Mobile commerce driving mobile payments

In my previous blog post, I discussed the core objectives of players in the m-commerce ecosystem to influence users in choosing a payment instrument and to shape the payment experience with ease of use, assurance of secure identity and transaction, and lures of offers and loyalty. While e-commerce and m-commerce trends are the chief drivers of innovation in retail payment, the focus is driven by convenience, experience and speed of payment processing.

In the past week we have gone through the biggest annual retail events: Black Friday and Cyber Monday. In this post, I discuss some notable trends that are emerging and ways retailers can adapt to them. One of the largest sources of my research for this post has been IBM Digital Analytics Benchmark Hub, which collects data from over 800 retail websites and 8,000 brands across 35,000 engagements. (It does not collect overall sales figures.) Let’s begin with some notable observations on Black Friday and Cyber Monday:

• As the new digital shopping companion for many consumers, smartphones drove 34.7 percent of all Black Friday online traffic, more than double that of tablets, which accounted for 14.6 percent. Yet, when it comes to mobile sales, tablets continue to win the shopping war, driving 16 percent of online sales compared to 11.8 percent for smartphones, a difference of 35.5 percent. (Source)
• Thanksgiving Day mobile traffic accounted for 52.1 percent of all online traffic—the first time mobile devices have outpaced their PC counterparts for online browsing. Black Friday mobile traffic reached 49.6 percent of all online traffic, an increase of 25 percent over last year. (Source)
• Apple users spent an average of $118.57 for each order, marking a 24.5 percent difference with the $95.25 spent on average by users buying with their Android devices. (Source)
• On Thanksgiving, mobile devices drove 52 percent of all US internet traffic. That’s more than Netflix! (Source)
• Thanksgiving Day and Black Friday set new (online) sales records at $1.33 billion and $2.4 billion, respectively. (Source)

So what does it all mean for the retail Industry?

For this discussion, I would like to borrow a page from the IBM Smarter Commerce playbook. The IBM retail solutions group defines the industry components, and we ought to not only understand them but also build upon them. Here is an attempt:

1. Buy: Think procurement.

How do retailers mobilize procurement? Optimize supplier and partner interactions based on changes in demand and customer behavior throughout the value chain.
How and why do we mobilize the buying process? Do retailers use this as a competitive advantage to fuel the feedstock of optimized supply with relevant consumer context? This is something to think about as stores struggle to provide a true omnichannel experience.

2. Market: Think location-based services, and use profile, context and marketing associated with it.

Apply deep customer insights and behaviors from both online and offline channels. In the mobile world, it is all about context and precision. The era of mass “hit or miss” mailings is being replaced with analytics-driven context awareness. This implies a business need to not only invest time in understanding your clients but also maintain a relevant dialogue.

3. Sell: Think mobile browse-to-buy ratio, order fulfillment, client reach, exception processes and mobile payments.

Empower customers and partners to purchase, shop, exchange information and fulfill orders. The net here is the “customer spend”—converting the browse-to-buy ratio. To do this, you must make sure that “browse” is customer experience–focused and “buy” handles issues like payment (which today is either cloud or near field communications, NFC, based). This area requires significant consideration to ensure seamless payments, loyalty and security with frictionless checkout processes.

4. Service: Think notification, bidirectional messaging, social hook points and so forth.

Provide flawless customer service in all customer interactions. We tout that mobility is context-driven, but how do businesses tie in the post-sale processes? This relates back to closing the loop from marketing, selling, accepting payments and loyalty rewards, and ensuring satisfaction for future inroads—all in an effort to capture mindshare of the consumer.
But understanding the industry components of the mobile retail and payments industry is not enough; there are significant challenges that any enterprise would have to consider. Some challenges include:
Payment: Today clients have a few choices:

• Cloud:  Cloud payment solutions are simple to implement and integrate into business processes.
• NFC: Near field communications have become the center of the payment focus, and as the retail industry absorbs the change, a cross-platform payment strategy should not be overlooked.
• Custom processing: This is traditional credit card processing, and most commerce platforms provide integration avenues with payment processors and payment gateways.
• New emerging consortiums: It is important for companies to understand how a large consortium of retailers affects frictionless payment processing.

B2B: Complete integration with business partner gateway services is another challenge that mobility will need to consider. This includes procurement processes, invoicing and corporate payments. Many financial-technology companies and startups have begun to address this issue and provide package solutions. The idea is to speed up processes, invoicing and payments for better inventory and management of working capital.
Brand management: How do we help a mobile storefront manage a cohesive brand like they do on the web? Mobile interaction is all about perception and given ephemeral and fickle consumer behavior. Every mobile interaction is a brand experience and should be treated with care.
These are just glimpse of issues we can encounter, and it’s by no means an exhaustive list.
So what can we expect to see when we discuss the shift in trends in 2015? Here are some things to keep an eye on.

1. Mobile is to account for 25 percent of US online sales by 2017.
2. Some 45 million Americans used their phones to shop in June.
3. Europeans will increase mobile spending 11x over next five years.
4. Black Friday sales figures are soaring for online retailers.
5. Loyalty, mobile wallets and integrated technology are now appearing in stores.

We can expect to see an upswing in current trends that will be dominated by mobile interaction—not just at the storefront but across all retail and commerce activities, from marketing to mobile payments. A continual data-driven feedback loop will help to maximize the process efficiency and use of customer context data.
Are enterprises ready to handle this shift, not only adapting but leading the disruption, in hopes of capturing mindshare and wallet share of the consumers?