consumer experience, mobile applications, technologies

Retailers ready for transactional mobile

A gulf between them?

Show me the money (or at least the billing mechanism)

Research published by trade bodies the IAB, AIME and IMRG and reported by NMA says that two-fifths of UK retailers are planning to launch a transactional mobile site or app within the next year.  It also says that retailers admit to needing more training.

How meaningful is that?  Is it rather like saying I’m planning to get good at golf?  (I too might need more training).

The question is surely how?  What’s my method of getting good?  Because it’s such a young, relatively unscaled medium, nobody is quite sure.  Faith is being piled into smartphone platforms and mobile applications but due to the lack of a blueprint, different routes are boldly being taken.

The bodies’ survey of 141 UK retail brands found that over half expected a mobile revenue upturn in the next year, but only 20% (or four) of the 20 most popular UK retailer websites are mobile optimised. Mobile web is one channel, and a sensible way of spreading eggs amongst different baskets.

Stacking Shelves

However, many more retailers are concentrating their short-term attention on filling app store shelves with mobile applications.  Ocado (Waitrose) went with iPhone and Android platforms which were launched around a year ago, loyalty scheme Nectar has recently opened up on the same platforms, while Tesco has decided to focus on Nokia, its Ovi app store and S60 devices, because those are the devices which the majority of their audience owns.

Whether that Nokia user-base is as mobile-engaged, motivated or fundamentally interested in using a Tesco application, will be interesting to watch.

Marks & Spencer are largely out on their own in focussing on the mobile browser, and the ‘seamless journeys’ it says it gives, optimising the mobile experience across all platforms.  And it’s doing this well, claiming over 1.2m unique visitors a month and more than 300,000 orders from the site since its launch.

With Amazon expecting to generate $1.5 billion in mobile transactions alone in 2010, it’s no surprise that the leading retailers are looking in the direction of mobile to generate new revenues.  But it’s also clear that, to a greater or lesser extent, all are taking informed guesses.  This is a new space, after all.  It’s to be expected.

What most are interested in from the top of such large retailers down, is how much new revenue can be earned; how much users spend and are willing to spend, or how browsing might inform physical purchasing decisions.  Amazon is clearly different from a high street franchise or a supermarket in that there is no physical purchase: you browse, you often know what you’re browsing, you might take a quick comparison check elsewhere, but because you trust the vendor, you buy.

Select your payment method

Key to the numbers, the cash and the revenue, is the mobile billing mechanism: a subject seemingly overlooked by this latest research.

Google’s decision to adopt PayPal into the Android application marketplace suggests its patience with mobile network operators and carrier billing has been exhausted.  Considerable effort continues to be invested in the UK’s mobile network operator internet standard, Payforit.  Despite a malnourished website, its latest iteration has witnessed concerted attempts at promoting mobile billing for online micropayments (predominantly through Impulse Pay).  But still, its limitations are still generally perceived as being too many, its experience too inconsistent.

The success of iTunes and Apple’s app store has been based on credit card billing linked to an account, a practically invisible payment process and no spend-limit.  Other platforms are aspiring to this as well, suggested by the reported talks between Google and PayPal.

And the app ecosystem stands to benefit.

Reports by Bloomberg covered by The Telegraph cite three people familiar with the situation, and suggest that “By adding PayPal, Google would give app developers another way to get paid, potentially making them more likely to create software for Android.”

This can be no bad thing, especially given that Google’s existing Checkout service has fewer registered customers than PayPal.  Meanwhile, carrier billing has an upward spend limit, revenue shares between mobile operators and developers remain a moot point and there can be technical discrepancies between carriers on how billing is managed – leading to inconsistent consumer experience.

Carrier billing – Processing…

As Payforit in the UK has shown, smoothly integrating carrier billing in one country through one medium (the mobile browser), without much of a budget, is hard work.  Integrating across global regions and multiple mobile media?  Given the fragmentation.. well, that might be a little tricky too.

For retailers to earn from mobile, unless mobile networks significantly change their game, standardising PayPal and credit card billing will likely continue to herald the way forwards.  Whether right or wrong, banks are still largely more trusted to conduct transactions than mobile network operators, for a reason.

Pay Now

With the big retail players pinning their colours to various platform masts, according to advice on volume, audience and reach – all of which should all be thoroughly considered – there can be a disconnection with the payment process.

It’s the selection of billing mechanism and the focus on an intuitive, transparent user experience which will separate the profitable fresh goods from the loss-making reduced to clear items.


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