In 2010 the use of mobile wallets totaled $167 billion but it is predicted to exceed $633 billion by 2014. The market for mobile commerce is undoubtedly gaining momentum this year and many companies are accelerating activities and experimenting with mobile in order to engage their customers.
As mobile technologies continue to evolve, organisations should see a significant opportunity to understand how to unlock and increase major revenue potential through mobile customer relationship management (mCRM) activities, whilst also improving the customer experience. Mobile channel opens up new opportunities for interacting with consumers on a one-to-one basis, which can be very hard or very expensive to do via other channels. Mobile Commerce (mCommerce), be it through couponing, loyalty, engagement or payment via near field communications (NFC), will be the catalyst for growth in consumer engagement, whilst offering value in the form of saving money or improving convenience for the consumer
Retail/Consumer opportunities
Consumers today have greater expectations for a personalised, enhanced shopping experience through multiple channels and value-added services. In the past, consumers enjoyed rewards whilst shopping but now they demand real-time, customised rewards at various stages of the sales lifecycle. With this in mind, there is the real potential for NFC integrating coupons, loyalty and payment in a near frictionless manner. Whether anyone can completely own a customer is yet to be seen, but there is opportunity to fully own a customer at a moment in time – for a specific transaction.
Retailers have a great opportunity to become drivers of consumer engagement and mobile marketing usage and adaption through couponing. According to research company Aberdeen Group, 57% of retailers are seeking new sales and service channels and the consumers’ mobile phone has emerged as a “channel growth” opportunity for engagement whilst increasing revenue options for retailers.
One of the challenges in the UK is that large retail chains focused heavily on eCommerce during the boom but made the mistake of not having enough stock in the store. They didn’t recognise that building customer loyalty needs to be part of a holistic picture in order to retain loyal consumers.
Today, consumers want multi-channels to make purchases on their mobile, the web and in store. Customers will be loyal if they’re offered these services, but in a meaningful way that is useful to the consumer otherwise it becomes valueless. A recent study from ATG Consumer Research established that 30% of consumers use three or more channels, 20% of all consumers 18 and over use their mobile to browse for products on a monthly basis and 21% of these on a weekly basis, whilst 23% of consumers make purchases via mobile.
Advantage of mobile wallets for banks and customers
Consumers need an incentive to adopt mobile payment technology. It is not enough that their mobile phone does the same thing as a credit or debit card – it needs to do something extra. Banksshould think of mCommerce as mobile financial services plus customer engagement. It is not just about the transaction itself but about banking in smart mechanisms for marketing, and mechanisms for understanding what happens post purchase.
Traditionally, individual partnerships between network operators and banks have created closed-loop systems, so that a consumer that signs up to use NFC with a particular operator and a particular bank cannot use the service in a shop with terminals provided by a different operator. However, after last year’s announcement of a joint venture between Vodafone, 02 and Everything Everywhere, the mobile network operators have submitted their plans for an integrated mobile payment system code-named Project Oscar, to Brussels for EU approval.As with any new technology, there also needs to be an element of consumer education. Mobile wallets are actually more secure than cash. There’s no digital right management on the coins and notes in your wallet or purse. If you lose your wallet and you’ve got £100 in there, then someone’s got that £100, there’s no way you could claw that back. With a mobile wallet, there is nothing on the phone, so you report your phone stolen and immediately the phone is locked out from your mobile wallet.
With the hurdles gradually being overcome for mobile wallets, there are a number of companies who are bringing these technologies into the mainstream. Sybase 365 announced earlier this year a partnership with Telefónica in order to develop Telefónica’s mWallet which will be the gateway for its customers to a wide range of mobile financial services. Telefónica’s mWallet will be capable of storing prepaid, debit, credit and loyalty cards, and thereby simplifying online purchases. And as NFC technology becomes more widespread it will be possible to make payment directly from the wallet via compatible handsets and point of sale terminals.
Conclusion
There are a number of mobile wallets which are in the process of being launched in the UK including the Google Wallet which is expected to launch ahead of the Olympics. Last month we saw the launch of O2’s iWallet, all of these developments will offer consumers services including person-to-person (P2P) payments, barcode searches for online price comparison shopping, daily discounts for major retailers and card and cash onboarding to name a few.
These developments are but the start of the expected progress within the mCommerce ecosystem. Time will tell the extent of this growth.
Image: gailjadehamilton via Flickr
