THE BLOG

Why We Will All Be Shopping Mobile

11/20/2012 12:41 pm ET | Updated Jan 19, 2013

Both retailers and analysts have hailed m-commerce as the future payment model for the retail sector and are certain that it will soon come to replace the dominance of e-commerce transactions. But despite the certainty of the success of m-commerce, there are still a handful of companies that have been slow to invest in the technology. Why is this when the evidence suggests that ignoring it could result in lost sales, and ultimately leave them 'left behind'?

In order to evaluate this argument it is worth looking at the advocates of m-commerce. A prime example is eBay, who earlier this year released figures showing that revenue had risen by 23 per cent. Its CEO John Donahoe was adamant that this was due to an increase in mobile transactions and he made the bold claim that the company expected to see a record $10bn in mobile transaction this year. Looking at the data for the company I manage, BrandAlley, m-commerce is also having a direct impact on our bottom line. We launched our first true m-commerce platform earlier this year, and since then we have experienced a 4,000 per cent increase in unique mobile visits. Not only this, but compared to our e-commerce customers, those using mobile spend more time on the site, view more pages and on average have a 5 per cent bigger basket size on checkout. But for me, the real dominance of m-commerce is the fact that it is the consumer who is demanding to be able to shop this way. Figures from the Financial Times show that at the end of 2011, 85 per cent of the world's 7bn population had access to a mobile device and that shipments of smartphones had overtaken shipments of PC's for the first time. For a number of years consumers have been capable of shopping on their phone but it is only in the last two years that technology has allowed us to shop both easier and quicker through our mobile. With 4G just launching in the UK too, it will be easier for all of us to get online, and the prediction is that more, and more of us will use our phones to shop. As John Donahoe said when announcing eBay's latest figures: "They [consumers] want what they want when they want it."

From the above you may be questioning whether any retailers have really ignored mobile? From a consumer's perspective, it seems as if every retailer has an app or mobile format that allow its customers to buy on the move. Argos, is an example of a retailer that has been slow off the mark in investing in digital technologies and has unfortunately faced the consequences. Although they have had an e-commerce platform for a while, the company's resource was focused on investing in their stores and catalogue outreach by printing 17m copies of the brick sized catalogue twice a year. I was surprised when earlier this year I saw a number of Argos employees outside a London train station handing out the catalogue to commuters. I found this an interesting choice of marketing activity, as although I completely agree that there is value in targeting the commuter, its unlikely that they will be keen to take a bulky catalogue on their travels. Instead, Argos could have used an incentive for passersby's to download their app on their phone or provided a QR code to gain an exclusive voucher. I believe using digital marketing activities in these instances could have been more successful and also provided a way for Argos to track its success. Thankfully Argos' new managing director John Walden agrees that it is time for a change and is quoted as saying: "Print won't go away... ... but the classic catalogue is likely to [fade away] eventually, perhaps rapidly, as customers increasingly use digital channels." I really hope Argos succeeds in its new digital drive as it is a stalwart of the British high-street, employs thousands of people and has the potential to continue to be a highly successful retail proposition if it continues to invest in digital and m-commerce capabilities.

There are of course other retailers that have staved off investing in mobile technology, with many claiming that it is security concerns that have stopped them launching an m-commerce platform. Security has long been a perception issue with online transactions; you only have to think back a few years ago when consumers were cautious of shopping through their PC, and yet now £500m is spent online each month in the UK and is an extremely safe way to shop. I believe the same will be true of m-commerce, in that when it gains the consumers trust we will see a continued rise in sales. But for some retailers like Argos, they have failed to invest in m-commerce as they are concerned about the potential cannibalisation of their business. This thinking, in an increasing digital world, is dangerous, because every retailer needs to make sure they provide their shoppers with the maximum amount of choice to shop, even if it is just to make that 'one buy'. The reality is that it is no longer an option for any retailer to take a cautious approach to m-commerce. Retailers need to diversify how consumers can access and purchase their products and not be scared if other elements of their business are 'cannibalised' by the technology. With some experts in the US predicting that mobile sales could hit $31bn by 2015, all retailers need to take heed that the consumer is demanding m-commerce - and they need to keep pace.