Making the Smartphone Boom Part of Multi-Channel Strategy

By  Scott Todaro, senior director of product strategy, Demandware
With more than 1.1 billion mobile phones shipped in 2008, retailers are buzzing about the prospect of mobile commerce driving additional revenue. Due to their high adoption rates and rich functionality, smartphones will undoubtedly be the device most responsible for delivering a usable mobile commerce experience. Since browsing on many of today's large screen smart phones is still less than optimal, native applications must be built to fit this small form factor. Of all the smartphone options, the iPhone was the first to introduce a large screen size, higher resolution, and easy-to-use finger motions to enable this shopping behavior.

Today the iPhone is making a charge into the smartphone arena unlike any other we have seen in the past. According to IDC, the iPhone seized 21% of the U.S. smartphone market share at the conclusion of 2008. The problem retailers face is developing a mobile commerce strategy to reach the other 79% of the current U.S. smartphone market that isn't using an iPhone.

The Smartphone Market
Apple may have revolutionized the smartphone from the earlier RIM, Palm, and Windows Mobile based models, but all manufacturers offering these devices are quickly catching up, introducing new operating systems and devices that compete head-to-head with the iPhone. And manufacturers are now creating models that are significantly cheaper than the iPhone. Based on current economic conditions, these low cost smartphones will inspire greater adoption among laggards and young adults under the age of 22.

So what does this all amount to for 2009? Waiting, watching and planning. According to Forrester, only 14% of U.S. Web buyers who own a mobile device that is capable of accessing the Internet have used it to make a purchase, and typically this purchase is digital content such as music and ringtones. This is an encouraging trend, but not one that warrants heavy investment in mobile commerce this year. Unless your business is tailor-made for mobile purchases such as tickets, music or software you will want to closely track smartphone adoption rates and consumer interest in mobile transactions for the first half of 2009 and look toward the latter half of 2009 to begin work building a mobile commerce plan.

Building a Plan
If you are an online retailer who wants to be on the cutting edge by being first to market with a mobile store, the big question is how do you get started? First, look at your customer base to determine if they are the right demographic to adopt smartphones, with average income level and education being two of the key determinates. If your customer base does not fit the bill, then until the market matures and costs come down, a mobile strategy might be a few years out for your business.

Next, look at how your mobile commerce strategy can be part of a larger multi-channel strategy. Consider your mobile commerce initiative as an extension of your website and brick and mortar experience instead of as a separate selling channel. With 61% of consumers unwilling to make a purchase on a mobile phone (source: Gartner), it is quite likely that your customers will use their smartphone to improve the shopping experience at your other retail channels.

Consider these three things before taking the plunge into mobile commerce:

1. Brand: Today brand is often lost in translation from physical store to the website. A poor mobile experience will only exacerbate this trend. Take into consideration your Web experience and your offline branding elements when you build your mobile commerce experience.

2. Product Catalog & Navigation: The goal is to keep the mobile purchasing experience as consistent with the online shopping channel as possible. Search and navigation on such a small form factor can become very difficult if you offer hundreds of thousands of SKUs. Also, you must address your staffing needs for managing the catalog, especially if you need to change the resolution of the images to fit the mobile form factor or manage different product categories from what is offered on your website.

3. Promotions & Marketing: Many companies offer mobile commerce but they fail to market the mobile site. With text message marketing still a little invasive and costly, promoting the mobile site must be a true multi-channel initiative.

All indications and research shows that mobile commerce is not going to hit critical mass until mid-2010. That said, it is prudent to start your homework now, while waiting to see how the market shapes up. Watch closely which operating systems become dominate and build a strategy for the masses that focuses on getting better than 70% market share of smartphone users. Write a comprehensive business plan that includes all elements of marketing, merchandising, services, technology, and globalization, and don't forget staffing. Then pray that mobile commerce continues to buck the current economic trend.