Mobile Commerce (M-Commerce)

Quick Definition: Mobile commerce, or m-commerce, specifically refers to consumers or businesses making a purchase through a mobile device like a smartphone or tablet.

Key Takeaways:

• Mobile continues to grow and may soon account for 75 percent of all web traffic.
• New technologies are allowing mobile websites to have some of the same capabilities as native apps, like GPS and camera access, while being less expensive to produce and more consistent across devices.
• Although m-commerce is often seen as a purely business-to-consumer (B2C) experience, business-to-business (B2B) commerce exists via mobile as well and tends to be more high value.
• Since most websites are developed via desktop computers, testing is vital to ensure mobile experiences are optimized.

The following information comes from an interview with Eric Erway, senior manager of product management for Magento Commerce.

What is mobile commerce?
What is a mobile commerce framework?
What is the difference between m-commerce and e-commerce?
What are the different types of m-commerce?
How do different mobile devices affect how a company approaches mobile commerce?
What challenges do companies face with mobile commerce?
How do companies overcome network failure issues?
How do companies create a global strategy around mobile commerce?
How much focus should companies place on mobile commerce?
How can companies drive visitors to a mobile website or app?
What steps should a company take when implementing a mobile commerce strategy?
What are the most important m-commerce applications?
Are there any privacy or security concerns with mobile commerce?
How does mobile commerce fit into an overall customer journey?
How do companies define success with a mobile commerce strategy?
How do companies optimize the mobile commerce user experience?
What is the difference between app-based m-commerce and web-based m-commerce?
How can developers who are used to desktop websites effectively create mobile sites?
What objectives do companies try to achieve with mobile commerce?
Do marketing strategies differ for mobile commerce?
What is the future of mobile commerce?

What is mobile commerce?

Mobile commerce refers to commercial transactions that take place over a mobile phone or another handheld device. In other words, it’s the act of buying and selling products and services via a mobile device.

Mobile commerce has been growing at an incredible rate. More and more people are using their smartphones and tablets to make purchases, both online and even in physical stores.

What is a mobile commerce framework?

On the technical side, a mobile commerce framework refers to how customers engage with a company — whether the company prefers customers to access their site through a mobile browser or through an app.

On the business or strategic side, a mobile commerce framework is how the company makes decisions about its mobile experience. Companies generally need an e-commerce director or leader who considers mobile a key part of both their everyday business operations and strategy.

What is the difference between m-commerce and e-commerce?

Mobile commerce is another aspect of commerce. It's commerce that just happens across the more than 5 billion mobile devices around the world. And about 50 percent of all traffic across customer sites is mobile now, either through a mobile browser or mobile apps.

What are the different types of m-commerce?

In terms of how customers access a store on mobile, the two main types of m-commerce are web-based and native, or mobile, applications.

But there are also differences between B2B m-commerce and B2C m-commerce. B2C is the more common type of commerce, but B2B can be more high value since businesses are purchasing more expensive products at a higher volume.

How do different mobile devices affect how a company approaches mobile commerce?

Predominantly around the world, Android devices are the most common mobile devices used. In the United States, the iPhone still has a stronghold. Across the board, phones are the largest percentage of mobile devices, with tablets only taking a small slice of the usage.

In the United States, there has been a slight slowdown in mobile phone upgrades. The next generations aren't perceived as quite as capable, or at least worth the investment to renew.

And globally, in places like India or others, many people have $20 or $30 Android phones that are fully capable and work extremely well but aren't going to necessarily have the performance requirements as more expensive devices.

And these are the devices that the next 1 billion mobile customers to come online will be using.

Companies need to take all of this into account as they create mobile experiences. They need to keep in mind that users aren’t upgrading as frequently as in the past and that billions of users may not have all the capabilities as users in the United States.

What challenges do companies face with mobile commerce?

One challenge is that companies are excited about mobile, but they’re hesitant about getting started. The steps involved with re-platforming or optimizing their current experience may be more ambitious than what they’re willing to undertake.

So they understand the problem but aren’t sure how to get started. So much has changed in the past few years, and it can be overwhelming. However, companies are at the point of needing to make decisions and dive into making changes.

Companies also need to be thoughtful when choosing a platform and partner. They need to find a solution that makes the most sense for them.

And they need to find a partner that will help them solve their needs in the appropriate way and has the expertise, skills, and focus that match the company’s mobile goals.

How do companies overcome network failure issues?

Native has had an advantage with network issues for years because they don’t always need a constant network connection. But some of the newer technologies and capabilities associated with progressive web apps are also solving this problem.

Companies can take advantage of saved or cached versions of the product catalog on the site that work well with intermittent connectivity, and even offline for certain circumstances.

Instead of accepting defeat when there isn’t a network connection, new tools can make it possible to move customers closer to a conversion. This will help with overall conversion, especially in areas where connectivity is not as great as it could be.

How do companies create a global strategy around mobile commerce?

Companies should start by picking open standards. They need to keep a keen eye on things like performance and provide an offline mode that allows the mobile channels to work well in areas with limited capability.

Soliciting feedback from customers around the world and testing in different locations can also help ensure companies are creating truly effective experiences for users in a variety of countries.

How much focus should companies place on mobile commerce?

It’s time for companies to start taking mobile commerce seriously. People need to think about the lack of conversion happening in mobile and put money on the table to address it.

They need to start having some sort of plan to get to where they want to be. For better or for worse, it's not trivial, so you have to start thinking about mobile and finding the partnerships and starting to invest.

Otherwise, companies will be left behind in a world that very quickly will be 75 percent mobile. They won’t be ready for it.

How can companies drive visitors to a mobile website or app?

Having an intuitive mobile experience that meets the needs of the customers is a key aspect of driving engagement. And being smart when distributing the mobile app helps as well.

Companies can use new techniques to carefully package and build the app.

Some techniques allow companies to publish it at the same time to the Google Play Store, Windows Marketplace, and the Apple App Store, which allows the app to be in different places at once. This can increase the number of potential customers who see the app.

New features and functionalities also exist around channels that drive visitors. When companies push their catalog to Amazon, customers don’t necessarily know they're shopping from a different store.

They just think they're pulling this through Amazon. Companies can increase customers by thinking about a multifaceted way to be at that point of need, including having a product in a different channel that then drives traffic to their own site.

And from a mobile standpoint, there are some characteristics that were once reserved for native apps but can now be used for websites — like alerts and notifications to bring people back.

So there are options for companies to think beyond the initial drive to the return visits, especially if the company has an existing relationship with a customer.

What steps should a company take when implementing a mobile commerce strategy?

The steps a company takes to implement their mobile commerce strategy depend on the company’s goals.

Sometimes companies make the mistake of basing a strategy around what they want to do on mobile when what they should do is figure out what problem they want mobile to solve, like offering new experiences or achieving new features or functionalities.

Companies need to be clear about what they want to achieve. And it could be a strategy that they start off with and then evolve over time or a strategy they lock in prior to investing the associated internal or external development dollars.

Many companies know what they want to do with mobile, but not why they want to do it. Once they establish their goals, they need to look at a blend of both tactical and strategic efforts to address near-term issues they may currently be having.

At some point, companies will hit that theoretical maximum and need to re-platform or invest in a full solution to help them reach that full potential.

A platform or full solution program provides additional capabilities for the developers and turnkey, extensions, and other aspects that will make it much easier for companies to hit the numbers they’re aiming for.

A large part of ensuring success with m-commerce is taking small steps toward a larger goal and not getting overwhelmed with needing to accomplish everything at once.

Companies can't guarantee results if people go mobile, especially if it's low performance or doesn't meet the needs of a progressive web app, which has a very strict set of guidelines.

But if you manage your mobile strategies well, you can be listed in the Google Play Store or be added as an app to someone's home screen.

What are the most important m-commerce applications?

It depends on a customer’s buying behaviors, but Amazon tends to be important across the board as an everyday application.

There are solutions that allow merchants to publish their catalog as a marketplace directly to Amazon. And Google, which can also be considered a mobile commerce application, is the front door for a lot of the work when you build a mobile shop or a store.

Are there any privacy or security concerns with mobile commerce?

There are fewer concerns in recent years. Payments, in general, are inherently secure, especially if you use a trusted payment gateway.

And in terms of privacy, there are better mobile controls in your Android and iOS-level devices that empower customers.

Similarly, customers now have more control over how many notifications they receive. Privacy gets down to a personal level in terms of how customers want to engage with a brand over time. A lot of the newer technologies take care of possible concerns.

But working with a platform to stay on top of security is still a good idea. It’s not a one-and-done proposition. Companies need to make sure that mobile security is part of the budget, just as they would pay for security for a brick-and-mortar store.

How does mobile commerce fit into an overall customer journey?

There isn’t a single point in time when mobile has to be present in a customer’s purchasing journey. One customer might use mobile to research a product and then later converts on a desktop computer, while another customer may use mobile for the entire process, from research to purchase.

Because of the varied ways customers use mobile, companies need to be cognizant of the capabilities they need to build so they can account for people who add a product to their cart or wish list on mobile but pick it up later on desktop.

Companies need to think about the customer journey in an omnichannel way and understand that people may only have a hummingbird-level attention span.

Especially on mobile, customers may have short periods of time when they aren’t ready to make a purchase, but they're chipping away at the buying process.

But then it becomes cyclical because then you have the return customers as well. So mobile commerce, and commerce in general, is a continuum, and there's a piece involved in each channel, especially with some of the new technologies becoming available.

How do companies define success with a mobile commerce strategy?

A lot of it comes down to sheer revenue, as well as cost savings. We've seen some pretty substantial case studies from Google and others in which revenue and conversion have gone up as high as 300 to 400 percent with a move from a very bad mobile experience to something great.

How do companies optimize the mobile commerce user experience?

It starts with a good baseline. Next, a company should think about the business objectives they want to achieve.

Teams will often think about the technical aspects and the performance characteristics, but even if you're fast, you may not necessarily be marketing or promoting the right things on your sites.

And the necessary change could be something as simple as pricing. So looking at a strategy that incorporates some level of testing can help.

What is the difference between app-based m-commerce and web-based m-commerce?

At a high level, it has to do with distribution. Apps are distributed through a marketplace, like the Apple Store, Google Play Store, or Windows Stores, while websites historically haven’t had that ability.

But that’s changing. In the past, apps gave brands more customization and flexibility, but new technologies are allowing web applications to catch up with key experiences like hardware support, accessing a device’s camera or GPS, and viewing performance.

And using caching, among other things happening behind the scenes, a lot of mobile app functionality is now available to the web, and has been for the past year or two, although companies haven’t fully taken advantage of it.

Tools are being built to allow consumers to have Apple-like experiences on the web, which in the end are a lot less expensive to maintain.

But companies also have the ability to then publish their sites across the board into different marketplaces and also have their sites picked up by search engines, something apps have never been able to do.

Since browser sites are starting to have all the functionality of mobile applications, there is evidence to support that apps are becoming less and less pervasive on home pages or mobile screens.

Web applications, in addition to being less expensive than mobile apps to maintain, are also more accessible to a larger audience. If you look at the next 1 billion mobile users, especially outside the United States, they don't necessarily have $1,000 iPhones, or really even $50 phones.

And they tend to be more Android-based. They're very limited in terms of storage, and they are very limited in terms of bandwidth and speed.

Across the market, we’re seeing less reliance upon apps as a whole. Overall, they will likely be replaced by websites, but there will be a couple of scenarios in which mobile apps are necessary, like if a company needs extreme security or extreme performance.

There are also certain apps, like productivity apps, that only work a certain way. But in general, the web is on track to replace apps in the near future.

And one of the benefits of focusing on websites over mobile apps is that websites don’t need to be created differently for an iPhone versus an Android.

If a company is using native apps, they sometimes have multiple teams to support everything and account for differences in devices.

Focusing on web apps provides cost savings from an operational standpoint, as companies can develop a site once and distribute it widely, and web technologies are generally less expensive to produce.

How can developers who are used to desktop websites effectively create mobile sites?

The most important thing is to continually test, and test well. Developers and merchants are used to building and creating things for desktop because they're using desktop systems to create them.

Rarely does a developer build a site on a mobile device, so developers need to make sure they have the right tools and processes to test and really understand how a site looks on mobile.

There are many existing applications that ensure experiences work across different devices and scenarios, but they're not perfect. So companies should make sure testing is a big part of the process and is accounted for in their IT budgets.

What objectives do companies try to achieve with mobile commerce?

The biggest objective is to address the conversion gap that typically happens with mobile. Traditionally, desktop sites have roughly 3.5 percent conversion, but mobile conversion, despite having a lot of traffic, is only seeing half that — roughly 1.7 percent.

So companies are looking to solve the conversion gap. They're looking to solve the operational expenses and costs that are associated with managing essentially separate technologies and platforms as well.

And then eventually, they're all trying to achieve and get ready for m-commerce to shift from being 50 percent of all e-commerce to eventually 75 percent, which will pressure those lower conversion rates.

Do marketing strategies differ for mobile commerce?

It shouldn't matter too much. Companies should have a single strategy for both mobile and traditional electronic commerce, but Google is now rewarding sites that have higher page-level performance for mobile.

Therefore, companies will start to see mobile prioritized inside of Google results. If a company isn’t focusing on mobile, they will experience a loss.

What is the future of mobile commerce?

Mobile will continue to grow as more and more people rely on their mobile devices for most of their digital needs. And incorporating artificial intelligence (AI) more into mobile experiences will optimize the way people interact with brands.

Looking beyond the device itself, there is a lot of work happening around how platforms interface with things that are not the web, like the Internet of Things (IoT), and how brands could be powered and shown on devices that we haven't begun to imagine yet.

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