The State Of Mobile Commerce – Are You Meeting Your Mobile Customers’ Expectations?

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The State of Mobile Commerce: Are You Meeting
Your Mobile Customers' Expectations?
Sucharita Mulpuru, VP and Principal Analyst

November 2011

2 © 2011 Forrester Research, Inc. Reproduction Prohibited
2009

Consumer spending is increasing and, with it,
investment in mobile services

• 12% research; 4% buy
• Smartphone owners: 30% research; 11% buy
• Forrester eBusiness group estimated direct spending on mobile to be about $6B in 2011.

Consumer spending

Mobile investment
• Websites Marketing spend
• Applications • Spend mostly on display ads,
• Infrastructure search, messaging and
• Average investment approx. applications
$170K by online retailers • $1B in US in 2011

Base: 7,156 US online adults with a cell phone

Source: North American Technographics® Benchmark Survey, Q2 2010 (US, Canada)

Portable media or computing platforms will grow, with
phones continuing to dominate
Five-year forecast of mobile devices
140
Millions of US consumers with

Smartphones
120
100M
100
Tablets
80

60
each device

40 eReaders

20

0
2008 2009 2010 2011 2012 2013 2014 2015
(F) (F) (F) (F) (F) (F)
Source: Forrester Research US Forecast, 2010-2015; Forecast: US Mobile Phones By Technology, 2008 To 2013; Forrester
Research eReader Adoption Forecast, 2010 To 2015; May 27, 2009 “How Big Is The eReader Opportunity ?” Forrester report

US mobile commerce is expected to grow to $31
billion by 2016

$31
$25
$19
$14
$10
$6
US$ (billions) $3

2010 2011 2012 2013 2014 2015 2016
% of eCommerce 1% 2% 3% 4% 5% 6% 7%

Source: Forrester Research Mobile Commerce Forecast, 2011 To 2016 (US)
Note: eCommerce includes mobile media and content, retail, travel, coupons/deals, and services.
Does not include mobile ring tones, mobile gaming, or mobile video

Source: June 17, 2011, “Mobile Commerce Forecast: 2011 To 2016” Forrester report

Cross-channel has far greater impact
“Which of the following have you ever used your mobile/smart phone
for?”
“ Have you ever used your cell phone to
purchase a product (excluding digital To check store hours 40%
content, such as ringtones) without
To locate a nearby store to purchase a specific
speaking to anyone (i.e., calling the product 36%
retailer, wireless carrier, or seller)?” To look up online product information while shopping
in a store 26%
To read customer reviews of a products 25%
To compare physical store prices with online prices,
No when shopping in a store 22%
71% To check on the status of an order 20%
Yes
29% To find or redeem a coupon/coupon code 19%
To scan a 2D barcode 16%
To check in-store availability of a product 15%
To learn about an in-store promotion or event 13%
To check in to a store using a location-based app 11%
To use a special mobile shopping app 9%
To purchase an item that was not available/in-stock in
the store 8%
To reserve items at store for in-store pickup 7%

Base: 1,545 smartphone owners
Source: North American Technographics® Retail Online Survey, Q1 2011 (US)

“Our biggest mobile days are around Thanksgiving”
“Do you agree or disagree with the following statements.”

I shop with my mobile device 18%

I shopped online with my mobile device
10%
Cybermonday

I shopped online with my mobile device
9%
Thanksgiving weekend

Base: 4,521 recent online buyers; 1,024 Cybermonday online shoppers; 817 Thanksgiving
weekend online shoppers

Source: Bizrate/Forrester Online Retail Holiday Study, Q4 2010

Tablet owners are still a minority of consumers
though they overlap heavily with smartphone owners


Among tablet owners, they prefer their tablet for web
shopping


Devices like Amazon Fire will likely accelerate tablet
adoption


Retailers need to beware of the inhibitors of mobile
commerce adoption
“I would use the mobile Internet on my cell/mobile phone to
purchase products…”

If my mobile phone number would be kept private 45%
Very easy [5] Very satisfied [5]
28% 35%
If mobile payment services were more secure 44%

If sites on the mobile Internet had all of the same
[4]
content, features, and functionality as on the standard
[4]
36%
41%
Web site 38%

If the mobile Internet was faster 35%

[3] [3]
If sites on the mobile Internet looked more like they do
19%
on a computer
17%
33%

If my phone had a larger screen 32%

Base: 4,306 US online consumers
Source: North American Technographics® Retail Online Survey, Q1 2011(US)

It takes time to overcome security concerns
“What the primary reasons you don’t buy online?” (circa 2001)
I don't want to give out my personal information 73%

I worry that my credit card number will get stolen 69%

I want to be able to see things before I buy them 67%

I worry about returning products bought online 49%

I don't want to pay shipping costs 41%

I have concerns about online customer service 29%

I don't trust any online stores 26%
I worry that an online retailer“[In the mid-90s] the types of transactions on the
I deal with will go out of
business 23%
Internet were things like porn and gambling.”
I don't trust that it will work smoothly 22%
Base: online nonbuyersNPR, November 30, 2009
(multiple responses accepted)

Source: Forrester Consumer Technographics, September 2001

Some consumers are also buying directly from their
mobile devices; this will grow significantly over time

“How did you purchase that product?”

“Have you ever used your mobile phone By accessing the mobile Internet
to purchase a product without speaking to visit a retailer's mobile Web 65%
to anyone?” site

By using a mobile payment
30%
service like PayPal Mobile

No Yes
84% 16%
By text messaging a short code 22%

By using a service provided by
12%
your wireless carrier
Base: 635 US Web buyers who
currently use a mobile
smartphone Base: 100 US Web buyers who
have used their mobile
smartphone to purchase a
product

Security isn’t the only issue though

28% 35%

[4]
[4]
36%
41%
Web site 38%


[3] [3]
19%
on a computer
17%
33%



Strategies for mobile optimization vary


What is the benefit of an app?
Target’s mobile optimized site Target’s iPhone app

1. Richer user
interface
2. Ability to
leverage
features like
cameras or
barcode
scanners

3. Ability to
leverage an
offline
experience
without a need
for “a fat pipe”


At a high level, here are your options:
Native Hybrid Mobile
Applications Applications Web
• Need premium • Simple information • Need broad reach
Use Case experience • Short-lived or and/or target younger
• Support “disconnected” situational applications consumers
Scenario
use cases • Frequent updates • Support mobile ad
• Deep device required campaigns (e.g., 2D
integration required • Net-centric solutions bar codes, banner ads)
(e.g., Bluetooth stack, • Need access to device • Limited financial
media) features beyond GPS resources

• UI quality • Low-cost applications • Broad reach including all
Pros
• Unique mobile • Leverage existing smartphones, most
services (e.g., RDC, developer skills QMD’s, and some
color matching) feature phones
• Quick time-to-market
• Updates relatively easy

• Support multiple • Performance issues – • Network/browser
platforms (= cost) must synch with Web performance dependent
Cons • Updates/maintenance • More network
processes bandwidth/speed
• Limited reach dependent


Poorly executed hybrid applications will fall short of
user expectations
The Web landing page tied to Content was not formatted for Links were poorly designed
their 2D bar code campaign the small screen – required resulting in 404 and “flash
was not optimized for mobile. horizontal scrolling. required” errors

AND


Good idea, badly executed


Three things you can do now
Make sure your site is simple
– “What are the 3-4 links you absolutely need?”
– Ensure that pages are not heavy and that content has been modified for the channel
– Test for legibility

Emphasize security where you can
– Alternative payments can provide an extra buffer of comfort
– React quickly and favorably to shoppers if fraud issues arise

Think multichannel
– Develop programs to support the other parts of your organization if you operate stores
– If you’re one of the companies with eCommerce owning mobile, get budget from
the other parts of the organization; CTOs need to invest in wifi in their stores
– Consider use cases for store associates as well as for customers
– Plan to measure the cross-channel impact (e.g. coupon redemptions, mobile
pageviews)
– If you are a pureplay, price comparison is a critical use case


Steve Madden: PC to mobile translation


Jewelry TV: PC to mobile translation


Wirefly: PC to mobile translation


For physical stores, out-of-stock ordering happens on
mobile devices
“What type of products did you purchase using your cell phone during the
past 3 months?” 16%
14% 14%
13%
11% 11% 11%
10%
8% 8%
7%
6%
5% 5% 5% 5% 5%
4% 4%
3% 3% 3%
2% 2%
1%

Base: 442 smartphone users who have purchased on a
mobile device



Some things may seem out of your control…

28% 35%

[4]
[4]
36%
41%
Web site 38%


[3] [3]
19%
on a computer
17%
33%



…yet some companies have executed speed and
stability (for the most part) well on mobile


In summary
Mobile usage is growing rapidly even for commerce and shopping purposes
– The multichannel use cases of mobile are currently greater than the “m-web” use
cases
– Tablets (to the degree that they are “mobile”) are siphoning traffic away from
traditional mobile devices

Consumers are still unaccustomed to purchasing on mobile devices and need
retailer/merchant reassurances
– Site content needs to render effectively and quickly
– Features such as alternative payments can reduce keystrokes and enable faster
transactions
– Speed and scalability of a mobile presence are critical to a consumer’s willingness
to use a site and return to it

Retailers are likely to experience significant traffic to their mobile sites this
holiday season; companies without a mobile strategy or those with poorly-
performing sites are likely to be left behind on key dates such as
Cybermonday

Selected Forrester research

June 23, 2011, “The State Of Retailing Online 2011: Marketing, Social,
And Mobile”
June 17, 2011, “ Mobile Commerce Forecast: 2011 To 2016”

July 25, 2011, “Why Tablet Commerce May Soon Trump Mobile
Commerce”
April 9, 2009, “The POST Method: A Systematic Approach To Mobile
Strategy”
February 14, 2011, “Mobile Technographics®: US Online Shoppers”

February 25, 2011, “Mobile Is Not Just Another Channel”
July 11, 2011, “eBusiness: The Future Of Mobile Is User Context”


Most retailers now have some mobile strategy

Source: State of Retailing Online 2011: Mobile


Thank you

Sucharita Mulpuru
smulpuru@forrester.com
Twitter: @smulpuru
www.forrester.com

© 2009 Forrester Research, Inc. Reproduction Prohibited

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