Mobilizing The Shopping Experience: Tips for Building Relevant mCommerce Relationships

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John
Stelzer

Director Retail Industry Marketing

Sterling Commerce an IBM Company

Andrew
Gaﬀney

Editor
Retail TouchPoints

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

4 © 2010 IBM Corporation

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

Smartphone Ownership2

46%
54%

Own A
Smartphone
Plan To Buy A
Smartphone

1 Source: US Consumer Survey; The Nielsen Co.; July 2010

And, Smartphone Adoption Is Accelerating

Source: eMarketer Inc.
Source: The Nielsen Co.

John Stelzer – Director Retail Industry Marketing
09/22/10

Mobilizing The Shopping Experience

Editable Text Editable
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© 2010 IBM Corporation

Agenda



Retailers Are Rapidly Embracing The New Mobile Channel

73% 20%
Of U.S. retailers are in the
Of U.S. retailers have some process of evaluating the mobile
type of mobile initiative in place 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

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


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

Deployment Of Mobile Retail Sites

Mobile24% sites
retail
36% Deployed

Plan To Deploy < 1 Year
40%
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?



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

What are the main
factors that drive
your mobile
channel efforts?



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

Average Apps Per Smartphone User2

Dec. 2009 Aug. 2010
iPhone 37 40
Android 22 25
Blackberry 10 14

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

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

Entertainment

Convenience

Shopping

Shopping

Source: The Nielsen Company


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

44% 46%
36%

17%

Coupons Find A View Info Compare
Store On Phone Prices

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

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

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
23%

online & on the mobile phone

4. Being asked to provide your 3-digit security number on your credit card when
22%

paying with a credit card

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

267%
Increased incidence of an iPhone user using their device for mobile
shopping more than any other smartphone user

Source: The Yankee Group Research


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?

Receiving Proactive Promotions

30%

Not Comfortable
70%
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
48%

outstanding orders

5. Ability to locate an OOS item at an in-stock location, purchase it, and have it
46%

shipped to you or held for pickup

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

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)?

Expect A Seamless Experience

15%
Expect A Seamless
Cross-Channel
Experience
85% Do Not Expect
Channels To Be
Integrated



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 Increased
Convenience Sales


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


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

  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)

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


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


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).


Store Associate Mobile – Associates assisting customers

Access Check View
View Product
Product Inventory Fulfillment
Availability
Information Levels Options


Companion
View Product
Description Specifications Promotions Or Substitute
Details
Items


Select Pick And Hold Contact In-
Fulfillment Ship To Home For Customer Stock Store If
Method Pickup Low Inventory


View Access/Collect
Edit Cart Provide Unique
Customer Customer
Content Order Identifier
Order Information


Check Track/Verify
Outstanding Order
Pick Orders Completion

Order Management Mobile Framework – Consumer Convenience
Instant
access
to:

Product
informa.on/special
offers

Product
availability

Purchase/Fulfillment
op.ons

Order
tracking

Complete
order

with
mul6ple

fulfillment
methods

Search
for
Order
is
ready
and

product
and
wai6ng
when
consumer

product
arrives

informa6on

Check
availability

loca6ons

Choose
preferred

fulfillment
method(s)


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


Download this PowerPoint Presentation:

http://www.retailtouchpoints.com/mobileshopping

Mobilizing The Shopping Experience: Tips for Building Relevant mCommerce Relationships

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