Is rapid growth masking major mobile commerce shortcomings?

Worldwide business-to-consumer ecommerce sales are set to top the $1.5 trillion mark this year, and increasingly significant contributors to this enormous sum are mobile devices.

In Europe, mobile shoppers are set to spend £19.8 billion in 2014, almost twice as much as last year’s spend of £10.7 billion, according to research by RetailMeNot. In the US, the figures are even higher – with eMarketer predicting that US retail mcommerce sales will total $56.72 billion in 2014, up 36.1% from 2013.

Even these figures omit revenues from travel bookings on mobile devices, a sector that is seeing a 50% increase in mobile activity and which it is estimated is worth a further $25 billion.

There’s no escaping the fact that mobile commerce is big business.

“Fundamental to driving the rapid increase in mobile commerce is the increase of the number and penetration of internet capable phones - smartphones,” says Chris Wade, head of strategy and product management at Sage Pay Europe. 

“However, what’s at the root to the speed of this increase in mobile commerce? Without a doubt it is consumer demand. By this, I mean shoppers who now demand the convenience and choice to shop any time, anywhere. And now the ever-present consumer mobile phone is now facilitating this.”

Gareth Mackown, mobile leader for IBM Global Business Services UK & Ireland, adds: “Customer behaviour is changing. In the past, if you wanted to buy something at home you’d probably go to your study or wherever you had your laptop and start that up. Now, you might be sat watching the TV or whatever else and you’re doing the shopping there and then on a tablet. And that’s part of the mobile commerce shift we’ve seen – the weekly food shop can be done while you’re chatting over your tea.”

Challenges and opportunities

This shift in behaviour has, unsurprisingly, generated both challenges and opportunities for retailers. Alexandre Vaz, CEO of Liquid, notes: “People are spending more and more time on their smartphones and visiting websites more often on their mobile devices, thus increasing the probability of buying products through them. At the same time, users are also using their smartphones inside stores to compare prices, or to check specifications and features on a competitor's website or in a price aggregator engine. This means that retailers have no other way than to bet on mcommerce.”

Retailers must therefore keep up with the rapid rate that mobile devices are evolving – something that hasn’t always proved straightforward in the past. As Wade highlights: “When mobile payments were still fairly new, retailers believed that their standard ecommerce pages would do, which of course means that the experience for consumers wasn't great.“

Vaz adds: “Since a growing and very significant percentage of visits to companies' websites are coming from mobile devices they need to give them a good mobile experience at the risk of losing that customer to a competitor. Also, if customers are already checking prices from inside a competitor's store, the smart thing to do is to make it really easy for that user to buy the product while using their smartphone. If you are an online-only ecommerce company, mobile represents an amazing opportunity, because your customers can use physical stores as a showroom and buy, while there, using your mobile app.”

A step behind?

In spite of this, many brands remain a step behind the customer when it comes to mobile commerce, something that is conspiring to dent confidence in mobile retail. Recent research by Omnico revealed that there are still a number of common issues that are deterring them from shopping on their mobile devices.

With a third of those questioned (33%) citing security concerns as preventing them from mobile shopping, retailers are clearly not emphasising the measures they are taking to protect their customers. And with another third (31%) reporting that small smartphone screens are a deterrent, more businesses need to use dynamically designed sites and specialist apps to support these shoppers.

“The online store checkout and payment process is still the biggest obstacle to delivering successful mcommerce,” says Simon Horton, founder of ShopIntegrator. “Using the smartphone's small on-screen keyboard to enter all the delivery and payment details can be tricky, taking longer than using a traditional keyboard, especially when you're juggling your phone and your credit card in your hands at the same time.”

Yet despite this, and in spite of the fact that as much as 20% of their ecommerce traffic is coming from mobile devices, a quarter of the UK's top 100 retailers do not have mobile optimised websites according to the UK Retailer Mobile Optimisation report by Skava.

Arish Ali, CEO and co-founder of Skava, believes that soaring online sales are hiding the detrimental effects of poor mcommerce - in many cases organisations are either making little effort to optimise their sites for mobile, or are underestimating the ongoing work required to maintain support for mobile commerce.

“The increase in ecommerce revenue overall is masking the loss of revenue through poorly converting mobile websites,” he says. “Simply creating a mobile website is no longer efficient, but retailers must build mobile optimised websites with a conversion-first approach. The launch of a mobile website is not the end of a retailer's mobile strategy, but just the beginning. Like ecommerce websites before them, they require constant updates based on analysis of user behaviour to create a seamless shopping experience."

Mobile integration

There are also wider implications for those brands that fail to optimise their mobile presence.

“The size of the mobile screen is something that many retailers find to be a challenge in delivering an effective and user-friendly service,” suggests Guy Chiswick, managing director at Webloyalty Northern Europe. “This is particularly challenging when at the same time trying to maintain brand consistency across websites and mobile apps, in that although each channel needs to be developed and implemented uniquely and separately by the retailer, the customer experience has to be seamless across all channels.”

Bill Loller, vice president at IBM Smarter Commerce, believes that integrating mobile into other shopping channels is indeed one of the biggest challenges that businesses are encountering. Yet it is one that they must address if they are to support the important role the mobile plays within the modern consumer’s journey.

“While a relatively new channel, customers have been quick to integrate mobile commerce with ecommerce and traditional in-store shopping,” he suggests. “Our research found that three out of five (60%) of the companies surveyed said their customers typically research products on mobile devices for later purchase online. While almost half (48%) said their customers purchase products directly using a mobile device. A similar proportion report that customers research products for later purchase offline, while 17% say their customers use their mobile devices for research in-store.

“With this insight, businesses have the ingredients they need to provide customers with a truly integrated digital customer experience. For customers who prefer to research products on their mobile devices for a later purchase, a travel provider, for example, could offer customers the opportunity to save a list of favourite destinations that could be accessed via any connected device for booking later.”

He adds: “A customer’s experience on one channel is directly impacted by their experience on another, and today’s customers want to be able to switch between channels seamlessly. As a result, to offer a successful mobile experience, businesses must ensure it is fully integrated to what they also offer online, in store or on the phone.”

Wade agrees that this integration represents the next major challenge for retailers: “The biggest obstacle to every retailer at the moment is ensuring you have a solid omnichannel offering. It's certainly important that shoppers can reach you via a mobile device but the next phase is how, as a business, to then keep track of how shoppers are paying for goods across different buying channels.

“It’s vital that all channels, including mobile, websites, card machines etc., all link together and lead into one reporting and administration format so that you have a single view of your customer. This is fast becoming an expectation of the customer. As Sage Pay’s 2014 Payments Landscape report found, 53% of consumers prefer to browse online and buy in store or vice versa.  Having a joined up back office system with the same stock, same systems and same processes, has a great effect on the customer experience.  It means, for example, that a customer can buy a product online but return it in-store and keep track of the returns process via their mobile phone.”

Mobile leaders

The Foresee Experience Index: 2013 UK Retail Mobile Edition recently aggregated feedback from almost 2,500 surveys to examine customer satisfaction with mobile commerce. The results generally make for painful reading, suggesting that the gap between mobile sites and their desktop equivalents is actually widening.

But there are examples of retailers that are thriving thanks to their mobile support. Argos, for instance, generated £400 million from mcommerce transactions last year – equivalent to 10% of its overall sales. And it is from companies such as this that we must learn if we are to truly capitalise on the appetite for mobile shopping.

“Some of the bigger brands have really upped their game,” says James Lovell, European retail Smarter Commerce solutions lead at IBM. “The ones that are keeping pace have strategically invested in a core customer interaction platform - one platform that is able to service both traditional online channels and also the newer mobile and social channels. And I think when the leading retailers have done that and made that strategic investment, it’s very easy to start to create a seamless experience across all these separate devices and also screen sizes.

“Certainly a lot of the leading platforms can offer responsive design, and it’s very easy now to create that consistent brand experience in that. So we’ve seen that the leading retailers have done that. But once you move away from the leading retailers and into the second tier, the businesses are struggling to keep pace because they haven’t necessarily made that strategic investment in technology yet. Quite often, their mobile channel is run separately to their web channel and it may lack the consistency and integration, and when you do have that separation, it’s much harder to deliver that joined-up and consistent customer experience.”

With forecasts for mobile shopping still wildly optimistic for the coming years, there is a danger that businesses will rest on their laurels. Certainly the current numbers could mask the problems that exist. But if they don’t act to improve their mobile commerce presence, brands run the risk of losing business to competitors that are more effective on mobile devices, or discouraging customers from mobile shopping altogether.

For those retailers who are investing the time and resources into mobile, however, the benefits are potentially vast.

Mackown concludes: “The larger retailers have upped their game. Some of the things that were causing friction, such as entering your payment details, have improved to allow it to be easier for users to complete that journey without feeling it would be easier to do it in front of a big screen. But they’re not perfect by a long way, and some retail examples are much better than others.

“However, because the user experience is getting better, it’s easier to create a bigger basket and so as well as the actual number of sales rising, the value of those sales is now growing sometimes as well. So a better user experience is also helping to increase the drive in value that we’re seeing from mobile commerce.”