M-Commerce Looks Healthy For The Holidays—But Not That Healthy

Written by Frank Hayes and Evan Schuman
November 9th, 2011

‘Tis the season for Mobile-Commerce hype: On Tuesday (Nov. 8), Sybase and the Mobile Marketing Association announced that, according to an October survey, 62 percent of consumers are “poised to make purchases with their mobile devices this holiday season.” Well, sort of. In fact, the survey of 1,000 consumers offers a slightly grimmer view of M-Commerce: Only 22 percent actually plan to use a mobile phone to buy anything—and that includes people who will just phone a retailer’s call center and order that way.

If this was just another marketing survey that over-hyped its results, it would be one thing. But there’s a serious issue at play here. The holiday shopping season of 2011 is going to be a crucial one in retail M-Commerce, the one where meaningful purchases start to happen and where millions of consumers will try—or consider trying—M-Commerce. And it is where they will be satisfied or dissatisfied. Even more crucially, there is a critical expectation issue at play. What will your CEO and board expect from mobile? Surveys will create the bogus impression that a huge number of mobile transactions will happen this month (the 61 percent from this survey’s headline is a perfect example), and when that doesn’t happen, you’re going to be blamed.

This gets worse. The definitions of mobile payment run the gamut from legitimate ones—actual mobile purchases, in addition to find store, product research, QR/barcode scans, price comparisons and mobile coupons—to not so legitimate ones—such as using an Android to call a call center. But the only figure that your bosses will see are purchases made directly from the phone. That is the only mobile revenue figure they’ll care about, and that’s where you need to realistically set their expectations. Here at StorefrontBacktalk, we’re projecting that—at most&mhdash;2 to 3 percent of holiday purchases this year will be true mobile purchases.

Internet Retailer is projecting a lot of true mobile transactions this year—$2 billion for Amazon, $934 million for Apple, $128 million for Wal-Mart, $45 million for Staples, etc. Those figures, though, are trivial compared with the full revenue reported from those chains. And other large chains are projected to see far less: Best Buy at $38 million, Macy’s at $33 million, Footlocker at $32 million and Sears at $32 million. It gets even worse down the line. Canadian Tire, with annual revenue of $10.3 billion, is projected to generate—this isn’t a typo—$122,960 in mobile revenue this year.

With this new survey, how are the numeric differences justified? That 62 percent actually said that if retailers offered coupons, discounts, giftcards, loyalty points or E-mail alerts, those things would “influence” their decision—not that they would actually make an M-Commerce purchase. And that, too, includes just-call-in-an-order customers, which the survey says is the form of “mobile commerce” that has been used by more consumers than any other (28 percent have done it).

It’s not a new thought to say that consumer surveys are an absolutely terrible way to project what consumers will do, especially with a new behavior. The overwhelmingly strongest factor that will determine mobile transactions will be the creativity and aggressiveness of this season’s M-Commerce incentives. You want to make a lot of your customers earnestly experiment with M-Commerce? Offer a 20 percent discount if a purchase is made via mobile compared with in-store or on the traditional Web. Delivering a coupon? Make it for $50 instead of 50 cents.

Use CRM and similar marketing devices and pitch irresistible things for individual customers. Mobile transactions are still going to be—for most customers—a significant behavioral change. Asking a consumer “Will you consider a mobile purchase if we offer you a bribe?” is going to deliver meaningless results. Many will say “no,” but they’ll change their minds when they see a 40 percent off text alert for that sweater they were about to buy anyway. Many will say “yes,” but that’s before they were underwhelmed with texts offering 2 percent off products they really don’t want.

Set expectations appropriately for your senior management, but remember that also includes funding marketing incentives to push your customers out of their comfort zones. Once they discover the ease of well-executed mobile transactions (and you wouldn’t offer any other type, right?), the incentives can certainly be scaled back. But if you’re conservative and cheap this season, you’ll find it ten times harder to change customer behavior next year. Displease them now with low-ball discounts and flood them with irrelevant offers, and you may find yourself not even making realistic projections.


2 Comments | Read M-Commerce Looks Healthy For The Holidays—But Not That Healthy

  1. Eric Weiss Says:

    Well, nothing like meeting hype with hype. The fate of mobile commerce hangs on the 2011 holiday season? Your job will be at stake if the mCommerce heavens fail to part between Thanksgiving and New Years Eve? Hardly.

  2. Evan Schuman Says:

    Editor’s Note: We view a key difference between misleading hype and ordinary hype. The figures the story cited were so misleading as to risk impacting perceptions. As for our comments, we stand by the argument that 2011’s holiday season is going to be viewed by senior management as a key one for mobile. Think of E-Commerce around 1995 or 1996. It was when mobile numbers started looking serious and meaningful.
    But senior execs will often see a number as good or bad based on their expectations. It’s IT’s job to properly and realistically set those expectations. If that doesn’t happen, you’ll have to address unreasonable questions in January. It’s a cautionary tale. Properly setting expectations in mid-November is a lot easier than bringing it up when defending yourself in January. If you think that amounts to hype, so be it.


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