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Mobile Retailing is on the Move

December 1, 2009

If I had believed everything that I had heard about new technology, by now I should be holidaying on Mars, driving to work in my jet car and my daughter would be an expert on the hoverboard.

It’s easy to liken mobile commerce with these flights of fantasy. M-commerce has been touted as the next big thing for years. However the reality has failed to materialise. So is the future for m-commerce bleak or is it the next big thing on the verge of taking off? Maybe it’s the Sinclair C5 of the internet.

Just what is mobile commerce?

I wonder if like me you have sometimes wanted to buy a small value item but realised that you are out of change. Or, maybe you were away from your computer and remembered that the eBay auction you’ve been tracking for weeks is ending and you’ve forgotten to bid. If you’re anything like me, these are real scenarios. The good news is that there are already mobile commerce solutions that provide solutions to these situations.

In Asia, the use of the “mobile wallet” is a reality. The Tokyo subway already allows for contactless payments akin to our Oyster cards. In Finland, the mobile manufacturer Nokia is trialing RFID and Bluetooth instant payments. The idea is simple; your phone is connected to your bank or credit card. Then when you go shopping your phone uses contactless technology to pay for the goods. Quite amazingly for a new technology, a single framework has already been agreed. The next step is surely world-wide roll out?

According to Gartner, almost 500 million mobile transactions will occur in Asia during 2009. In the Philippines it’s easier, cheaper and faster to transfer money via text message. South Korea is the world leader in true multi-channel retail, allowing orders to be received in-store, online or via mobile and then sent to friends and family.

However, the West is finally catching up. Looking towards Silicon Valley, it’s once again Apple showing the rest of us how m-commerce should work. While many people believe the iPhone revolutionised the mobile industry, it’s the surrounding eco-system that has transformed the company from hardware provider to media vendor. The stats are impressive, Apple has sold 8 billion songs and videos via iTunes, with 200 million being sold direct to an iPhone. The iPhone app store currently has 70K apps available and 1.5bn apps have been downloaded.

According to analysis by the ecommerce consultancy firm Acquity Group, 5% of the top US retailers already have dedicated mobile commerce sites with a further 1% offering iPhone optimised sites or applications. Acquity predicts at least 50% growth in this area within the next 5 years. eBay is leading the way with a feature packed iPhone application providing an optimised experience for its auctions, and impressive PayPal application for transactions and payments.

So, what’s next?

I believe the mobile is the ultimate ubiquitous device. The facts are obvious; a device that just a few years ago was only being used for making and receiving calls has morphed into a camera, media player, mobile office, wallet and more. What’s more, thanks to the investment of the carriers and advances in wireless connectivity, these devices are online 24/7, and UK penetration of phones is over 100% — more people have two or more than don’t have a mobile.

I fully expect a widespread adoption of contactless payments within the next three years, although not specifically via mobiles yet. The Oyster card has already proved the model works and on the back of this success Visa and Mastercard are planning similar schemes. Already most of our cards contain an NFC (Near Field Communications) chip. The eventual goal is to get rid of the payment card and it’s the mobile that is leading the charge.

Sticking with payments, how may times have you bought something online and wondered how safe the site you are using is? While the banking industry is pushing schemes such as PCI DSS, I can see a future involving the mobile. The vision is this. When you buy online the store contacts your bank for approval, and this is then sent to your mobile for confirmation. That’s a completely disconnected device, separate hardware on a separate network. Without approval the payment is rejected. This would make online card fraud virtually impossible.

M-commerce may not be everywhere and it’s certainly not as wide spread as many predicted. However, its growth is being fuelled by the gradual adoption of pragmatic technical solutions to real problems. There are no flights of fancy involved.

The future with mobile devices is already here. I would expect us all to be using them soon, if we’re not already.

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