Mobile Commerce for the Holidays
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Mobile Commerce for the Holidays

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Ubiquitous connectivity beckons this holiday season, bringing with it a new wave of Mobile Commerce (M-Commerce). Consumers can soon expect SMS and MMS coupons, the ability to run price comparisons in ...

Ubiquitous connectivity beckons this holiday season, bringing with it a new wave of Mobile Commerce (M-Commerce). Consumers can soon expect SMS and MMS coupons, the ability to run price comparisons in real time while at the store and even mobile phone shopping from the comfort of home.

According to a recent Yankee Group survey, 14 percent of consumers are interested in mobile transactions, and an additional 18 percent say they may be interested. Yankee Group predicts the mobile coupon market will reach 2.5 million North American consumers by 2013, ballooning the dollar-amount of the market to $2.3 billion.

In this webinar, Yankee Group analysts Jon Paisner and Andy Castonguay reveal further trends from our consumer surveys and explore the devices, conveniences and challenges of M-Commerce as mobile is integrated into the retail shopping experience this holiday season.

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  • Consumers pay for communication services (SMS, MMS, email) and access (mobile internet) but not necessarily applications.
  • Starbucks 2D barcode: top up prepaid card and pay at the point of sale (PoS) with a barcode All authentication is run through the processor; Starbucks receives payment from the issuing bank and has no additional risk Requires no interaction with MNO, handset OEM or TSM Run all authentication through PoS infrastructure Creates a problem is consumer has to top-up but has no mobile signal but mobile internet and SMS are too unreliable to be integrated at the PoS On a pilot basis, available at 16 stores in the Valley and Seattle area Replacement for lost/stolen phones Launched a 2 nd application nationwide to check balances and reload Slows the que when consumers don’t have enough balance on the gift card Average rating of 3.5 stars with 2165 ratings in the Apple App Store 28% only gave 1 star because consumers are having login issues
  • The quality of the camera phone is a determining factor Autofocus is now standard on most phones The size of the code proximity isn’t an issue Screen distortion can be a problem Plastic skim holders can cause problems 30% of the screen must be read Multiple code types require multiple application readers Should the consumer be forced to recognize the difference between a QR Code, EZ Code and Datamatrix Code? Consumers require a single reader for all types Ex: App store reviews Accessing coupons, whether through SMS or WAP must be instantaneous if at the point of sale Consumers cannot waste time at checkout searching for the coupon
  • Key Drivers Income level of consumer skews to the higher end income earners Availability of data packages 61% of SMS, MMS packages 22% have data plans and can search & download coupons through the mobile internet Personalized coupons see higher redemption rates, mobile enables that QR codes are a zero cost approach, no licensing costs from the patent holder Key Inhibitors What happens when a campaign is run and the advertiser wants to change vendors? Who owns the codes? Example: Premium SMS (PSMS) shortcodes owned by the aggregator not vendor Requires a national clearing house model, similar to number portability Companies like Neustar and Telcordia run number portability registries today Integration at the point of sale Cost of redeeming coupons Queue management Consumer understanding of the code types
  • Advertisers and Merchants are wading slowly into the mobile channel Understand the success factors of paper and digital coupons and are proceeding slowly Merchants are quite concerned about redemption at the point of sale Failure rates are too high for barcode scanning Alternatives exist to eliminated scanning by linking to a loyalty program Example: Kroger / Cellfire campaigns Integration into a loyalty program is expensive and time consuming, should you just invest in NFC? Market isn’t open, too many closed code types and app readers This is changing with current industry announcements and dropped litigation
  • The time is here, mobility should be integrated into your 2009 holiday season In 2010, mobility will need to be a vital part of your holiday campaigns and will include payments Launch SMS for push and 2D barcodes for pull campaign Campaigns using both methods will reach more people with limited additional expense A single vendor can support both methods Do not charge consumers to receive MMS/SMS messages if they do not have a messaging bundle Create time sensitive and personalized campaigns but don’t try to combine offers and sales directly through the mobile channel Use mobile as a way to drive store traffic for specific campaigns, but conduct transactions through traditional payment methods Integrate with loyalty programs to limit the redemption at the PoS or provide discounts on monthly card statement

Mobile Commerce for the Holidays Presentation Transcript

  • 1. Mobile Commerce for the Holidays Jon Paisner Senior Analyst Andy Castonguay Director © Copyright 2009. Yankee Group Research, Inc. All rights reserved. www.yankeegroup.com Nov. 17, 2009
  • 2. Agenda
    • Device Trends: Mobile Phones as Gifts
    • Integrating Mobile into the Retail Shopping Experience
    • Using Mobile to Drive Incremental Store Traffic
    • Conclusions and Recommendations
    • Q&A
  • 3. Poll 1 This holiday season, will you use your mobile phone to compare prices or product information? Poll 1
  • 4. Future smartphone brand Base: People who say they are very likely to likely to buy a multimedia handset
  • 5. Strong demand for advanced OS devices is driving the growth of that segment, at the expense of others How Likely Is It That Your Next Mobile Phone Will Be a Multimedia Device with a Data Plan? Total Device Volumes (in Thousands) 32% 27% 9% Source: Yankee Group Anywhere Consumer: 2009 U.S. Survey Suite, Wave 1-6 Very Likely 16% Likely 16% Unsure 29% Not Likely 21% Very Unlikely 18%
  • 6. As smartphones go, so will feature phones WiFi CDMA EVDO revA 3G HSPA ARM1176JZF 620MHz Qualcomm MSM7201A 528 MHz Processor Device Samsung Instinct Qualcomm MSM7600 528 MHz Blackberry Bold Storm Connectivity Palm Pre N97 “ Smart” feature phones will drive significant volume Apple 3G iPhone HTC G1 Laptops Netbooks 3G Smartphones 2G Phones MIDs
  • 7. Monetizing mobile services Base: People with a mobile phone Communications-centric, not entertainment-centric
  • 8. Number of paid applications Base: People with a smartphone who have downloaded apps
    • 60% have not paid for an app
    • 16% have paid for one app
    • 10% have paid for two apps
  • 9. U.S. smartphone app store revenue will exceed $4.2 billion in 2013
  • 10. Agenda
    • Device Trends: Mobile Phones as Gifts
    • Integrating Mobile into the Retail Shopping Experience
    • Using Mobile to Drive Incremental Store Traffic
    • Conclusions and Recommendations
    • Q&A
  • 11. Poll 2 How do you plan to use your mobile phone to compare prices or product information? Poll 1
  • 12. Case study: Starbucks 2-D bar code application
    • Starbucks 2-D bar code: fill prepaid card and pay at the point of sale (PoS) with a bar code
    • Run all authentication through PoS infrastructure
    • On a pilot basis, available at just 16 stores in the Silicon Valley and Seattle areas
    • Replacement for lost/stolen phones
    • Launched a 2 nd application nationwide to check balances and reload
    • Average Apple App Store rating of 3.5 stars with 2,165 ratings
  • 13. Technology challenges facing mobile coupons
    • The quality of the camera phone is a determining factor
    • Screen distortion can be a problem
    • Multiple code types require multiple application readers
    • Accessing coupons at the PoS, whether through SMS or WAP, must be instantaneous
  • 14. Drivers and inhibitors for mobile coupons
    • Key Drivers
      • Consumer income level skews to the higher end
      • Availability of data packages
        • 61% of SMS, MMS packages
        • 22% have data plans and can search and download coupons through the mobile Internet
      • Personalized coupons see higher redemption rates, and mobile enables that
      • QR codes are a zero-cost approach, with no licensing costs from the patent holder
    • Key Inhibitors
      • What happens when a campaign is run and the advertiser wants to change vendors? Who owns the codes?
      • Requires a national clearinghouse model, similar to number portability
      • Integration at the PoS
        • Cost of redeeming coupons
        • Queue management
      • Consumer understanding of the code types
  • 15. Evolution of mobile coupons
  • 16. Mobile coupon interest increases with annual household income The higher the income, the higher the interest in mobile coupons. Regardless of whether the consumer is sent an MMS, SMS or a bar code.
  • 17. Consumers don’t care about the mobile coupon delivery method, as long as it’s free Base: Anyone who would consider mobile couponing
  • 18. The mobile coupon market remains small until 2013
    • Advertisers and merchants are wading slowly into the mobile channel
    • Merchants are quite concerned about redemption at the PoS
    • Integration into a loyalty program is expensive and time consuming; should you just invest in Near Field Communication (NFC)?
    • Market isn’t open; there are too many closed code types and app readers
    Millions
  • 19. Agenda
    • Device Trends: Mobile Phones as Gifts
    • Integrating Mobile into the Retail Shopping Experience
    • Using Mobile to Drive Incremental Store Traffic
    • Conclusions and Recommendations
    • Q&A
  • 20. Poll 3 If you plan to visit a mobile Web site to compare price or product information, where will you go? Poll 1
  • 21. Driving incremental store traffic
    • Main question: Is this going to help me sell more widgets?
    • Link consumers to:
      • Location
      • Reviews
      • Real-time promotions
      • Content /video
    • Focus on perishable items such as concert tickets, sporting events and food
      • Deal of the day
      • Approaching storm (can drive foot traffic)
    • Technical challenges
      • App developers must have access to location
      • Mobile content delivery networks (dedicated pipes) are necessary if you want to download video and ensure QoS
      • 3G/4G network certainly impacts the customer experience
    • Align retailer and manufacturer interests
      • Price comparisons are not what the merchant wants, but maybe the manufacturer doesn’t mind if the consumer visits another store for a cheaper price
  • 22. Mobile codes provide more than coupons Loyalty Programs Personalization Device Detection Location Mobile Campaigns
    • They require limited upgrade to infrastructure if PoS redemption is not required
      • Handsets from Nokia, Pantech, Samsung, LG, etc., are shipped with code readers
    • They avoid consumers having to enter long URLs; great for in-store opt-in campaigns
      • Can provide coupons, content, video, etc.
      • Can integrate inventory, location, directions
    • The cost of embedding them in a poster, newspaper, etc., is essentially $0 (vs. $$$ cost of integrating NFC chips into a campaign)
      • Access mobile Web pages, download content, engage with mobile advertising, find a location, etc.
    • Extremely popular in Japan but haven’t expanded further
  • 23. Case study: IKEA’s use of SMS
    • Customers text to a predetermined short code
    • Customers scan the SMS from their handset when they arrive at the store
    • Customers print a paper coupon to use at the checkout PoS
    • IKEA sees a 10-45% response rate through the bCode campaigns
      • Key user demographic is females aged 18-49; secondary demographic is families
    • Scan and redemption data are offer-specific, store-specific and user-specific
    • Campaign management
      • Offers can be configured online and deployed in real time
      • All reporting data is available online in real time, and for CSV exports
      • All touch-screen interactions are Adobe Flash-compatible, allowing for a variety of rich multimedia interactions in-store
      • Adobe Flash content can be updated in real time via online tools
  • 24. Push vs. pull: bar codes or SMS?
    • Push messages are best through SMS because consumers have already opted-in through another channel
      • Asking consumers to remember a short code can cause fallout in a “pull” scenario
      • Contrast: Highly successful for voting, e.g., American Idol
    • Cost of MMS/SMS should not be borne by consumer
    • SMS/MMS is a common format used around the world (want lowest common denominator to reach prospects)
    • Use SMS short codes as a way for consumers to opt-in
    • Pull interactions should be handled through an application
      • Should be as easy as possible for consumers to obtain content
    • Hybrid approach of SMS and bar code scanning is best
    • Sales/transactions should not occur yet; push only information or free content
      • Linking consumer pull activities with coupons should not occur at the PoS
      • Consumers can opt in through a pull mechanism but discounts should be received via a monthly statement
    Pull Push
  • 25. Agenda
    • Device Trends: Mobile Phone as a Gift
    • Integrating Mobile into the Retail Shopping Experience
    • Using Mobile to Drive Incremental Store Traffic
    • Conclusions and Recommendations
    • Q&A
  • 26. Conclusions and recommendations
    • The time is now: Mobility should be integrated into your 2009 holiday season
    • Launch SMS for push and 2-D bar codes for pull campaigns
    • Do not charge consumers to receive MMS/SMS messages if they do not have a messaging bundle
    • Create time-sensitive and personalized campaigns, but don’t try to combine offers and sales directly through the mobile channel
  • 27. Q&A
    • Look for these reports from Yankee Group
    • Available from shop.yankeegroup.com or through our client Web portal
      • ‘ Tis the Season: Mobile Retailing Will Transform the 2009 Holiday Shopping Season by Christopher Collins
      • Bundle Up for the Holidays by Dmitriy Molchanov
      • Yankee Group's Mobile Coupon Forecast: Integrating Mobile Into the Retail Shopping Experience by Jon Paisner
      • Forecasting the U.S. Mobile App Gold Rush by Carl Howe and Andy Castonguay
  • 28. Jon Paisner, senior analyst Andy Castonguay, director Upcoming Yankee Group webinar: 2010 Predictions – Dec. 15, 2009 Register at www.yankeegroup.com Thank you!