At the end of last year The Drum announced that 2012 would have a focus on retail. With the growth in mobile platforms however, mobile commerce and technology has come to fore for marketers and retailers, with many consumers using their handheld devices to spend their money, literally. The Drum spoke to John Milliken, CEO of the Mobile Money Network to hear his thoughts on this developing trend within retail.
Will retailers' use of mobile technologies mainly be as an alternative to brick and mortar stores, or is it likely to be used to complement the traditional retail experience?
I think it’s definitely complimentary. Consumers are using an increasing number of channels for the way in which they communicate with one another, for the way in which they gather information, and for the way in which they shop and more often than not, those are overlapping. We’ve seen the emergence of e-commerce while we’ve been consumers I guess and that’s now been extended into m-commerce and social commerce, however what we’re not seeing is any channels really falling by the wayside. These are all supplementary.
It’s a little bit of a myth to say ‘I’m a mobile shopping customer’ or ‘I’m an e-commerce customer’. Retailers are finding that their best customers use all of these channels.
People are not siloing themselves. In terms of how mobile is going to be used, I think for discovery, it’s going to be used in the form of m-commerce sites and apps, although there is an issue currently around the ability to make those experiences transactional. And arguably where we’re seeing the biggest impact of mobile in retail is in complimenting some of those existing retail experiences.
There was quite a hoo-ha a month or so ago with Amazon offering U.S. consumers five or 10 bucks to scan barcodes in stores, clearly not in Amazon stores because they don’t have any, searching for Amazon products on Amazon marketplace and buying from other people’s stores. There are also an increasing number of retailers using things like QR codes in store to supplement customer education, so you could find out about products and all those sorts of things so you could potentially buy it offline. The real advantage of a mobile is it’s an intelligent piece of technology I can take wherever I am. And I think the most successful retail experiences using mobile will capitalise upon those USPs.
What role will near field communications play? Do you think that retailers are proving to be responsive or do you think that retailers are struggling to invest in this?
It’s definitely a struggle to gain traction as far as the technology itself is concerned, and I think there are two or three principle reasons for that.
The first one is around customer/retailer benefit. As a consumer I can see it would be cool, but I don’t really have a problem at the moment in using either cash or card to pay for things. That works. It doesn’t delay me. It’s not in my critical path of purchase. That’s usually in discovery or packing or whatever it is I’ve bought. It’s not the actual mechanic of paying, and the retailer sees that as well, and that’s why, I think the retailer already feels that pain in a fast food environment, which is why you’re seeing Near Field Communications (NFC) being rolled out primarily in those sort of fast food scenarios.
The other reason revolves around technology. People are seeing the disruption as an ability to be able to either introduce themselves to that payment value chain where they haven’t already ordinarily existed. However, you still need all the participants that were previously involved in a more conventional purchase. What you’re saying to a bank is ‘if I’m a handset manufacturer or a mobile operator, either the retailer’s going to pay more for this transaction or I want to share what you previously took from these transactions. That or I’m going to displace you completely. But I need you in order to make this end-to-end purchase work, because if you’re a bank, you’re the guys who get people’s salary cheques.’ If you’re Visa I still need you to settle between that bank account and that retailer. So people are trying to disrupt or introduce themselves to a value chain, where there was a question mark over the value they had, and they’re actually asking the incumbents to take a hit because of their introduction. So if I’m a Visa or if I’m a bank, I’ve actually got a pretty strong position at the moment, and a ‘do nothing’ option is a very realistic one. Why should I introduce people into that value chain and reduce what I get out of it? So I think it’s for those two principal reasons: consumer and retailer benefit on the one hand, and also how I actually make it work from a commercial model perspective, and the strength of the incumbent position.
What retailers have been most interested so far in its uptake?
Primarily fast food retailers. We’ll see where it goes next. I guess it would be supermarkets because they would be the next people that would benefit from that speed of check out, which seems to be the primary retailer advantage. Supermarkets tend to be the guys who’ve got the most sophisticated loyalty reward scheme redemption and mobile can be used for that. So if you look at a Google Wallet environment, the way in which they’re saying they’re going to get over the fact that there is a limited consumer benefit in the payment itself is to try and inform and improve the shopping experience for the consumer at point of discovery. So we will give them discounts, we will give them more information about the product, we will try and drive particular behaviours. And because those supermarkets tend to have the most sophisticated engines to drive those behaviours, I think that’s probably where they’ll step in next.
How will a true multi-channel environment evolve?
The challenge I see at the moment is that the majority of retailer cost comes in customer discovery. By that I mean I’ve got to pay – as the number of channels increases, my cost base increase, because there’s a huge cost involved So my cost base increases because there’s a huge amount of cost associated with that. All my cost comes in – getting the right products, marketing that, telling customer about it, paying rent, stores, staff – all those sorts of things, and that increases linearly with the number of channels that I need to support.
The principal challenge that I see as those number of channel extends is how do I get good conversion? How do I improve the sales conversion rate in each one of those channels? How do I improve the sales conversion rate from my advertising? and how do I ensure there’s a largely consistent experience for my consumer in the conversion within those environments? That’s where my business is focused. What we say is we abstract the checkout, the instant mobile checkout away from the point of discovery, whether that’s newspaper adverts, whether that’s an e-commerce site, whether that’s an m-commerce site, whether it’s an advert in a tablet, or a Facebook page, and put that onto people’s mobiles. That way they can transact with the consumer in any or all of those environments without the retailer, linearly increasing their cost base through the implementation of checkout within each one of those channels.
And what that looks like is, I can go on the Facebook page, and I can take a picture of the item on a Facebook page, or scan a QR code, I can do the same thing in store, I can do the same thing on an e-commerce site, I can do the same thing from a newspaper advert, and there’s an instant conversion then for that sale for the consumer and therefore for the retailer as well, and that’s why we’re running it.
What mobile technologies are we likely to see utilised more by retailers? For example, augmented reality or location-based offers. What scope is there for retailers to harness these in their mobile strategies?
Technologies like augmented reality, location based offers, QR codes, and image recognition to name a few, will all see increasing uptake from retailers as long as they are deployed in a way that results in increased sales conversion and increased customer loyalty. At Mobile Money Network we are huge fans of many of these technologies but we can see the need for each of them to be aligned with a simple, secure, convenient and universal way to order and pay for products if the full sales conversion benefits are to be realised. We are already embracing new innovations and leading in the UK with the first transactional IR and QR services.
Milliken will be speaking at the upcoming summit Digital London, taking place over 13 and 14 March. The summit will include a number of digital experts speaking across the two days, including Matt Brittin, VP Northern & Central Europe for Google, Justin Cooke, CEO, Fortune Cookie & chairman of BIMA and many more.