mobilizing the shopping experience: tips for building relevant mcommerce relationships

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Andrew Gaffney Editor Retail TouchPoints

John Stelzer Director Retail Industry Marketing Sterling Commerce an IBM Company

© 2010 IBM Corporation 4

Agenda

Proliferation Of Mobile Phone Usage

How Retailers Want To Use Mobile Access To Consumers

How Consumers Want To Use Their Mobile Phones

How To Bridge The Gap Between Retailer Goals And Consumer Preferences

A Sample Scenario For Bridging The Gap


Agenda







Mobile Phone Penetration Is Extensive

82%

Of U.S. adults own mobile phones1

96% Of multi-channel consumers

own mobile phones2

234 million U.S. consumers ages 13 and older used mobile devices in

Q2, 20103

1 Source: Pew Research Center’s Internet & American Life Project and The Nielsen Co. survey: April 29-May 30, 2010 2 Source: Survey “Cross-Channel Brand Interaction: 2010 Consumer Preferences”; Sterling Commerce/Demandware; Sep. 2010 3 Source: US Consumer Survey; The Nielsen Co.; July 2010


Smartphones Are A Significant Portion Of Mobile Phone Usage

53.4 million

U.S. consumers own smartphones1

1 Source: US Consumer Survey; The Nielsen Co.; July 2010 2 Source: Survey “Cross-Channel Brand Interaction: 2010 Consumer Preferences”; Sterling Commerce/Demandware; Sep. 2010

46% 54%

Smartphone Ownership2

Own A Smartphone Plan To Buy A Smartphone


And, Smartphone Adoption Is Accelerating

Source: eMarketer Inc. Source: The Nielsen Co.

© 2010 IBM Corporation

Mobilizing The Shopping Experience

John Stelzer – Director Retail Industry Marketing

09/22/10

Editable Text Editable Text Editable Text


Agenda







Retailers Are Rapidly Embracing The New Mobile Channel

Source: Forbes Insights; “Retail’s Mobility Imperative – A Measured Approach To The Emerging Channel”; April, 2010

73%

Of U.S. retailers have some type of mobile initiative in place

20% Of U.S. retailers are in the

process of evaluating the mobile channel

  10% Have already widely implemented a strategy

  24% Are expanding their strategy rapidly

  39% Are in pilot programs

  20% Are evaluating their mobile strategy

  7% Do not currently plan to pursue a strategy


The Revenue Contribution Of The Mobile Channel Will Grow Rapidly

$23.8 billion Projected U.S. mCommerce revenue (in 2015)

8.5% Of all U.S. eCommerce revenues (in 2015)

20% Of global mobile commerce revenues (in 2015)

Source: Coda Research Consultancy & ABI Research


Mobile Sites Are A Common Approach For Retailers Embracing mCommerce


Mobile retail sites

36%

40%

24%

Deployment Of Mobile Retail Sites

Deployed

Plan To Deploy < 1 Year

Not Planning To Deploy < 1Year


The Majority Of Retailer Mobile Tactics Are Focused On Selling


What mobile tactics are you using today and planning to use

in one year?


And, Planned Retail Mobile Investments Are Focused On Selling


Where are you focusing the bulk of your spending on mobile initiatives?


What are the main factors that drive

your mobile channel efforts?

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But, Retailers’ Top Reasons For Pursuing The Mobile Space Are Quite Different



Agenda







Consumers’ Current Uses Of Mobile Phones Provide Insight Into Their Preferences For Mobile App/Site Capabilities

Source: Internet Retailer; September, 2010


Consumers Are Increasingly Adopting And Using Mobile Apps

The average adult mobile phone user has 18 apps on their phone1

1 Source: Pew Research Center’s Internet & American Life Project and The Nielsen Co. survey: April 29-May 30, 2010 2 Source: The Nielsen Company Apps Playbook; Sep. 2010

Average Apps Per Smartphone User2

Dec. 2009 Aug. 2010

iPhone 37 40

Android 22 25

Blackberry 10 14


The Most Popular Consumer App Downloads Signal Consumer Preferences For Further Smartphone Use

Source: The Nielsen Company

Entertainment

Convenience

Shopping

Shopping


Even When Focused On “Shopping” Capabilities, Consumers Want Convenience Capabilities Over The Ability To Purchase A Product

Source: ROI Research, Inc. & Microsoft, “Future of Mobile”, Nov. 2009 1 Source: Read Write Web; “More Smartphone Users Now Use Their Phones to Shop Online”; 1/4/10

A recent Compete study found that product research (price comparison, reading ratings and reviews) was the most common mobile shopping-related activity

conducted by smartphone users.1

Coupons Find A Store

View Info On Phone

Compare Prices

17%

36% 44% 46%


Most Consumers Are Still Not Comfortable Purchasing Products Using Their Mobile Phones

69% Are not comfortable making a purchase on their mobile phone.

Top 5 Inhibitors To Purchasing More Via Mobile Phones

1. Cannot connect to the internet with my mobile phone 40%

2. Difficult to use, because the screen is too small 34%

3. Difficult to visualize what the product looks like 31%

4. I don't think it's secure 28%

5. Interacting with the retailer's website via the mobile phone is too slow 22%

Source: Survey “Cross-Channel Brand Interaction: 2010 Consumer Preferences”; Sterling Commerce/Demandware; Sep. 2010


Interestingly, All Solutions For Removing Increased Purchase Adoption Impediments Were Security Based


Top 5 Changes That Would Make You More Comfortable Making Purchases Via Mobile Phones

1. Option of using PayPal 45%

2. Knowing that the mobile phone app does not store your credit card information 39%

3. Mobile phone only shows a truncated credit card number (only shows last 4 digits online & on the mobile phone

23%

4. Being asked to provide your 3-digit security number on your credit card when paying with a credit card

22%

5. Viewing the retailer app's security policy 20%


Consumers Showed Interestingly Different Inclinations To Purchase Via Mobile Phones Based On The Mobile Platform Used

Source: The Yankee Group Research

267% Increased incidence of an iPhone user using their device for mobile

shopping more than any other smartphone user


As Interested In Selling Via The Mobile Channel As Retailers Are, It’s Important To Note That Consumers Do Not Want To Be Sold To


How comfortable are you having retailers send you advertising/promotions via your mobile phone?

70%

30%

Receiving Proactive Promotions

Not Comfortable Comfortable


Agenda







Consumers Are Clear About What Would Incent Them To Use Retailer Mobile Apps/Sites More Frequently


Top 6 Capabilities Consumers Would Most Like To See In A Branded Retailer Mobile App

1. Look up and verify product availability at a particular store location 62%

2. Ability to look up the price of an item while in the store 57%

3. Find nearest store location 49%

4. Ability of retailer to proactively notify you via your mobile phone about the status of outstanding orders

48%

5. Ability to locate an OOS item at an in-stock location, purchase it, and have it shipped to you or held for pickup

46%

6. Ability to access user product reviews while in the store 46%


And, Consumers Expect Seamless Integration Between The New Mobile Channel And Retailers’ Existing Channels


85%

15%

Expect A Seamless Experience

Expect A Seamless Cross-Channel Experience Do Not Expect Channels To Be Integrated

To what extent do you expect consistent shopping and brand experiences across the various channels that you can shop for a certain retailer (e.g., Web, store, call

center, and mobile)?


This Is Very Troubling Given How Few Retailers Have Completely Integrated Their Mobile Channel With Their Other Channels



Balancing Consumer Preferences With Retail Objectives Is Critical To Consumer Adoption Of Mobile Retail Offerings

Customer Convenience

Increased Sales

30


Agenda







Retailers Have An Opportunity To Apply Mobile Capabilities To “Kill Two Birds With One Stone”

Question • What everyday occurrence in the world of retail brick-and-

mortar business offers an opportunity to apply mobile capabilities to:

1.  Speak to retailers’ objectives to use the mobile channel to increase sales and

2.  Enable retailers to address consumers’ preferences for increased convenience via mobile capabilities?

Answer • Recovering from—or avoiding—stock-outs

32


  Consumers experience OOS on 17.8% of their shopping trips 1

  The average consumer spends 20% of each shopping trip looking for—or waiting for store associates who are looking for—out-of-stock items 2

  53% of consumers admit that they consciously shop at fewer retailers courtesy of current economic conditions 3

– But, the retailers with whom they still shop are the ones with which they feel the greatest loyalty 3

  Upon experiencing a stock-out4

– 1 in 3 consumers frequently leave the store without purchasing additional items (1 in 10 always do this)

– 1 in 3 consumers frequently leave without purchasing any items – 43% leave the store and look for the item at a competitor – 33% purchase the item at the competitor – 40% of affected consumers will make fewer trips to the OOS retailer (chain wide)

33

Retail Out Of Stocks (OOSs) Remain A Significant Scourge To Consumers

1 Source: IHL Group “What’s The Deal With Out-Of-Stocks”; 2008 2 Source: “A Comprehensive Guide To Retail Out-of-Stock Reduction In the Fast-Moving Consumer Goods Industry”; Thomas W. Gruen, Ph.D. and Dr. Daniel Corsten; 2008 3 Source: Fleishman-Hillard Research Survey, “The Multi-Channel Shopping Experience”; January 2009 4 Source: Survey “Cross-Channel Brand Interaction: 2010 Consumer Preferences”; Sterling Commerce/Demandware; Sep. 2010


Recall Clues That Consumer Preferences Provided Regarding Avoiding—Or Recovering From—The Inconvenience Of Retail OOSs

  How consumers would prefer to use mobile capabilities while shopping: –  #3 Preference: Verify item availability in stores (26%)

  Most important use of mobile phones while shopping – #1 Preference: Checking product in-stock availability (28%)

  Top 6 capabilities consumers would most like to see in a retailer-specific mobile app/site: – #1 Preference: Look up and verify product availability at a particular store (62%)

  Importance of being able to determine in-stock availability of product – 66% consider it Important to Very Important

  Ability of a retailer’s mobile app to enable the consumer to locate an OOS item at an in-stock location, purchase it, and have it shipped to them or held for pickup

– 46% of consumers selected this as important to them

  The ability of a store associate to be able to locate an OOS product at an in-stock location and have the product: shipped to the customer, transferred to the customer’s home store, or held for customer pickup at the in-stock location

– 72% consider it Important to Very Important Source: Survey “Cross-Channel Brand Interaction: 2010 Consumer Preferences”; Sterling Commerce/Demandware; Sep. 2010


Multiple Goals Can Be Achieved

Applying mobile capabilities for avoiding—or recovering from—retail stock-outs provides a recipe for achieving retailer goals (i.e., selling), appealing to consumer preferences (i.e., for increased convenience), and funding future mobile initiatives (i.e., that leverage consumer adoption).

35


Store Associate Mobile – Associates assisting customers

36

Access Product

Information

View Product Availability

Check Inventory

Levels

View Fulfillment

Options



37

View Product Details Description Specifications Promotions

Companion Or Substitute

Items



38

Select Fulfillment

Method Ship To Home

Pick And Hold For Customer

Pickup

Contact In-Stock Store If Low Inventory



39

View Customer

Order

Edit Cart Content

Access/Collect Customer

Information

Provide Unique Order Identifier



40

Check Outstanding Pick Orders

Track/Verify Order

Completion


Order is ready and wai6ng when consumer

arrives

Order Management Mobile Framework – Consumer Convenience Instant access to:

Product informa.on/special offers Product availability

Purchase/Fulfillment op.ons Order tracking

Search for product and product

informa6on

Complete order with mul6ple

fulfillment methods

Check availability loca6ons

Choose preferred fulfillment method(s)

41


Conclusion

  Mobility is undeniably the next major Retail channel

  Retailers want to increase sales via this new channel

  Consumers want increased convenience from the mobile channel

  Retailers must offer consumer convenience to incent consumer adoption and use of retailer-specific mobile apps/sites

  Applying mobile capabilities (whether in the hands of store associates and/or consumers) to recover from or avoid retail OOSs provides the highly promising potential to boost sales while increasing consumer convenience and satisfaction

  Regardless, any retailer mobile commerce offering must successfully address consumer awareness, adoption, and use in order to be successful

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mobilizing the shopping experience: tips for building relevant mcommerce relationships

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