Cross-channel sales -- also known as web-influenced sales or transactions that touch a digital medium, but are not completed on the Internet -- are now more than four times larger than online sales alone and will reach $1.8 trillion by 2018. This is according to Forrester's just released five-year US cross-channel retail sales forecast. Offline sales -- primarily web-influenced offline sales -- will comprise nearly 75% of the $475 billion in US retail growth anticipated between 2014 and 2018. This growth in cross-channel sales can be attributed to US online consumers increasingly using their phones in retail stores to research products online. Retailers would be wise to see this growing trend as the new normal; if this is the first you’ve heard about your customers’ in-store mobile behavior, you’re already late to the game.
Despite frequent in-store research on the mobile device, the number of actual mobile transactions remains low. Consumers are more interested in using their phone in the “pre-shop” phase, be it searching for a product’s location, comparing prices, or checking online inventory. Many retailers, such as Target, have found it worthwhile to invest more in mobile services that meet customers’ needs in their pre-shop context rather than at the point of sale. Target has helped customers find specific items in its stores via its mobile app: A customer can create a shopping list within the app, which then maps that list onto the floor map of the customer’s Target store location, guiding them through the aisles from one item to the next.
I had the opportunity and privilege to get an early look at the new Amazon Fire phone. It delights in many ways, but I’ll focus on the shopping experience enabled through Firefly.
For those who may not remember, Amazon put a dedicated physical button on the left hand side of the phone that launches directly into image recognition. If the image is recognized, then a web-based mCommerce experience launches. The user can then buy the product or it on a wish list, among other things. From there, the experience is more ‘traditional Amazon.’ The ‘new’ is the image, email, URL, etc. recognition.
Why is selling mobile phones important for Amazon? mCommerce in the US alone will add up to nearly $100M by the end of 2014. The new battleground for retailers is in the mobile moment – the point in time and space when a consumer pulls out her phone to get something she needs immediately and in context. Amazon’s FireFly service facilitates two core types of mobile sales moments:
Impulse Sales Moments – these are often flash sales (e.g., WTSO.com, SteepAndCheap, etc.) or spontaneous purchases (e.g., Groupon). The opportunity for Amazon here is in minimizing the friction between consumers seeing something they want, and enabling them to buy it before they forget about it, or find it later in a store nearby.
Replenishment Sales Moments – the phone (or something like an Amazon Dash) is with me when I realize a shampoo bottle or milk is empty or I need more toothpaste.
Coffee-lovers just about anywhere around the world are intimately familiar with the sweet feeling of indulging in a Starbucks Frappuccino – but their blended beverages of choice might be starkly unique. Although the Starbucks brand is familiar to consumers worldwide, the taste of a Starbucks beverage varies regionally according to the diversity of palates. Chinese consumers may seek out a Red Bean Green Tea Frappuccino while their Japanese counterparts prefer a Coffee Jelly; Argentinians may count on that Dulce de Leche Granizado Frappucino where Brits treat themselves to a classic Strawberries and Cream.
The Starbucks Frappuccino phenomenon is a metaphor for any global retailer’s optimal international approach. By catering to consumers’ varying tastes, global companies can hone a strategy that is sensitive to diversity — the “art of thinking independently together,” in the words of Malcolm Forbes.
When it comes to eCommerce specifically, consumer tastes differ not only in relation to products but also to purchase methods. According to Forrester’s Consumer Technographics® data, more than half of metropolitan Chinese online adults regularly buy products through both traditional and mobile devices, but only one in four US online adults and even fewer European consumers do this.
Amazon is testing a new device to facilitate making a grocery list and ordering groceries through their AmazonFresh service in markets such as San Francisco and Seattle. (See TechCrunch article.) Consumers can add items to the list through voice or by barcode scan. Two things (for me) make this an interesting experiment to watch.
1) Amazon looks to profit from what we call "a mobile moment," a concept introduced in our forthcoming book, The Mobile Mind Shift. Or more specifically in this case, an impulse sales moment. As a consumer, I add an item to my grocery list before I forget. I may or may not order that day - it may be tomorrow, but I will buy it. The Dash adds convenenience - it removes friction from my shopping process. The Dash takes advantage of the immediacy of mobile. (See our report on how to create mobile moments).
Facebook will launch its new Paper product on February 3. The questions I have been asked are, "Why?" and "Should we be thinking about multiple apps rather than one large app?" Both good questions.
The first question -- I can only take a shot. Facebook, like many other media properties, depends heavily on advertising for revenue. To get advertising, you need eyeballs. More and more minutes per day are spent on mobile phones. Consumption of news, information, and media generally tops the list behind communication. Consumers also expect highly curated experiences on small screens that can be more challenging to navigate. At first glance, the Paper user interface and experience looks to be quite elegant.
It always makes me smile to see a product or app launched that takes a mobile first-approach. From the short video that was released, you can instantly tell that they didn't start with a web experience and think, "How can we strip this down and put it on a small screen?" They appeared to have done ethonographic research -- to watch and observe how people engage with their phones and consume information through the course of the day (e.g., the unfolding of the newspaper). This is one of the best practices in mobile design -- understand the needs of consumers on the go. Companies must ask, "What are those moments during the day when someone reaches for the phone to access information or a service?" Forrester calls them mobile moments. Companies must be ready to serve customers in those moments.
If you believe the idiom "a bird in the hand is worth two in the bush," then Snapchat believes it will be worth more than $6B to a future buyer — or the public through an IPO. The service is appealing not just for the UI but also for the limited time the content is stored. That appeals to me as a middle-aged adult, let alone to a teen with poor judgement who may be applying for college or a job in a few years. We've probably all felt awkward at some point about something someone posted.
If you believe the movie "The Social Network," Mark Zuckerberg was also advised to turn down early offers. Remember the shockwaves that rippled down the West coast when Microsoft invested $240M in the fall of 2007 for what is now a 1.6% stake or $1.36B valuation? (See Source)
I am not our social media expert. I am also not our primary mobile marketing expert, though I've covered it extensively at times. This POV is from a mobile analyst who has spent a lot of time looking at social networks on mobile devices.
Here's what we do know:
- There are about 7 billion people on earth.
- 6 billion of them have mobile phones.
- 1 billion (and growing) of them have smartphones, with nearly 400m of those in China.
- People communicate, consume media, and transact on mobile phones — in that order.
- Mobile phones sit at the core of our social graph. We create photos and we share good times with friends. I don't often post while I am sitting at home working. I post when I am out and about doing fun things that I want to share.
What drives a $6B+ valuation beyond pure speculation, optimism, and wishful thinking?
I recently published a report on The European eCommerce Landscape; it shows that more than two-thirds of European online consumers are shopping online, but there are big differences among the different countries. The top categories bought online are travel, clothing and accessories, leisure and entertainment, and consumer electronics. Forrester’s European Technographics® data also reveals that European consumers increasingly prefer the Internet to high-street shops for purchases of music, computer software, event tickets, and videos:
In recent years, the Internet has become the leading channel for media products. In 2012, more European online consumers bought videos/DVDs, music, event tickets, and computer software online than offline. These online media purchases fall into two categories:
1. Digital (sold direct as a download).
2. Physical (a product that an Internet retailer delivers).
The Forrester Research Mobile Commerce Forecast, 2012 To 2017 (US) indicates that nearly 40% of US mobile phone owners will become mobile phone shoppers by 2017. While this statistic sounds impressive, it means that the majority of consumers will be reluctant to purchase products on their mobile phones. Why aren’t all customers attracted to the unprecedented convenience of anywhere, anytime mobile shopping?
Forrester’s Consumer Technographics® data shows that while consumers use the mobile channel to research competitive product pricing while they’re in a store, they often prefer to purchase their desired product off the shelf, even if the physical item in front of them is not the cheapest option. Consumers are driven by convenience, sometimes at the expense of price:
The rapid growth and ubiquity of smartphones has led many to conclude that a significant portion of Internet activity, including shopping, will migrate to these mobile devices. To help eBusiness professionals in retail get a better sense of the real size and opportunity that exists, Forrester has released its “US Mobile Retail Forecast, 2012 To 2017.” Retailers beware: while mobile commerce is growing and undeniably shifting how some consumers buy, the pertinent facts are that:
Total US mobile retail is still small. Forrester estimates that of the 132 million US mobile Internet users in 2012, only a quarter of those users have ever made purchases via their phones. While we expect the retail mCommerce penetration rate to double by 2017, it’s still a tiny portion of eCommerce — and, consequently, a minuscule share of overall retail.
Significant impediments exist for mobile retail. The main road block to mobile sales is the checkout experience; it’s the single most important feature when it comes to driving conversions on mobile devices. Adding an easy checkout experience, like PayPal Express, will enable users to more easily convert – even with the smaller screen – but how much that moves the needle remains to be seen.
Consumers prefer the mobile Web to apps, despite retailer investment. Consumer awareness of and/or interest in retail apps is low: Only a tiny share of any given retailer’s shoppers appears to download their app. Most shoppers who access a retailer’s mobile presence get there by clicking on links from mobile search engines or from mobile emails.
This week, the National Retail Federation (NRF) held its 102nd Annual Convention and EXPO —Retail's Big Show 2013. Attendees gathered from around the world to demo products and services and exchange ideas about the future of retail, including mobile payments. Mobile payments have captured the attention and imagination of industry insiders, venture capital investors, and innovators. Although retailer investment and consumer adoption have been nascent to date, we see that changing. Forrester forecasts that US mobile payments will reach $90B in 2017, a 48% compound annual growth rate (CAGR) from the $12.8B spent in 2012.
In my new report out today, titled “US Mobile Payments Forecast, 2013 To 2017”, I outline the growth drivers and inhibitors for the three mobile payments categories: mobile proximity, or in-store payments; mobile peer-to-peer (P2P) and remittances; and mobile remote commerce, or mCommerce. Here are the key takeaways:
Mobile payments adoption will be fueled by unprecedented growth in proximity payments. Mobile proximity payments are currently the smallest category within mobile payments, but we expect it to be the fastest growing. Proximity payments will reach $41B, making up nearly half of all mobile payments in 2017. Lower barriers to adoption, increased convenience, and early entrants striving for scale will be important drivers of growth.