The need for speed

Mobile commerce is poised for the kind of big bang that saw internet shopping become commonplace. EN investigates.

Fifteen years ago, who would have believed that people would one day use an electronic network designed to share scientific data to buy everything from DVDs to banjos and pogo sticks? Yet between 2003 and 2009, according to Nottingham University’s Centre for Retail Research, the value of internet shopping in the UK surged by 171 per cent to top £38bn.

While the high street remains battered by recession, the latest figures from the Office for National Statistics show that sales volumes for non-store retailing, which includes internet, phone and mail orders, grew by 13.7 per cent in the 12 months to August.

Now a new frontier is opening up in web-based retail - mobile commerce.

In September, research from the Internet Advertising Bureau (IAB) showed people were spending more using their smartphones and tablets. In the previous 12 months, the value of the average mobile transaction jumped 43 per cent to £17.49.

Furthermore, while 25 per cent of consumers purchased via mobile as an “experiment”, 42 per cent said it was simply the easiest way to shop.

Elsewhere, Fabio Sisinni, director of product management at PayPal Mobile, recently declared that mobile payments were “growing exponentially”.

In 2008, PayPal handled $24 million worth of mobile transactions. That grew to $140 million in 2009, $750 million in 2010 and is projected to hit $2bn this year and $7.5bn in 2013.

The good news for entrepreneurs is that they can grab a slice of the action because many of the big boys been slow at getting mobile.

Damian Hanson, who last year co-founded One Iota to develop technologies specifically for mobile and social media commerce, says, “Roughly 33 per cent of the top 100 retailers in the UK have mobilised their sites - so a massive 77 per cent haven’t.”

So how do you stake your claim in the mobile commerce market? Well, if you have an online store the chances are you already get some traffic from iPhone, Android or BlackBerry users - but without a site optimised for mobiles, it’s unlikely they are hanging around.

Steve Brennan, managing director of Bespoke Internet, which specialises in building ecommerce and mobile commerce sites, says faster home broadband means today’s rich, image-heavy websites pack a lot of data.

However, mobile internet speeds are much slower and consumers who increasingly expect their internet to be quick won’t wait minutes - or even more than a few seconds - for a site to load.

“The way I like to picture it is a supermarket with ten checkout queues - and the end two queues have got an obstacle course in front of them,” he says.

“You don’t want to be the business that has got the obstacle course; you want the fast checkout because they’re the ones that make the money.”

Robert Castley, lead solutions consultant at Keynote Systems, which monitors internet, mobile and cloud performance, says optimising for mobile means building “from the ground up”.

Keynote uses MITE - the Mobile Internet Testing Environment - to look at the number of objects or elements embedded in a page, the size of images, CSS and JavaScript files, and the total size of a site to “grade” it for mobile use from A to F.

“It’s all about optimising it for the handset and sending as few bytes over the air as possible but still providing the user with the information they need,” Castley says. That requires investment.

Brennan says it varies but going mobile is normally around “half the cost” of setting up an ecommerce website because “you’re just rebuilding the front of the site, not the back of it”. There’s also the option of developing web-based apps for mobiles.

“Obviously there’s less investment required to build a mobile app because apps should work on all platforms,” says Castley.

The cost, Brennan adds, should be seen as “an investment in extra revenue for the next... well, indefinitely”.

“Most retailers we engage with see between seven and 15 per cent of their traffic now originates from mobile phones,” Hanson says.

“If they haven’t optimised their mobile journey, the conversions they get from that traffic are, at the very best, half of what they are online. In many cases, they’re ten to 20 per cent of what they get online.

“With many retailers issuing profit warnings or looking at cost reductions, it’s a fairly significant revenue and profit opportunity that is being constantly overlooked.”

A mobile website or app - or both - might get the punters to browse your wares on-the-go, but Brennan says some can still be reluctant to enter their credit card details because of concerns about security.

“There isn’t actually any difference in the way it works,” he says. “You’re transferring encrypted information across a wireless network, which is what you do if you’re on your laptop.

“For example, PayPal have got a desktop website version of their system and then they’ve got a mobile version as well - so you’re actually sending the same information to the same people using the same technology, but on a smaller screen.”

The IAB research and PayPal’s transaction figures suggest worries about security are fading as consumers become more familiar with the technology.

Brennan believes there will be a “major breakthrough” in the next 12 to 18 months when payments become automated.

Instead of having to enter a card number, customers will be able to store their details securely and simply enter a PIN or password to confirm a transaction.

Ben Whitaker, co-founder and CEO of app developer Masabi, says security concerns are “very much an emotional thing” and they will subside if people have a good reason to go mobile.

Masabi developed the first in-application payments, the first viral distribution of apps and the first security system for mobiles, which has been assessed by BT’s cryptographic testing laboratory, certified by the US government and complies with PCI DSS - the data security standards for the payment industry.

“Very few customers will even look at that or understand it,” he says.

However, if they trust a brand and, crucially, the mobile option solves a “pain point” for them, they will be more inclined to try it.

Masabi’s “pain point” was queuing for train tickets.

“There’s enough pain in the old way that if you show an ad next to the queue saying, ‘Are you queuing too long? Text this number, buy it on your mobile and never queue again,’ even people that don’t trust mobiles, when it might get them on their train on time, they might give it a go while keeping their place in the queue,” Whitaker says.

“If we close that sale while they’re in the queue, it means that next time they want to do it, if we’ve given them a good experience, they’ll just use the phone as a default.”

This was borne out in trials, when Whitaker noticed users were not all “young male gadget-freaks” but often people “who had never even used mobile internet before”.

“But when you said this will get you out of the queue for the train, they were willing to learn five new technologies in one go and put their credit card in because it was meaningful for their lives,” he says.

“That’s the way we’re going to get the whole public to start using m-commerce. This is kind of a beachhead, the place where they do their first-ever mobile commerce transaction because with a trusted brand like Virgin Trains it’s easier because they’ve got a real, physical complaints desk to bang on if it goes wrong.”

Mobile ticketing also means train operators can deal with more passengers without having to invest in ticket windows or machines used only during peak times - Whitaker says the business case sells the app rather than the cool technology.

While some brands have been slow off the mark with mobile commerce - Hanson says it’s a rare example of consumers being ahead of retailers in how they want to shop - they are waking up fast.

But Brennan says a well optimised website can still give entrepreneurs a leg up on much larger competitors.

“I can think of three or four companies who are turning over £1 million or more online and they’re above high street brands in Google - obviously on the high street there’s no way they can compete because of the capital that you need to put into it,” he says.

“So yeah, you can completely shoot ahead of the competition, whoever they are.”

But competition will hot up. One Iota now aims to get “hundreds or maybe thousands” of SMEs to go mobile with Incredicart.com, a DIY service for building m-commerce tools.

It’s like the opening up of the Old West - without all the wild animals, disease and genocide, obviously. A few pioneers have ventured into the new territories - and an army of settlers is now rumbling over the horizon. So how do you grab your prime patch before the masses arrive?

“Look at your statistics and analytics,” says Hanson.

“Look at the business case that’s staring you in the face and then, basically, accommodate how your customer is trying to shop.” And if you can’t be first, be fastest.

“There’s no point taking ten seconds if your competitor’s taking two seconds. You’ve got to win the speed battle,” says Brennan.

“If your competitor establishes himself or herself as the fastest mobile website, they could steal a year’s worth of trade on you. Make sure you get your chunk of the business this year before everybody else catches up next year, because next year it will be commonplace.”

Pictured - Voting with their feet: Wynsors World of Shoes has taken an early lead in race for customers who want to buy on the move

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