Rapid growth in the use of smartphones and tablets for internet shopping, otherwise known as m-commerce, is hardly surprising considering UK consumers have already established themselves as the world’s most voracious online shoppers.
UK customers spent more online as a percentage of total retail sales last year compared to any other country. That amounted to an estimated £62.4 billion, according to the e-Retail Sales Index compiled by Capgemini and UK e-retail trade organisation IMRG. Analysts Martec International say this represents 16 per cent year-on-year growth as a proportion of total retail sales. Martec polled the UK’s top 150 retailers by revenue, representing 71 per cent of retail sales, which revealed overall retail sales growth last year was only 1.5 per cent.
Fran Riseley, Martec International deputy managing director, says interest among retailers in m-commerce is growing, because it is putting other online retail gains in the shade. IMRG confirms this: last year purchases made using mobile devices, including tablets, were up 304 per cent on 2011. As smartphones and tablets proved popular gifts last Christmas, it seems likely that this strong growth will continue through 2013, making it a trend retailers will find hard to ignore.
Purchases made using mobile devices, including tablets, were last year up 304 per cent on 2011
“Even though mobile technology is changing so fast and retailers are having to update their e-commerce systems more frequently, they seem to be seeing ROI [return on investment] from mobile,” says Ms Riseley. “Whether that’s in terms of protecting their store and e-commerce investments from cannibalisation or the competition, or driving new revenue, with the likes of Asos [online fashion retailer] gaining 26 per cent sales through mobiles, you could say it’s an indicator of how slick a retailer is.”
Imran Choudhary, consumer insight director at market researcher Kantar Worldpanel, points out that more than 60 per cent of the UK population now owns a smartphone. Moreover, research published for the first time by Raconteur in The Times, commissioned by IMRG and carried out by eDigitalResearch, confirms that almost two-thirds of these smartphone owners already use their device to make purchases. The research also found that 41 per cent also owned at least one tablet device, like an Apple iPad or Amazon Kindle, which is higher than the national average of 30 per cent. “What the consumer stands to gain from m-commerce is convenience because mobiles are the one type of device they always have with them,” Mr Choudhary adds.
“Having that potential level of contact with customers is something retailers have never had before. And, as barriers to adoption erode, with smartphone sales increasing and more free wi-fi on offer, as well as 4G coming on board, retailers will not only lose out on sales if they don’t invest, but they’ll also lose customers to competitors, who do m-commerce and do it well.”
In addition, Mr Choudhary says, the wealth of customer information, such as location and browsing data, could help retailers refine their propositions to meet rapidly evolving customer demand.
Martin Butler, IBM UK vice president and retail industry lead, agreed the value of m-commerce data is also driving retail investment. He points to “showrooming” as the biggest m-commerce trend to emerge, where shoppers use their mobiles in-store to research product information, read reviews, compare prices and even use social media to solicit advice on a potential purchase. “Our recent global survey of over 26,000 consumers showed the UK public really likes promotions and discounts,” he says.
“Offering free wi-fi in the store with a mobile-optimised site or app allows retailers to attract and retain these customers. It also gives the retailer a huge wealth of data to tap into so they can offer a truly integrated shopping experience, regardless of the customer touchpoint, and push better recommendations or promotions to those customers while they are both in and outside the store.”
However, he cautions: “Our survey also found people were willing to invest in better shopping experiences by sharing personal information with a retailer, but only once [and assuming their security concerns had been addressed].”
Mr Butler also points to how m-commerce added to the “big data” deluge that retailers already collect about their customers’ off and online activities. “The question is how do you mine all that unstructured data?” he asks. “We do that generally by building databases which allow the data to be analysed and managed. We’re even looking at building replenishment systems that take into account social media.” Systems like these, which include mobile data, could enable more responsive and personalised shopping experiences, he says.
Sean O’Connor, head of online delivery and customer experience at John Lewis, confirms that its free in-store wi-fi, introduced last October with BT, had proved very popular with customers and increased dwell time within its catering facilities. Feedback on its mobile site indicates wi-fi is helping customers to shop.
“We have also instigated a trial in our Exeter branch where we have a number of iPads accessible to customers,” says Mr O’Connor. “Mobile and tablet shopping continues to exhibit triple-digit growth, both in terms of traffic and revenue, and we haven’t yet seen maturation of this trend,” he adds, confirming that mobile is now a fundamental part of John Lewis’s online strategy.
The UK department store retailer has also trialled Quick Response (QR) codes in its Exeter store, for customers using a QR scanning app to access further product information and reviews directly from the product display.
By contrast, the eDigitalResearch/IMRG survey found almost half of those canvassed felt retailers did not actively encourage the use of mobile in-store with QR codes and other interactive promotional material. Indeed media agency Carat has discovered it is online-only brands that are reaping the benefits of m-commerce, with 54 per cent of consumers Carat surveyed visiting established e-retailers eBay and Amazon via mobile the most. Meanwhile, mainstream brands, which are not already exploiting mobile, risk missing out on customer engagement opportunities, where they can garner feedback in real time.
Dan Hagen, head of planning at Carat, says m-commerce development is a sign that the distance between the introduction to a product and the ability to buy it is becoming non-existent. “We’re seeing it with interactive TVs,” he adds. “But a games console, or even the iPad on your lap in concert with your average TV, is already interactive.” He also urges retailers to exploit mobile advertising and apps to capitalise on this development. His agency worked with Shop Direct Group’s Very.co.uk, Channel 5 and Endemol earlier this year to dress the Celebrity Big Brother house and contestants with the online shopping brand’s products and clothing.
Philippa Heywood, Very.co.uk head of brand and advertising, comments: “We could not have been happier with the outcome, not least in delivering an innovative ‘click-to-buy’ microsite, which delivered phenomenal sales growth in a period when the retail market was suffering post-Christmas blues, but also in the upward movements in all targeted brand measures: awareness, engagement, purchase intent and, critically, opinion of our brand.”
Andrew McClelland, IMRG chief operations and policy officer, concludes: “Retailers who are integrated as a whole, but optimised for each customer touchpoint, are those who will succeed with m-commerce.” In other words, retailers who seize the opportunity to enter the mainstream now, not least before m-payments technology develops and mobiles replace credit cards, stand to benefit the most.
