Throughout 2010, a flurry of announcements from players in the mobile value chain placed the spotlight squarely on the potential of the mCommerce market and highlighted it as a valuable revenue driver in a tough and competitive economic environment, writes Suhail Bhat, policies and initiatives director of the Mobile Entertainment Forum.
For good reason, retailers are paying more attention to mCommerce. ABI Research estimated that North American sales of physical goods purchased via a mobile device in 2010 exceeded $1 billion (£650m), a 33 percent increase over its 2009 forecast of $750 million.
In September 2010 Amazon reported that customers around the world ordered more than $1 billion of products from its site using a mobile device. And in November, AT&T Mobility, T-Mobile USA and Verizon Wireless announced the formation of a joint venture chartered to build ISIS, a national mobile commerce network that aims to fundamentally transform how people shop, pay and save.
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This explosion of mCommerce is in direct relationship to the advent of smartphone technology that has enabled easy access to mobile content such as full-length music, videos, social network sites and the Internet.
Consumers have also acquired a much bigger appetite for using their mobile phones as more than communications devices. This uptake is due to good user experience and the accessibility to diverse and rich media content.
The quality, reliability and simplicity of the user experience have been significantly enhanced by enabling services, which give the media, content owner or retailer the necessary visibility and control they need.
A good example of an enabling service that showcases mCommerce's value proposition is the customer insight that provides user segmentation and is essential for targeted advertising, personalisation and product or service recommendations.
Much of mCommerce's growth is attributable to the popularity of mobile applications for smartphones. Mobile applications are changing how consumers use their mobile phones by providing users with new tools and resources.
Companies from various industries are adding mCommerce applications into the mobile mix, thus creating new revenue streams. But mCommerce is not just about applications.
Broadly speaking, mCommerce encompasses any digital content, goods and services purchased and delivered on the mobile device, as well as any tangible products purchased through the handset but physically delivered.
MCommerce supports several channels: Applications and mobile storefronts are cited most often, but premium SMS also plays a significant role, as well as mobile coupons, mobile-enabled loyalty programs, location-based offers and mobile gift cards.
All these options move consumers toward making purchases in-store.
Retailers off to a Slow Start
Despite all the evidence that points to consumers wanting to use their mobile devices more to shop, some retailers are reluctant to develop a definitive mCommerce strategy. This hesitance prevents the market from realizing its predicted potential. According to April 2010 statistics from BT Expedite, only 5 percent of U.K. retailers have an mCommerce presence, and only 24 percent are planning to develop one.
Of course, exceptions are out there. Macy's Inc., which owns both Macy's and Bloomingdale's, has an mCommerce Web site for its Macy's-brand department store chain that allows users to search for and purchase products, redeem special online sales offers and locate product availability at nearby store locations.
Some retailers report that mobile optimized Web sites account for nearly 3 percent of overall site traffic and 2 percent of total revenue. But overall, the potential of mCommerce is seemingly ignored by retailers, as the industry instead maintains a strong focus on the tried-and-tested success of the eCommerce channel
Time to Address Security + Privacy
The retail industry's caution may be influenced by the apparent complexity of the mobile value chain. Moreover, a debate is raging among players throughout the mobile and retail ecosystem about the security of mobile payments. On top of this concern, the public is worried about privacy and positive consent.
Security and privacy are complex areas to navigate, which is why the Mobile Entertainment Forum (MEF) is working with its membership on these areas in 2011. Mobile industry players, retailers and regulators must work together to try and ensure that consumers and merchants have confidence in using a mobile device to do commerce.
mCommerce provides retailers with great opportunity, but the industry must resolve these concerns. If they do, it's very likely that 2011 will see an mCommerce revolution. the market from realizing its predicted potential.
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This was first published in June 2011