To create mobile shopping traction, retailers should think beyond payment

By Robin Arnfield

Contributing writer

If U.S. consumers are to be persuaded to pull out their smartphones instead of credit cards, there needs to be a much greater focus on the overall mobile shopping experience, according to Brent Cohler, director of mobile product marketing at SAP.

"Mobile shopping apps and sites need to offer greater levels of personalization, service and support to consumers," he said. "Mobile commerce is about much more than just the payment."

In September 2013, the Walldorf, Germany-based software firm SAP published a global study on mobile consumers' attitudes and behavior, based on surveys conducted in 17 countries by Loudhouse Consultancy in March-April 2013. "Our research found that 80 percent of mobile users' purchasing decisions are influenced by the mobile channel, even though they may not use their devices to complete the final purchase," Cohler said.

Reflecting the importance of smartphones and tablets as shopping research tools, mobile advertising is soaring. The digital marketing research firm eMarketer estimates that U.S. spending on advertising on mobile devices rose by 120 percent to $9.60 billion in 2013, from $4.36 billion in 2012. EMarketer predicts that in 2014, overall spending on U.S. desktop advertising will increase by 0.41 percent, while mobile ad spending will grow by 56 percent to $14.97 billion.

Showrooming

Despite major growth in U.S. mobile purchases during the 2013 holiday season, for example on Cyber Monday, many U.S. consumers still use their mobile devices for research but not for the final purchase.

"In the U.S., we're seeing a lot of showrooming, where consumers enter a store to look at a product, then use their smartphone to find a cheaper version at another retailer," Cohler said.


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"Mobile In-Store Research: How in-store shoppers are using mobile devices," an April 2013 report by the Google Shopper Marketing Agency Council, estimated that 84 percent of U.S. smartphone shoppers use their phones to assist them in their shopping while in physical stores. The Google Shopper Marketing Agency Council is a group of shopping marketing experts.

The marketing software firm Monetate's third quarter 2013 e-commerce report said smartphone and tablet users accounted for 25 percent of all e-commerce website traffic in Q3 2013. However, conversion rates — from visits to sales — remain low for these devices, Monetate noted.

Windsor Holden, author of the Juniper Research report Mobile Payment for Digital & Physical Goods: Opportunities & Forecast 2014-2018, said retailers need to adapt their strategies to incorporate showrooming by deploying tablets equipped with mPOS capability throughout their stores, while also introducing price-match options. "This means that not only is the retailer proactively offering the consumer the opportunity to price-check in-store, but that the purchase can be made immediately, without having to queue elsewhere in the store," Holden said in a press release.

The U.S.

"Our research found that mobile purchase transaction figures are lower in the U.S. compared to other parts of the world," Cohler said. "In the U.S., it's easy to shop online from home using PCs or laptops, or to use credit cards in-store. There isn't such a need for mobile payments, as there is in developing countries which lack Internet infrastructure and have low penetration of credit cards and bank accounts."

The SAP survey found that 19 percent of U.S. respondents have carried out mobile shopping purchases, while 15 percent expressed a desire to buy more goods and services using their mobile phones. By contrast, 96 percent of mobile phone users in emerging countries such as South Africa and India expressed a desire to buy more goods and services on their phones.

According to Juniper Research, Cyber Monday 2013 saw retail sales via mobiles and tablets approach $400 million in the U.S. alone. IBM estimated that on Cyber Monday, U.S. mobile purchase transactions were up by 55 percent year-on-year, accounting for 17 percent of total Cyber Monday 2013 online sales.

But Cohler said much of the growth in mobile shopping transactions is occurring at organizations such as Amazon and PayPal, with which consumers already have relationships. "These organizations make it easy to complete transactions on mobile devices, as they already have the customer's information stored on their system," he said.

SAP's research found that barriers to mobile shopping cited by U.S. respondents included concerns about information security (36 percent of respondents), lack of Internet access at the point of purchase (27 percent) and the inconvenience of having to enter large amounts of personal information onto mobile devices (32 percent). "People don't want to have type a lot of information onto their smartphone when they make purchases," Cohler said.

U.S. survey respondents highlighted assurances about personal data security (25 percent of respondents), receiving mobile discounts, offers or coupons (23 percent) and easy-to-use interfaces (22 percent) as drivers to adoption or increased use of mobile payments, SAP found.

Global appetite

Globally, 53 percent of consumers surveyed for SAP's report said that, while they hadn't made a mobile purchase, they would be interested in doing so in the future. In addition, 29 percent of respondents worldwide said they had used their mobile device to shop for goods and wanted to continue doing so, while only 1 percent had used their mobile to shop for goods and showed no desire to do in the future, the report found.

SAP said consumers globally would be more likely to increase their use of mobile commerce services if they had a greater choice of payment methods (64 percent of respondents worldwide), if mobile payments were accepted by more retailers (51 percent), if they received regular order updates (41 percent) and if they were incentivized by brands and services (32 percent).

Omnichannel strategy

To convince U.S. consumers to pull out their smartphones instead of their credit card in a store, Cohler said, retailers need to adopt an omnichannel strategy that goes beyond focusing on mobile payment transactions. "Retailers need to offer mobile shopping apps that are personalized for individual consumers, are tied into their loyalty programs, offer a record of the shopper's previous transactions at the store and provide great pre-transaction and post-transaction customer support," he said.

And if a customer is using a retailer's app in-store, he added, the app should be linked in real-time to the retailer's inventory, and display specific offers that are available at that moment. "SAP's research has found that consumers are OK with retailers collecting data about their purchases, provided retailers are transparent and offer them value in terms of relevant, personalized advertising," he said.

Apps that let consumers scan and add in-store items into a mobile shopping cart on their smartphone, which lets them avoid standing in line to pay, will help streamline the checkout experience, Cohler added.

According to the SAP study, mobile consumers are more interested in a high standard of service than technological sophistication. "One thing that should be on the radar of any retailer seeking to tap into the massive gold mine of mobile opportunity is that consumers will be increasingly influenced by service excellence over technology sophistication," SAP said in a blog posting. "As the level of device sophistication becomes commonplace, the sophistication of consumer needs and expectations rises. This puts quite a bit of pressure on the marketing and operational infrastructure of any business engaged in mobile commerce."

Cohler said that in the future, mobile post-purchase support and servicing will become increasingly important. "Retailers will need to think beyond the mobile payment transaction and focus on the entire consumer lifecycle," he said.

Read more about consumer behavior. Photo: Allshots Imaging via Flickr

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User Comments – Give us your opinion!
  • Andrew boon
    3884139
    Interesting article . Omnichannel strategies allow retailers to engage fully with a consumer through all channels, Smartphone’s and mobile applications deliver a personalized shopping experience to customers. I work for McGladrey and thought this conversation aligns well with a white paper that was created on this subject, if your readers are interested in it.@ “ The one constant in retail is change” https://bitly.com/1hrViqk
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