Mobile Is About Enablement, Not Transactions
Smartphones are ubiquitous. They are owned by more than 50% of consumers who, according to comScore, spend on average one-third of their time online on their smartphones. It comes as no surprise that marketers are asking when the booming popularity of mobile technology will translate into increased online sales via mobile channels for their brand.
But it’s the wrong question.
A better question to ask is how can the mobile platform be leveraged to empower shoppers to better interact with my brand, online or offline? The sales will come, be it through mobile, .com, or brick-and-mortar, but a focus on ROI pales in comparison to the long-term ROE (Return on Engagement) that mobile can deliver.
Falling prices of smartphones and data plans are driving the ubiquity of mobile computing. Today's "always on" consumer has full-time access to all the content the Web has to offer.
The practice of "showrooming" -- browsing offline then buying online -- is one example of how mobile is reshaping the retail landscape. Nearly 70% of mobile users reported getting product information on their smartphones while in retail stores this past holiday season, according to customer experience analytics firm Foresee. For many retailers, showrooming is a threat to their business.
However, of those in-store mobile users, 62% accessed the stores’ own Web site. Thus, showrooming is better viewed an opportunity to deepen engagement with mobile consumers. Retailers need to ensure that their mobile presence effectively complements their in-store shopping experience.
Similarly, brand marketers need to understand how mobile can provide in-store consumers with payment options that drive impulse purchases, or how mobile based loyalty/rewards programs can strengthen bonds with consumers to increase conversion.
Peapod, the online grocery delivery etailer, learned that timely scheduling of deliveries was a concern for many customers. In response, the company introduced a program where consumers were sent a delivery day text message with an updated arrival time. This is a powerful example of how a company can take an existing technology and apply it to enhance utility, drive customer engagement and provide a value-added service to its customers.
Another innovative application of mobile is Peapod’s creation of virtual stores in commuter rail stations. Billboards within the station displayed product images inviting commuters to scan the corresponding QR code and download the Peapod shopping app, and purchase grocery items. The goal of the program was not necessarily to increase sales, but to increase awareness and drive adoption of the new Peapod app. It was a success on both measures.
Another company that truly understands the power of mobile is Amazon.com. Analysts estimate Amazon gets an estimated 8% of its revenue from mobile channels. The site has become a product information portal for product availability, descriptions, prices, and user reviews.
Amazon embraces mobile. It made headlines when it unveiled its price comparison app, which it promoted by offering discounts on merchandise scanned in-store but purchased from Amazon. The company also developed Flow, a combination barcode scanning and augmented reality app that allows users to instantly buy almost anything they can point their phone at.
Despite accusations that Amazon is dismantling traditional retailing by encouraging show rooming, the truth is the other way around. Amazon is much more likely to be the victim of ‘reverse show rooming’—where consumers look up products online and then go buy them in a local brick and mortar store. The fact that Amazon’s conversion rate hovers around 10% indicates many more people are shopping than buying.
Nonetheless, Amazon is, and by all accounts will continue to be bullish on mobile. Part of the reason is that Amazon likely sees the big picture: 65% of the world does not yet have internet access—and low cost smartphones will likely be the on-ramp for a growing number of consumers in the years to come.
As mobile transactions continue to grow. The value of the smartphone will continue to come from its value as an engagement tool, and not necessarily as a transactional platform. The challenge for brand marketers is how to use this engagement to inform and enhance consumer's relationship with brands.