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Is retail ready for m-commerce revolution?


Ten years ago the idea of using your mobile to window shop, order your groceries or track the delivery of your latest purchase would have seemed absurdly futuristic. Now the technology is here, Retail Gazette discovers how many retailers are utilising it.

By Jon Whiteaker

M-commerce is currently the biggest buzzword in the retail industry. Incorporating mobile technology, particularly for the latest generation of phones, is seen by many as a large untapped oil field of potential.

If there is an army of eager prospectors preparing to exploit this land however, most are not drilling too deep just yet. Most retailers acknowledge the possibilities of mobile retail but a large number still seem slow to utilising them.

Of a number of leading retailers conatcted by Retail Gazette, only Sainsbury’s confirmed future m-commerce plans. To date Marks & Spencer and Waitrose are the only UK retailers to launch online services via mobile, after Waitrose launched their iphone app in July.

In an online survey conducted in July by research companies M Retailing and Sponge, 60 per cent of retailers questioned said they were using mobile technology.

Of the 40 per cent who are not however, 60 per cent are not planning to utilise the medium in the near future.

Online retail was also slow to take off and around a decade after its birth it currently only makes up around seven per cent of the overall market.

Given the increasing importance of online sales, it seems amazing that some major retailers still do not incorporate online ordering on their sites. Fashion retailers H&M and Zara are launching their first transactional websites this autumn.

It is tempting to conclude that the retail industry is slow to adapt to any new technology but Verdict Research sees thing differently and predicts sales via mobiles to double by 2013.

The potential of m-commerce goes well beyond purchasing via handsets however, according to Christine Bardwell, Senior Retail Technology Analyst at Ovum Research.

Bardwell argues: “Mobile in retail should be about “m-tail” - interacting with consumers, providing a complete retail experience over mobiles.

“It’s about providing maps and store locators, barcode scanning, augmented reality applications, news and competitions, text and collect, vouchers etc. These interactions can help retailers boost sales across all of their channels, not just mobile.”

The potential of these new technologies is huge but some still argue that the industry will be cautious before investing in unproven strategies.

Richard Dodd, British Retail Consortium, warned that retailers would do best being part of the “second wave” of mobile retail and that it is “still a long time until it becomes essential”.

Dodd argued: “We have seen some examples of our members incorporating mobile technology. Takeaway food outlets for example use payment by text, GPS and mobile ordering but most members are cautious.

“It is about getting the balance right, not being too late and left behind but not being too early and being the first to make mistakes. The retailers who benefit most will be those who are part of a second wave who learn from the errors of the pioneers.”

Bardwell agrees that initial investors in m-commerce will be watched keenly by their rivals but sees the sector’s development as speedier than its older brother e-commerce.

She said: “I don’t think transacting over mobile will be slow to take off. One of the inhibitors of online growth was that consumers were not used to using technology; now they are tech savvy.

“Also, the online user experience was pretty poor in the early days - we can expect this to be the same situation with mobile but retailers have learnt from their mistakes developing online so I believe issues will be more quickly rectified.

“Retailers are not ignoring mobile. They will know how many customers are already accessing their online stores using mobile handsets. They will also have ideas and plans for how they will approach mobile, the costs involved etc.”

Costs may be the most crucial factor in deciding how quickly mobile strategies are adopted, with outsourcing a danger to the balance sheet in tough economic times.

James Dolphin, Head of pan-European Retail Agency at Jones Lang LaSalle, said: “Making life easy for consumers does not go hand in hand with a simple life for retailers.

“Faced with these challenges, retailers will seek efficiency savings and inevitably outsource more of their operations. As this trend accelerates in the future, retailers will find it more of a strain to keep profits in-house.

“As they outsource, revenues will flow externally to website builders and hosts, phone companies, logistics operators and technology providers.”

Wise retailers will want to start tapping the ‘black gold’ of m-commerce sooner rather than later but it may take time for them to build adequate machinery for the job.

Published on Thursday 22 July by Editorial Assistant

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