The statistics seem almost implausible. As recently as 2010, mobile commerce accounted for just 1 per cent of UK e-retail sales. In four short years, browsing and shopping with a mobile phone or tablet has become something that many of us take for granted, so much so that the devices are now the source of 48 per cent of all traffic to retail websites and account for 34 per cent of the £91-billion UK online retail market.
According to online retail association IMRG and Capgemini, it all amounts to 3,400 per cent growth in mobile commerce in virtually the blink of an eye.
Mobile technology is not just affecting consumers’ online buying habits; its sphere of influence is expanding to include our experiences of bricks-and-mortar stores and how we take delivery of goods. But its consequences are not evenly spread and some companies are using it much better than others.
“Apple is a good place to start,” says Cameron Franks, commercial and marketing director at Tigerspike. “The company has the highest revenue per square foot of any retailer.” Forbes puts the figure at $4,551 per square foot.
Mr Franks, whose company provides retail apps and design solutions for digital technology for clients such as John Lewis, says that Apple continues to break ground as a retailer, particularly with the recent introduction of iBeacons.
Using Bluetooth sensors to detect when a compatible device has come within a certain range, the technology alerts users of Apple’s retail app when they are close to an Apple store. “Of course, it works like any other app that allows customers to buy things,” he says, “but it changes state when you go near the stores. It tells you about events in the store and makes it easy to book a genius bar [technical support] appointment.”
Retailers have experimented with initiatives that allowed commuters to scan images of products at transport hubs before travelling home where the chosen goods would later be delivered
US retailers, such as Macy’s and Walmart, have also begun to experiment with iBeacons, although their UK counterparts have been slower off the mark. However, it is still early days and the technology has many more potential applications.
“The next stage is to use things like iBeacons to give consumers more specific information and offers,” says Mr Franks. “Knowing the user’s location and information about them can add value. Say the technology senses that you are walking down the dairy aisle of a supermarket, it could cross reference your shopping list with in-store offers and let you know that there was an offer on organic milk or whatever it might be. That’s useful.”
Banks, airports and department stores might also be able to use the technology to identify particularly loyal customers when they walk into a store and then single them out for special attention.
Yet new methods and new technology seldom come without teething problems. One obvious danger is that consumers will feel bombarded by irrelevant information and notifications or have concerns about whether their data is being used appropriately.
Another potential pitfall, according to Mr Franks, is being tempted to push technological innovations on customers who don’t need or want them. “You’ve got all this technology available, but you’ve got to match it with the users. Not every user is going to want offers flashed at them or to post pictures on social media. Retailers have to ask themselves which parts of the spectrum of mobile and personal technology are relevant for them and their customers, and how it will improve that purchase journey,” he says.
One judgment that many companies still find themselves wrestling with is whether to invest in an app at all. Now that websites can respond in a sophisticated way to the device that has accessed them, it makes little sense to create an app that adds no further capabilities.
As a result, sandwich takeaway chain Subway launched an app that performs a similar function to its traditional loyalty cards, but in a more efficient way. Subway marketing manager Chris O’Neill says the move has proved to be a good investment. “We know that customers who use the Subcard mobile app visit a Subway store three-and-a-half times more regularly than traditional plastic-card users. Some customers don’t want plastic loyalty cards anymore.”
Mr O’Neill adds that the mobile app can be scanned at the point of purchase so customers can instantly see the number of points added and how close they are to redeeming a hot drink or sub. “We continue to add features like this that just wouldn’t be possible with a mobile-enabled site.”
Another potential use for iBeacons and related technology is payment. If an app on someone’s phone can be set to react in a certain way when it is within, say, 70 metres of an iBeacon, it could be prompted to react in a different way once it is within one metre of the transmitter.
Mr Franks describes a system whereby, once an enabled device is in range, the merchant is shown an image of its owner. If that image is of the person standing in front of the till, the merchant can verify the customer’s identity and initiate a transaction that uses cloud-based payment. PayPal is understood to be close to launching a system that works in this way.
“It’s easier for the customer because they don’t have to put their hand in their pocket,” says Mr Franks. “But it also adds something extra to the merchant. They know who the customer is and what their purchase history looks like. It’s more than just an additional payment system. It’s almost a throwback to the very old-school days of walking into your local store and being recognised as a regular customer. You didn’t have to pay there and then, the person in the shop just said: ‘I’ll add it to your account, sir.’”
Another mobile technology trend that retailers are being forced to take into account is the rise of “showrooming”. According to IMRG, 47 per cent of consumers have used their mobiles to browse a competitor’s website while in a store. “Much of this activity is likely to be comparing prices in order to get the best deal,” says IMRG’s chief information officer Tina Spooner.
Tigerspike’s Mr Franks says that the threat of customers shopping elsewhere, while actually being in a retailer’s store, is even more prevalent in the United States, where companies such as Amazon offer same-day delivery more widely. “People want instant gratification,” he says. “They don’t want to wait.”
Convenience is another important consideration, and has been at the heart of trials by Tesco in South Korea and Woolworths in Australia. The retailers have experimented with initiatives that allowed commuters to scan images of products at transport hubs before travelling home where the chosen goods would later be delivered.
“We found that the length of time customers had to shop was too short,” says Mr Franks, who worked with Woolworths on the trial. “People just stop scanning items when their train comes.” The answer might be to offer the chance to buy “bundles” of goods, something that Poundland has begun to do in the UK.
The challenge of combining these new techniques and technologies with good delivery solutions adds yet another layer of complexity. Mr Franks says Google’s investment in taxi app Uber, which was recently valued at $18 billion, suggests driverless cars might be one solution that is considered further down the line.
But he suggests Amazon’s overtures concerning the use of flying delivery drones might remain pie in the sky for some time to come. Then again, four years ago, few could have imagined where we’d be today.