions even at the point of sale, especially when there are compelling economic incentives.

Aside from being research tools, mobile devices can also serve as active influencers of purchase decisions through mobile marketing and location-based promotions.

What are the top mobile commerce trends, and how can retailers/merchants take advantage of those to help their bottom line?
We believe that apps will definitely drive a lot of the growth in mobile commerce, and mobile strategy will go beyond the iPhone and iPad platforms.

Having apps for just the iPhone or iPad will not be adequate mobile strategy, since the growing smartphone market leaves a lot of room for other players such as Android, BlackBerry, Windows Phone, Symbian, HTC and Samsung.

Besides, the fast adoption rate of tablets means that having tablet-specific applications will be key.

We will likely see an increase in mobile-exclusive brands from traditional publishers and other content players, and increased usage of tools like near field communications in mobile apps.

In order to ride the wave of the mobile commerce surge, retailers and merchants will need to make sure their mobile strategy covers all different devices.

In addition, improved analytics will enable businesses to optimize applications and the user experience.

Merchants need to devise strategies that will drive continued usage, which translates to revenue, instead of merely focusing on the number of downloads.

Social will also be an important element when it comes to user experience, so merchants should definitely sharpen their social tools when developing their mobile commerce apps.

Security and threats within apps will be paramount as the momentum and volume of mobile commerce continues to pick up.

Final Take
Ms. Gridley

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Dan Butcher is associate editor on Mobile Commerce Daily and Mobile Marketer. Reach him at

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