• May 1, 2009
  • By Jessica Tsai, Assistant Editor, CRM magazine

Shopping On the Go

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For the rest of the May 2009 issue of CRM magazine, please click here.

As if it weren’t enough to be able to go shopping in your bathrobe, consumers literally want the option to shop anywhere, anytime. Enter mobile shopping, a trend made possible by the increasingly robust computer-like interfaces of smartphones. According to research firm Gartner, global smartphone sales hit 38.1 million units in the last quarter of 2008, a 3.7 percent rise over the year-ago quarter. In North America alone, 2008 sales grew 69 percent, despite economic instability. Further reports, by market research firm IDC, indicate that smartphones now comprise 22.4 percent of all handsets sold in the United States, up from 10.3 percent in 2006.

In ForeSee Results’ Top 40 Online Retailer Satisfaction Index, only 29 percent of approximately 9,000 consumers surveyed used their mobile phones as part of their shopping experience. Even when not used to transact, mobile phones integrated into the in-store shopping experience increased likelihood to purchase by 6 percent, according to the study. (See graph, “How Shoppers Are Using Mobile Devices,” below.)

How Shoppers Are Using Mobile Devices (Source: ForeSee Results)

Though undoubtedly a hot topic, “m-commerce” remains low on the to-do list. Attendees at the recent eTail trade show were asked whether they had implemented mobile applications for their own company—17 percent said yes; 66 percent said no; and 16 percent said they plan to have one by the next holiday season.

“There aren’t many retailers doing this yet,” says Larry Freed, president and chief executive officer of ForeSee Results, commending forward-thinking companies that are well under way, such as Amazon.com, Best Buy, and Target. Many retailers in the U.S. still operate in traditional environments where even photography isn’t allowed in stores for competitive reasons, says Jeff Orr, senior analyst of mobile content at ABI Research. “It’s the wrong reaction to have,” he says, praising applications on the market that allow consumers to scan bar codes and do price comparisons or add products to their cart—all of which can ultimately help facilitate a sale.

Freed expects this mentality to change dramatically in 2009. Given the highly competitive environment of the industry, he says, retailers that want to survive will have to compete on more than price. (For more on the current scene in retail, see this month’s cover story, “Selling Out,” on page 22.) In today’s economy, buyers are hard to come by, so it’s imperative that retailers are ready for whatever channel the consumer prefers.

Beauty retailer Sephora launched its mobile reviews site with social commerce platform provider Bazaarvoice in January 2009. Within the first 30 days of launching reviews on its Web site last August, Sephora saw over 85,000 reviews, 300 times more than what the company had initially predicted. Julie Bornstein, senior vice president of Sephora Direct, says the decision to go mobile was a natural extension of this success. “We think in a multichannel way [because] our customers are cross-channel,” she says. Another goal, she adds, is to enhance consumer confidence. “[The mobile application] provides them another data point to support their purchase,” she says. “To validate it.”

Getting a potential buyer in the store doesn’t mean the battle’s over. With that, the mobile component becomes game-changing. “Do you really want people walking through your store, browsing on a competitor’s site to learn about your product?” Freed asks.

While retailers can’t actually prevent a consumer from surfing a competitor’s site, what they can do is promote their own mobile applications within the store, Freed says. “Provide integrated features that will influence [customers] to use them,” he suggests, such as being able to access an online wish list or shopping cart. Sephora draws attention to its mobile reviews both on its Web site and with signage in the front of the store and on product shelves. Salespeople are encouraged to direct consumers to this channel.

In the current form, the m.sephora.com site is only a mobile reviews platform, but Bornstein says enabling transactions is definitely on the product roadmap—though not likely in time for 2009’s holiday season. “It’s all a matter of prioritization,” she says. “It’s still a fairly unique idea…. I think that ‘using your phone as a device’ [is] certainly in its growth phase.”

It’s not difficult to see m-commerce as the next major shopping platform, but low consumer adoption remains a hurdle. According to Orr, consumers are hindered primarily by security concerns. “It’s very much like the early days of e-commerce in that sense,” he says. Transactions made over the phone, he says, are actually more secure because it’s a one-to-one relationship with a carrier rather than a Web browser over a shared broadband network. Once consumers overcome their security fears, Orr says, they’ll move on to concerns about the speed of the transaction and the immediacy of interacting with time-sensitive activities such as online auctions.

Mobile shopping’s future will depend on how consumers perceive their mobile device, Orr says. Is it just a phone for voice calls? Or a communication platform that gives them access to resources that help inform decisions?

“There’s a lot that can be embraced, a lot of creativity in trying to understand who the user is,” Orr says. “The challenge there is to see how that can be done…
in a very minimalist environment. Whoever can figure that out’s going to have an advantage.”

Every month, CRM magazine covers the customer relationship management industry and beyond. To subscribe, please visit http://www.destinationcrm.com/subscribe/.

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