The Rapid Growth of Mobile Commerce

According to ATG, the number of consumers who use mobile devices to research or browse products and services has grown by 21% since November 2009 (chart to the left).

"There is a debate whether mobile is more of a transactional channel or a browsing channel, but the number of consumers who have purchased something on a mobile device based on the survey results shows it can be all of those things." - Kelly O'Neill, Director of Industry Marketing at Oracle-ATG

29% of the 1,000 individuals surveyed indicated they have made a purchase using their mobile device. This number is more than double the amount from 2009.

In my opinion, these numbers are destined to grow for the next few years as users become more comfortable making purchases on their mobile devices and as these devices become more sophisticated and user friendly.

Shopkick is Catching On

Earlier this month shopkick, the app that rewards you for walking into a store, surpassed 1 million users. Considering that the company had only 750,000 users at the end of January, that number is fairly significant. This also indicates the growing popularity of smartphone owners using the device while shopping.

Although services like foursquare are still more popular, shopkick appears to be catching on. The difference? Rather than relying on GPS, like foursquare does, retailers place a patent-pending device in the store. This device sends a signal to the users phone when they enter the store. This device, which costs retailers around $100, is more accurate than the traditional GPS model and ensures that a consumer is actually in the physical store.

Within the next two years, 24% of retailers surveyed by RIS News and IHL Group will sign up for shopkick or a similar service. This number is impressive until you compare that to the percentage who plan on signing up with foursquare or a similar service, which is 43%.

Although foursquare certainly seems to be the larger player (they added nearly 100,000 users at SXSW) shopkick may eventually overtake the market due to the accuracy issues of the GPS system. The fact of the matter is that the market is still rapidly growing and it is anyone's game at this point.

QR Codes Everywhere

I'm a bit slow in this, but if you haven't seen it yet, you should check this out:

Mobile Commerce Best Practices

In a recent posting on the Google Retail Blog, the company details four best practices which should be utilized when developing a mobile retail strategy. A summary of the article can be found below, or the full article can be read here.

1. Extend your online brand reputation to mobile with Seller Ratings - This extends an online reputation to mobile devices and can drive consumers to the website. Campaigns with mobile Seller Ratings saw a 7.5% increase in clickthrough rates compared to campaigns without the ratings.

2. Take your customers directly to your desired conversion path with Mobile Ad Sitelinks - This makes it easier for users to navigate a mobile site. Currently, only two sitelinks can appear on mobile devices. Campaigns that utilize mobile ad sitelinks see a 30% increase in clickthrough rates compared to campaigns without the sitelinks.

3. Drive customers to your store with Offer Ads - Special deals can be included in mobile search ads, which allows users to store coupons via SMS or email. This also displays the company's phone number or location on Google Maps, allowing the consumer to locate or contact the company immediately.

4. Make it easier for customers to contact you with Click-to-Call Ads - This includes the business phone number in the mobile search ads. Calls traditionally cost the same as a click for these ads, but calls can lead to higher quality leads and more conversions. There is also something named the Call-Only Creative enhancement which ensures that the phone number is the only clickable part of the mobile ad. This can be particular useful if the goal of the ad is to increase phone calls.

Although these are certainly not the only things which must be considered for an effective mobile retail strategy, they are certainly a good place to start.

The Home Depot Goes Mobile

The Home Depot, a company which was co-founded by Arthur Blank (the owner of the Atlanta Falcons) has decided to fully embrace mobile commerce by forming a partnership with Scanbuy. Home Depot shoppers will now be able to scan these codes, like the one pictured below, to see how-to videos, buying guides, product demos, and more.

If a consumer scans the code outside of a Home Depot, they can make purchases.

Scanbuy reports that nearly 25 million people throughout the US are in possession of barcode scanning technologies. It has also been reported that mobile barcode scanning displayed a 1,600% increase in traffic in 2010. If these numbers are correct, this could be an extremely advantageous move for Home Depot. The goal is to help connect customers with the store, and this may work, but it will be interesting to see if competitors embrace the strategy and if it turns into a profitable venture.

The Lincoln Lawyer and Groupon

Lionsgate, maker of movies such as Hotel Rwanda, Crash, Saw, and Kick-Ass, has teamed up with Groupon to promote its new movie, The Lincoln Lawyer. The two-day promotion, which began on March 16, offered Groupon users the chance to buy tickets to the movie for $6. As far as I know, this is the first type of deal between Groupon and a major film studio.

According to a post on the LA Times, this promotion sold roughly 190,000 tickets. If this number is accurate, at $6 a piece, that's $1,140,000 worth of movie tickets sold through Groupon in a two-day period. With Groupon taking a 50% cut of the sales, that means that the company grossed $570,000. Not bad for two days worth of work.

So, why does this matter? Fandango, which facilitated the promotion, reported that 31% of all tickets sold on that Thursday were to The Lincoln Lawyer. Rango, who was second on that list, accounted for only 12% of all tickets. You can count on the fact that a large percentage of these numbers were from mobile users. As with every first-mover, it is unknown whether or not this strategy will work for the movie and entertainment industry, but you can bet that others will try. It appears that more and more industries are beginning to embrace mobile and eCommerce, and it will be interesting to see who does it next..

Smartphones are Changing Commerce

The retail industry (and anyone selling anything) has to be prepared for the rapid evolution and adoption of smartphones by the average consumer. According to a February 7, 2011 report by Wells Fargo titled "The Sputnik Moment for Retail: A Whitepaper on eCommerce and the Disruption in Retail" smartphones are growing at a rapid pace. The chart to the right illustrates the Wells Fargo forecast of smartphone shipments (units in millions).

In addition to the growing number of smartphones throughout the general population, a majority (55%) are utilizing the phones while shopping. This is according to the March 2011 study "How Smartphones are Changing the Retail Shopping Experience" published by iModerate and CMB Consumer Pulse. However, despite over half of smartphone owners using the devices while shopping, only 23% have used them to actually make a purchase. While we can expect this number to climb as apps improve and users become more comfortable with the technology, this does signal the current state of mobile commerce.

Smartphones are growing in popularity, as is mobile commerce, but people still remain hesitant to make purchases in this fashion. My goal is to further research the state of mobile commerce and future expansion opportunities for those who are pioneering the industry. Will this simply remain as a niche market or will companies be forced to embrace this trend in new and innovative ways? Although I tend to believe in the latter, it is an exciting new field which I hope to analyze and to provide others with a strong base of knowledge in the future.

Smartphone Shopping Increases

A recent report from Chadwick Martin Bailey and iModerate Research Technologies shows that 50% of smartphone owners use their phones for assistance while shopping on-site. Why is this important? According to IBISWorld, smartphones accounted for 24% of the mobile phone market in 2010. That percentage is expected to climb to 70% of the market by 2015. As smartphones become more common throughout the general population, a majority of shoppers will be utilizing smartphones while shopping on-site. The most common use of smartphones are barcode scanner apps (44%) which enable comparison shopping. In other words, someone shopping in Target will be able to scan the barcode of a particular item and compare prices across all stores. I may purchase an item online from Wal-Mart or Amazon while standing in front of the same item in Target after I used my smartphone to instantly find a cheaper price. The explosion of the smartphone industry, and the apps that go along with it, are revolutionizing the way traditional commerce companies conduct themselves.