Consumers use smartphones to make tills ring

Brands that fail to develop mobile commerce sites will miss out on the huge potential this purchasing path offers, according to research seen exclusively by Marketing Week. By Lucy Handley.

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Marketers cannot afford to ignore a report published by Morgan Stanley that forecasts mobile internet access will overtake desktop PC access by 2014.

Consumers are already familiar with buying products online and are becoming more comfortable with purchasing on their mobiles. In the last two weeks, fashion retailers New Look and BrandAlley have both launched mobile buying technology, while Asos and John Lewis, started selling via smartphones last October.

According to research by consultancy Simpson Carpenter, shown exclusively to Marketing Week, 27% of people say they have used their mobile to make an online purchase and nearly 50% say they would consider buying goods in this way in the next year. Hotels and travel will see the highest percentage increase in purchases by m-commerce in the next 12 months, followed by white goods, then groceries.

Currently, just 11% of the 1,200 research respondents say they pay for hotel rooms and travel tickets on their smartphones, but this figure is set to treble in the next 12 months. Meanwhile, 7% say they buy large appliances like fridges via their smartphones, but the report predicts a 187% increase in people buying these products via m-commerce.

While groceries are among the most popular purchases via mobile, with 11% of consumers saying they have bought them in this way, there is still potential for supermarkets to tap into the trend. Over the next year the number of people using a smartphone to buy from a supermarket will rise by 132%, according to the research.

While groceries are among the most popular purchases via mobile, with 11% of consumers saying they have bought them in this way, there is still potential for supermarkets to tap into the trend

Rachael Fraser, director of the retail and consumer team at Simpson Carpenter, explains that people often need an incentive to buy via their phones. “People use their smartphones to buy when they need to access specific promotions, make a last-minute purchase or when they want something with limited stock,” she says.

This is a trend seen by booking website Hotels.com (see The Frontline, below). Marketing director Christelle Chan says consumers use mobile and desktop internet in different ways. They book on their mobiles when they need a hotel room imminently, or use mobile to search for rooms, and then make final bookings on a desktop PC.

The research highlights that people are not necessarily moving away from one buying method towards another, but are using smartphones to complement what they are already doing. More than 50% of respondents claim they have used their mobile for research in the last year, while 88% say they have used desktop computers for the same purpose.

Simpson Carpenter account director Alan Ellerton comments: “M-commerce is being integrated into the shopper’s journey and is used as an additional tool to research and buy.”

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The goods most likely to be bought online are small items such as books and DVDs. This is not a surprise to Alun Williams, ecommerce director at TUI, who sees these items as commodity goods, unlike the offerings of travel companies such as his own (see The Frontline, below).

The most popular m-commerce apps for buying these types of entertainment goods are Amazon, eBay, Argos and Tesco, respectively. Fraser at Simpson Carpenter says: “The best sites in consumers’ eyes offer a simple interface. By making buying easy, they overcome some of the biggest barriers to m-commerce.”

The main barriers to buying are screen size (43%), clarity (41%) and connection (31%). This may seem quite obvious but there are several brands that have not yet optimised their websites for mobile. For some, it makes sense to develop an app first, as in the case of BrandAlley, which launched an iPhone app last month (see The Frontline, right). Ease of use is absolutely key, says Ellerton. “Design improvements are needed to overcome the key barriers to mobile commerce. The major barriers are technical.”

The research highlights that people are not necessarily moving away from one buying method towards another, but are using smartphones to complement what they are already doing

This may go some way to explain why most mobile shopping actually happens when a person is stationary, according to the research. Two-thirds of people say they are at home, work or at a friend’s house while they are shopping via their smartphones, with the remainder (34%) saying they are on the move.

“M-commerce is currently not that mobile,” says Fraser. “The majority of purchasing is taking place at home or at work when buyers could use a desktop computer instead. The main reasons for this are convenience and speed.”

According to the report, the people most likely to buy on their phones can be classed as “smartphone enthusiasts”, who are likely to have got such a device before their friends and use it as a shortcut to buying things, rather than physically going into shops. These people frequently take advantage of discount vouchers and are likely to shop at the last minute. The group currently makes up 30% of respondents, followed by “online addicts” (27%), who are impulsive and love technology.

And while the remaining 43% are made up of groups less keen on mobile shopping, they make up four segments of consumers among which the research identifies distinct behavioural characteristics. There is likely to be potential for targeting these groups individually and encouraging greater take up of m-commerce. The message, therefore, is clear: brands without mobile websites should make developing one a top priority because the opportunities they present are huge.

The Frontline

We ask marketers on the frontline whether our ’trends’ research matches their experience on the ground

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David Roman, chief marketing officer, Lenovo

We have done research that identifies similar barriers to people buying on their smartphones as this study. People do not necessarily talk about it, but the user experience must be integrated.

Screen size is part of that, but coming up with a way to integrate that experience with a payment system is important, and we can manage the security in it. We have set this up in China [with LePhone]. We set up that whole experience up front.
Rather than roll it out just as a piece of hardware, we wanted to make sure we provide the whole experience, including the website and the payment solution. It is absolutely crucial to focus on the user experience.

The fact the research reveals that 43% of people are at home does not surprise me because it is new and is similar to how I browse the internet on my mobile.

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Christelle Chan, marketing director, Hotels.com

We are pretty much seeing the same trends as identified by this research – a lot of smartphone shoppers are iPhone users. We are definitely expecting hotel room bookings to increase in the next 12 months by a two- or three-figure percentage.

One of the differences we see is definitely where people are when they buy. We see two very different types of smartphone users. The first take the time to research mainly on the go, and then will book via desktop computers. The people on the mobile booking site are those who are really in need of a hotel, either the same day or within three days of making a booking. This is a very different pattern to what we see on the web, where people book further in advance.

We have optimised our mobile site to work for every handset and operating system. It is important to make the mobile web accessible to everyone. We ran a focus group on mobile and found that people still start their hotel search with Google, so we have to be present everywhere.

We can add pressure through marketing when we know people are at their desks [on their PCs] and we can see peaks, but on mobile there are no peaks because people are browsing and buying on their phones when they are on the move.

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Melissa Littler, marketing director, BrandAlley

BrandAlley launched its mobile app at the end of last month and had 25,000 downloads in just five days. This proves to us the growing strength of m-commerce.
The figure of 100% growth in fashion buying via smartphones is not a figure that surprises me as it is in line with our internal growth targets for mobile traffic to the site over the next 18 months.

Our members are keen to snap up a bargain fast. The app comes from listening to customers who are keen to shop on the go. As our sales only last a few days, they want to make sure that their favourite brand has not run out when it comes on sale.

Our members often say that commuting is their only real downtime during the day and therefore a great time to shop, not only for clothes but our entire lifestyle offer. The penetration of smartphones has now made such an impact on ecommerce it just cannot be ignored.

The frustrations some members have expressed to us about shopping online in general is screen size and losing connection mid-purchase. Our focus has to be improving the ease of shopping on the app and making the site overall very mobile friendly.

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Alun Williams, ecommerce director, TUI Travel

We are looking to develop mobile apps for MyFirstChoice and MyThomson, the platforms that people use once they have booked with us. They can pay their balance, check their booking details and sort out extras such as transfers between the airport and hotel.

M-commerce is very important to us. We are seeing a lot of use through mobile devices but we are not seeing huge volumes of commerce at the moment. We anticipate that the content consumption trends – of being digital and “always on” in your pocket – will continue.

Hotels and travel will see the biggest increase according to this research, which looks significant. Commodity and easy-purchase products lend themselves to the mobile experience. Although more complex or higher-value bookings still see some reticence from consumers, that will dissipate over time.

The tablet computer will be the biggest commercial application in the travel space for people buying things and this is where we are seeing some growth.

It does not surprise me to see that people are shopping via their mobiles mainly at home. We see spikes in online use following investment in TV advertising, but I do see huge opportunities arising from the tendency to have devices on the go all at the same time.

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