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Mobile commerce market worth $2.5B and growing: panelist

BALTIMORE – The mobile commerce market is worth $2.5 billion today, and will grow four times in the next couple of years, according to a panelist at the eTail 2010 Social media & Mobile Commerce Summit.

Retailers should focus on developing mobile commerce services to reach the growing number of smartphone users, because the market for mobile sales will increase dramatically in the next few years, according to panelists.

“There’s been a lot of hype and buzz and hyperbole, overall,” said Colin Sebastian, senior vice president of equity research, Internet and interactive entertainment at Lazard Capital Markets, New York. “2009 and 2010 put mobile on the map, and in 2011 and 2012 we’ll start to see more meaningful revenues.

“The market is worth 2.5 billion dollars in mobile commerce transactions,” he said. “That number should double over each of the next couple of years. Apple and iPhone were inflection points, and the iPad as well.

“I would also focus on Android, since adoption is increasing significantly. By the end of next year, there will be 100 million iPhones worldwide, and 100 million Android devices.”

Panelists at the eTail 2010 conference

The “Mobile commerce trends and best practices revealed,” panel was moderated by Marci Troutman, founder/CEO of Siteminis, Atlanta, and structured as a question and answer session.

The major themes covered were the growth of mobile commerce, strategies and tactics for newcomers to the medium and best practices.

Incremental versus cannibalistic growth
Mobile commerce initiatives have the potential to drive new consumers to make mobile purchases without driving a significant number away from traditional ecommerce, according to the panelists.

“We did notice incremental growth at Lacoste,” said Maryssa Miller, former director of ecommerce at Lacoste, New York. “After we launched an mcommerce-enabled app in April, we didn’t see regular Web site sales decrease.

“We saw those increase dramatically as well,” she said. “It really was incremental, from people purchasing through the app.

“The app was an extra funnel, gave that extra layer of engagement for customers.”

Apps versus Web site
Disagreements began to arise when the topic of mobile Web sites versus applications came up.

The reach and versatility of mobile Web sites was viewed as a strong rationale for developing a site first.

“The first place to develop is the mobile Web – it should be the conduit for everything else,” said Joy Randals, head of mobile sales integration at Akamai, Cambridge, MA. “Mobile Web gives you the ability to tie everything from TV to print to in-store all together.

“It gives you the ability to address everything with the browser, with SMS, with apps, and you can build out from there,” she said. “As long as you build something that will scale, then you don’t need to reinitiate that investment later.”

The potential return of a mobile Web site was also seen as a draw.

Retailers who plan prudently can recoup the costs of mobile Web site development within a year, according to one panelist

“Build [mobile Web site development] into your budget,” Ms. Miller said. “Lacoste did a quick analysis, and found that even if we increased conversion a small amount, we would break even by the end of the first year.

“Use data to help make decisions,” she said.

However, others argued that applications provided a safer, simpler alternative to mcommerce.

The panelists also discussed location-based technologies, suggesting that the technology was not yet mainstream and would take some time to catch on.

“Theoretically, a mobile site will get more audience, but it’s harder to implement,” said Sean Bunner, operating vice president of advanced services at HSN, St. Petersburg, FL. “Apps can be created with just an SDK, they’re safe, and they can be internally built.

“A year ago, most of us chose iPhone, because its simple to get up,” he said. “Android is growing so quick it would be a tossup – it has same safety of SDK.

“Go for the app first, then develop the site.”

When developing a mobile site, companies need to always keep the customer in mind.

“Start with taking a look at your Web site, see where customers interact the most,” said Sharla Wagy, director of online programming and development at ShopNBC, Eden Prairie, MN.

Best practices
The panelists agreed that mobile needed to be executed in concert with other marketing initiatives.

“Looking at mobile as a standalone doesn’t work,” Akamai’s Ms. Randels said. “You have to take a step back and look at your business goals and your marketing palan and see where mobile fits.”

Ms. Randels suggested that retailers should create a mobile-based loyalty program.

Additionally, Ms. Miller said that taking advantage of the novelty of new mobile offerings by promoting it through search engine marketing and on the retailers home page helped adoption rates.

HSN’s Mr. Bunner said that many mobile users were purchasing products from unoptimized sites.

“Literally one day, sombody went into our core metrics and looked at the huge amount of hits from phones on unoptimized sites,” Mr. Bunner said. “People were going through long complicated processes to buy.

“If you go to a lot of retail apps and sites, it’s still hard to navigate,” he said. “Usability and site performance are best practice.”

Final Take
Sharla Wagy, director of online programming development at ShopNBC, Eden Prairie, MN