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 / Spring 2011 / Issue 62(originally published by Booz & Company)


The M-Commerce Challenge to Retail

A Synchronized Experience

In a truly mobile, digital marketplace, no channel exists in isolation. Instead, retailers will increasingly design fully integrated shopping experiences to cater to well-informed, digitally enabled consumers — creating, in effect, a new electronic retail ecosystem. Amazon’s mobile offering provides an apt illustration. The online retailer offers real-time cart synchronization across electronic and mobile channels; if you put a CD in your cart when shopping via smartphone, the CD will be there when you log in later from your desktop. On the mobile home page, Amazon provides personalized recommendations, shopping histories, easy access to product ratings and reviews, and product recommendations. Amazon’s most eye-catching m-commerce accomplishment is an application called Amazon Remembers. Consumers can take a picture of a product at a store (or, in fact, an item in their house), and the retailer will within minutes text them with links to similar products for sale at Amazon.

How are the most advanced bricks-and-mortar retailers coping with this kind of m-commerce–driven competition? By providing a mobile experience that keeps shoppers focused on the store they are in. For example, Walmart allows customers to search for ratings and reviews by scanning the barcode of in-store products into a cell phone. This tactic underscores another Booz & Company survey result: Conversion rates (turning browsing into sales) increase by as much as 240 percent when consumers view ratings and reviews while shopping — in this case, it was for orders under $200. Looked at from a more negative perspective, retailers that don’t give customers a way to get the purchasing insight they need from their own ecosystem and that don’t offer jazzy mobile shopping features will only drive their consumers to find reviews and offers someplace else, creating a chance for a competitor to, in effect, enter their store.

Best Buy has a still more ambitious approach. Its “twelpforce,” founded in 2010, is a large group of employees who answer customer questions posed on Twitter about brands and models. Most of these tweets are sent by consumers while they are in Best Buy stores.

The most innovative uses of m-commerce have yet to be invented. A high-end clothing retailer, for example, could develop a mobile app that allows customers to take pictures of outfits they like on the street or at work, mix and match items in virtual closets showing photos of the clothing in their physical closets, combine this set of information with recommendations from the retailer, and share possible purchases with friends via social networks to collect instantaneous buzz that will help them make their decisions. As this illustrates, the retailer of the not-too-distant future will have to stay on top of customer preferences from any number of sources of data — pictures, video, chat, and who knows what else — and serve up highly targeted offers at the right price to coax the consumer to buy a new blouse that she has been thinking about or that she just took a picture of while sitting at a café enjoying an espresso.

As the apps grow more sophisticated, anything that transpires on a smartphone — purchases, preferences, products viewed, and reviews — will become part of an ongoing digital log that influences the decisions consumers make and the types of catalogs and offers they receive. Bricks-and-mortar retailers will also synchronize e- and m-commerce activities with in-store point-of-sale systems, creating new levels of potential up-selling, cross-selling, and customer service.

Loyalty and Context

Currently, the least used multi-channel strategy is a well-integrated loyalty program. Best Buy’s “Reward Zone” program, which offers consumers points for purchases and targeted promotions that can be redeemed at stores or online, is one of the few that can be freely accessed in any sales channel. Yet according to the Booz & Company survey, 54 percent of consumers would like to have a mobile loyalty account that provides credit, points, and promotions across a variety of physical and virtual outlets.

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