2nd Sept 2010

AIME, IAB, IMRG survey finds consumers are ahead of retailers when it comes to M-Commerce. More training and awareness needed

Until now the credibility of mobile commerce has been largely built on the success of selling ringtones, games, screensavers and other bits and pieces of digital content. Thanks to a few unscrupulous content promoters that credibility was stretched to breaking point after some high profile subscription-billing scandals rocked the industry and led to a regulatory crackdown in 2007. Since then revenues have dropped as consumers lost trust. However, over the past few months growing interest from major high street retailers in the mobile channel looks set to pave the way for the real arrival of m-commerce.

Last month AIME, along with trade bodies IAB and IMRG released findings of some combined research into this sector which found that over half of UK retail brands expect revenues from mobile channels to rise over the next 12 months and 65 percent plan to launch a transactional mobile site within two years. Although 94 percent of those retailers surveyed sited mobile as a real opportunity for future growth, the research worryingly found that only 20 percent of the 20 most popular UK retailer websites were actually optimised for mobile browsing.

Although use of the mobile device for fully end-to-end transactional services remains slight, recent m-commerce efforts from companies such as Ocado, M&S and Tesco are targeting a more mainstream shopping audience. Clearly retailers are recognising the opportunities and platform-wide benefits available from both feature and smartphone devices as more and more people find the confidence to use their mobile phones to access retailers.

Retailers must move faster to keep up with consumers who are already seeking out retail websites via their mobile phones. According to the GSMA and Comscore, each month in the UK a staggering 4.2 million consumers are visiting retailers’ websites using the mobile Internet. Even if m-commerce is still in its infancy as far as being an everyday transactional tool, retailers must act now in order to seize opportunities that already exist in the mobile channel. This means looking at mobile not just as a means for direct revenue generation but also as a way for driving sales to other online and in store channels, CRM, couponing and loyalty programs – as part of a wider, joined up marketing mix.

Extending their presence onto mobile platforms has been a daunting prospect for brands and many companies have quite rightly questioned the perceived lack of ROI in launching a mobile website and whether consumer behaviour is ready for m-commerce yet. However, that uncertainty should ease now and there is clearly more and more evidence of a market opportunity to exploit. Consumers are once again driving demand for a new, convenient shopping channel, just as they did in the early days of online retailing. This time around, the cultural shift required for retailers to recognise this demand is much smaller and in many cases simply requires the optimisation of an existing web presence rather than a ‘ground-up’ development of a new technology. There is a thirst for knowledge within the retail sector to best understand how a mobile channel fits with their customer proposition.

But as with social media, m-commerce will not automatically provide a game-changing solution for every e-commerce operation. Mobile apps may be popular right now but in terms of cost versus reward, a lot of retail brands are probably better off investing in mobile CRM or simple text alerts. Some marketers are spending money on iPhone and other smartphone apps at the expense of improving their mobile websites that everyone with a mobile browser can access. With iPhone app development costs running at 10 times more than mobile site costs and with a reach which is fifty times less, sex appeal and app vanity will only trump pragmatic reach for so long. Most retailers operate on tight margins and they need tools that can drive traffic and generate sales at low cost.

In the coming months, AIME, the IAB and IMRG will be holding a series of events around mobile commerce, as well as producing educational materials for retail brands and conducting further research into the behaviours and attitudes of UK consumers in this area.

For more information, visit www.aimelink.org