THE POWER TO HELP YOU SUCCEED

The future of m-Commerce

An introduction to m-Commerce 01

Introduction to mobile strategies 02

Mobile today 03

How m-Commerce breaks down across the sectors 04

The many uses of m-Commerce in retail 05

Are retailers ready? 06

Mobile tomorrow 07

The impact of mobile throughout the shopping process 08

Mobile as the ultimate cross-channel tool 09

How mobile bridges the gap between online and stores 10

Mobile strategies 11

Making mobile shopping user-friendly 12

Customer-centric mobile strategy 13

Personalising the mobile experience 14

The challenges of price transparency 15

Addressing security and privacy issues 16

Payment – assessing what is available 17

The four core mobile KPIs 18

Case Studies 20

eBay’s trend-setting mobile apps 21

Ocado leading innovation in grocery m-Commerce 22

H&M drives traffic to stores with mobile catalogue 23

Contents

For the purposes of this report, the term ‘mobile devices’ refers to any device that enables customers to connect to or purchase goods primarilythrough smart phones and tablets.

1

An introduction to m-Commerce

As little as two years ago retailers were questioning when to

invest in m-Commerce but, with £1 in every £10 now spent

online it is time for retailers, who have not already done so, to

make mobile an integral part of their offering.

Mobile remains a major challenge for many retailers, but

those who do invest will be at a significant advantage,

with estimates suggesting m-Commerce will be worth

£19.256bn within the next ten years, up from £1.35bn today.

Coupled with the limited amount of new shop space coming

into play in the UK in the near future, the genuine

opportunities for British retailers lie on the virtual high street

– consolidating mobile’s position as a critical channel.

The real value to be found in m-Commerce is through its role

as a multi-channel integrator and the indirect sales it generates

by connecting physical stores with online. As a result, I expect

to see retailers, particularly pure internet players and grocers,

beginning to borrow from their banks in order to make capital

investments to improve their e-tail infrastructure, whether it is

investments in technology to enhance the online experience or

investing in new distribution centres.

We have already seen a number of well-known brands moving

into m-Commerce. The most interesting developments to

date are in the pure play space. Ocado’s recent trial of giant

video walls in the City of London not only brought a new

meaning to the term window shopping, but also provided a

glimpse of how mobile will revolutionise the retail landscape

of tomorrow.

With conversations now firmly focused on how to implement

a successful m-Commerce strategy and how much it will

cost, this report seeks to answer many of the questions being

asked by the sector. I hope you find it insightful and that it

will aid your strategic thinking going forward.

Richard Lowe

Managing Director

Head of Retail & Wholesale

Barclays Corporate

07775 540802 (mobile)

richard.lowe@barclayscorporate.com

2

Introduction to mobile strategies

The top ten trends in mobile strategy – covered in more detail throughout the report.

Mobile as a linking channel

Mobile strategies need to be aligned with the rest of a

retailer’s business, as the channels become ever more

blurred and mobile emerges as the connector.

1

Be innovative and reactive

In the fast developing m-retail market, we will see constant

advances. Retailers will need to be flexible to change and

accommodating to new trends.

2

Accommodate the multitude of platforms

To engage consumers using a variety of mobile devices,

websites need to be optimised for multiple platforms or

apps need to be developed.

3

The role of m-Commerce

It is important to clearly define what role the mobile platform

will play within a retailer, before developing functions.

4

Consumer-centric strategies

The consumer needs to be at the heart of all mobile

strategies. Developments should have the consumer in mind

and be responsive to their needs.

5

Extreme price transparency

As more price comparison tools become available to

empower the consumer, retailers will need to pay more

attention to pricing strategies.

6

Security can not be ignored

m-Commerce strategies need to provide solutions to the

security and privacy threats consumers encounter today and

resolutions communicated openly.

7

Payment procedures

Accommodating safe and simple check-out procedures

is necessary for the success of all mobile-optimised sites

and applications.

8

m-Commerce KPIs

m-Commerce strategies can be split into four main groups:

adoption and usage, engagement, conversion and customer

retention.

9

Barriers to traction

Usability and functionality are barriers hindering the take-up

of m-Commerce; retailers need to facilitate mobile usage

and include innovative measures.

10

Mobile today

Despite the UK still being in the early stages of smart phone

adoption, mobile devices have already had a significant

impact on retail. Over half of all smart phone or tablet

owners use their device at one or more stages of the

purchasing process, whether it be to research before buying,

compare prices in-store or actually make a purchase.

The rise of m-Commerce.

As you can see, mobile still only takes a small slice of the

total retail pie but the potential is there for it to have a

huge impact on the way consumers shop and interact

with retailers.

Percentage of UK shopping population that shop online

via mobile phone (making a transactional purchase)

2009-11e

Percentage of UK mobile device owners that use

m-Commerce (at any stage of purchasing process)

2009-11e

3

1,558

3,850

6,007

£199m £562m

£1,350m

2009 2010 2011e

m-Commerce market value (£m) m-Commerce population (000s)

3.8%

2009

7.4%

2011e2010

5.8%

28.2%

2009

62.9%

2011e2010

52.0%

The leaps in smart phone and tablet technology and the

ensuing consumer demand have been the major driver of

m-Commerce growth in recent years.

The m-Commerce population – that is, consumers using

web-enabled phones, smart phones and tablets – continues

to grow exponentially, from around 1.558 million people in

2009 to a projected 6 million by the end of 2011. This uptake,

combined with innovative shopping apps and retailers

learning to gear their websites towards mobile consumers,

has led to a significant rise in m-Commerce spending over

the same period, from around £199m in 2009 to an

estimated £1.35bn in 2011.

There’s no doubt m-Commerce is on the rise. The growing

number of smart phone users are slowly becoming more at

ease with using their mobiles to shop, while retailers are

grasping the opportunities mobile-optimised websites and

tailored shopping apps can provide to their business.

Perhaps unsurprisingly, grocery shopping represents the

greatest share of overall spend, with mobile technology

finding a natural bedfellow alongside online food shopping.

By allowing users to amend shopping lists and arrange

delivery times from their mobile, supermarkets have

created a useful and convenient tool for consumers to

manage their shopping.

The increasing digitalisation of books, music and video

content has made media another popular area for

m-Commerce, with users taking advantage of the facility to

download content to their mobile or tablet in an instant.

Mobile retail spend split according to spend

by sector (2011)

The degree of mobile penetration varies across sectors

and is largely dependent on the importance of the physical

stores to customers. For sectors in which the purchase

process demands a high level of interaction and advice,

such as electrical items and clothing, high street stores

remain pivotal. It’s sectors like music and video where

m-Commerce is already having its most significant impact.

Retail sectors shown in terms of mobile penetration and

the importance of stores to consumers

4

How m-Commerce breaks down across the sectors

Food and grocery

Electricals

Books

Music and video

Clothing and footwear

Other

Homewares

Personal care

DIY and gardening

Total mobile retail spend

£1,350m

£292.7m

£270.3m

£190.6m

£176.1m

£171.6m

£74.3m

£64.3m

£62.8m

£47.5m

Stor

e im

port

ance

Penetration HighLow

Hig

hLo

w

Clothes

Homeware

TV and audio

DIY

Electronics

Food

When you look at overall online spend, m-Commerce is still

a relatively small part, accounting for around 5% of total

online sales in 2011.

m-Commerce share of total online spend 2011

That share is set to increase dramatically over the coming

years as we’ll see later on, but to focus purely on direct

spend is to miss the true value of mobile as a retail tool.

Mobile plays a part in the way consumers shop at different

stages of the purchasing process, helping to boost retailers’

sales across their physical and online businesses.

The most common use of mobile devices for shopping is

stockist and price comparison research. 16.2% of mobile

device shoppers are doing at least part of their initial

research on their mobile devices, with a further 5.8%

turning to their devices for research while they shop –

a function facilitated by apps such as RedLaser, which

allows consumers to scan a product’s barcode in order to

compare prices across stores.

The growing use of mobile devices throughout the

shopping process highlights the importance to retailers

of making sure they have mobile-optimised websites

and up-to-date pricing info.

The ways consumers are using their mobile

devices to shop

Percentage of online shoppers using retail-related mobile

functions

5

The many uses of m-Commerce in retail

Total online spend: £26bn

Mobile share: 5%

Research 22.0%

12.7%

16.2%

Purchase*

Research while shopping

Reserve a product and later collect and pay for it instore

Reserve a product by text and later collect and pay for it instore

Purchase a product and later collect it instore

Reserve/ purchase and collect

Utilise vouchers/ discount codes

Research before shopping

5.8%

6.0%

3.2%

3.5%

6.9% 5.7%

* Excluding music downloads, ringtones, phone applications or games

6

While retailers undoubtedly recognise that mobile will

have a fundamental impact on how people shop, many

have yet to really take full advantage of the medium as

a tool for boosting revenues. For example, many of our

high street retailers have yet to implement sites that mobile

users can easily navigate through their mobile devices.

The retailers receiving the most mobile traffic are

generally those that have invested in making themselves

fully mobile-compatible through well designed mobile

websites and innovative applications.

Unsurprisingly, it’s established e-commerce players

like eBay, Amazon and iTunes who are leading the pack

when it comes to catering for the needs of the

m-Commerce market. For example, Amazon recently

incorporated a photo search function into its app –

simply take a picture of an item you want and ‘Amazon

Remembers’ will quickly find a match for it in their store.

Meanwhile fashion retailer ASOS recently launched a

mobile-optimised site when they noticed their traffic via

mobile devices had significantly increased throughout 2010.

Are retailers ready?

Stor

e im

port

ance

Penetration HighLow

Hig

hLo

w

ASDA TESCOSAINSBURYS

NEXT

ARGOS

APPLE

I TUNESAMAZONPLAY.COMOCADO

EBAYASOS

Strategic positioning of the most visited retailers in terms

of mobile penetration and the importance of stores to

their consumers

7

Mobile will be a significant channel.

Mobile tomorrow 19

1

176

48 64 270

63 172

293

163

253

351 69

9

648 97

7

1,01

9

1,25

1

610 88

0 1,34

7

1,73

5

2,18

2 3,11

5

3,47

9

5,06

7

Book

s

Mus

ic a

ndvi

deo

DIY

and

gard

enin

g

Hom

ewar

es

Elec

tric

als

Pers

onal

care

Clo

thin

gan

dfo

otw

ear

Food

and

groc

ery

2016

2021

£1,350m£5,822m

£19,256m

2011 2016 2021

2011

2016

2021

Key

Spending via mobile devices will affect some sectors more

than others, depending on the importance of the in-store

experience, but what’s certain is that all sectors will see

strong growth in mobile spend over the next decade. This

boom is going to be helped along by the increase in smart

phone penetration, as well as upcoming technological

developments such as 4G.

Forecast mobile spend by sector

With sectors such as entertainment, mobile will form an

integral part of the purchase process, increasingly becoming

the point of transaction and delivery. As digital devices

become further integrated around cloud-based services like

Spotify and Apple’s forthcoming iCloud, consumers will be

able to access their content more easily across multiple

devices. This integration will make customers more inclined

to purchase direct through their mobile devices.

As a whole, we expect spend via mobile to reach £19.256bn

by 2021. While this growth is impressive, direct mobile

transactional spend will still remain a small part of total retail

spend, with the bulk of sales continuing to go through

physical stores and online via traditional PCs and laptops.

The true value that mobile adds to retail will be through the

indirect sales it generates by significantly increasing

consumers’ ability to shop ‘on the go’, making shopping

quicker and more convenient than ever before.

Market value forecasts for m-Commerce

8

Mobile is set to reshape how consumers shop across

different channels in the years ahead. While mobiles and

tablets are becoming retail channels in their own right, their

real potential lies in how they influence shopping behaviour

across different channels, most noticeably in the

traditional store environment.

Pre-purchase impact

The biggest impact of mobile is that it provides consumers

with a huge amount of previously ‘wasted’ time – such as

lunchbreaks, commuting or time spent in front of the TV –

to browse and explore retail offers, so that when they get to

the high street they’re focused and fully prepared.

Tablets will prove particularly useful here as their larger

screen means they can function as portable catalogues,

with in-built interactivity in the form of videos, social media

connections and so forth.

Point-of-sale impact

As smart phone penetration increases, more and more

stores will realise the value of incorporating mobile

elements such as QR codes into their in-store displays.

Debenhams, for example, has incorporated a barcode

scanner into their app, allowing shoppers to access

detailed product information.

With mobile devices becoming a more commonly used

tool when shopping, retailers may be inclined to offer in store

WiFi access to facilitate mobile usage and support retailers’

mobile functions and services.

Post-purchase impact

As Amazon and iTunes have proved, consumers like to share

their views and opinions on purchases and the advent of

mobile offers the opportunity for instantaneous feedback.

For example, if a customer receives poor service when

in a store, this can be broadcast to a huge audience

within seconds via Facebook or Twitter. On the flip side,

a happy customer who posts a positive comment or ‘like’

can act as valuable and authentic ‘word of mouth

marketing’ for a retailer.

Retailers are increasingly using QR codes on POS signage to

encourage deeper customer interaction.

The impact of mobile throughout the shopping process

9

Mobile as the ultimate cross-channel tool

As recent high-profile disappearances from our high streets

have shown, sales from physical stores will continue to be

eroded by online. Today internet sales account for 8.9%, up

from 1.4% a decade earlier thanks to greater broadband

penetration and the growth of retailing websites. Over the

next five to ten years online sales will be boosted even more,

hitting 13.7% by 2021.

Forecast for online spend as a share of total retail spend

However, traditional physical stores have been the

mainstay of retail for centuries. Despite the increased

migration of retail spend online, bricks and mortar stores

will continue to play an important role, still accounting for

over three quarters of retail spend by 2021. The difference

will be seen in the make-up of the high street, with the

sectors most affected by the digitisation of content such

as music, video and books being the hardest hit.

As smart phone usage becomes more mainstream and

sales of tablets increase, the amount of transactional

spend via mobile devices will make it the fastest growing

retail channel over the next five years, albeit growing from

a relatively small base.

Despite this growth, mobile’s key benefit is as a tool to

blur the boundaries between different shopping methods.

Mobile will drive cross-channel integration, giving

consumers the freedom to switch from channel to channel

to get what they want.

Forecast for average annual retail growth across

shopping channels 2011-2016

2016£42.6bn

2021£53.4bn

13.7%12.6%

2011£26.2bn

8.9%

Physical storesMail order Online Mobile

+1.6%-1.2% +8.0% +55.2%

10

Mobile will make retail truly omni-channel through activity

such as in-store price comparison apps and QR code

special offers. It will act as a bridge between the two spheres

of traditional store-based retailing and online, allowing a

retailer’s online and offline presence to feed into one another,

bringing the two worlds closer together.

Mobile’s bridging impact between the online and physical

retail world

Online

Customer researches products, availability and prices online

Mobile

Uses mobile phone to check prices via comparison websites or

barcode scanner appCustomer finds online is cheaper and uses mobile to go online and buy the product or saves details for a later purchase online

Selects product and downloads details to mobile device

In-store

Customer goes to the shop to view/buy the product

Customer finds a desired product in a shop

Customer locates nearest shop with best price and availability using GPS map on phone, then goes there to purchase product

Mobile is so much more than a new channel for retailers to generate extra sales. Its real value isas a multi-channel integrator, influencing the whole shopping process at a variety of stages.

How mobile bridges the gap between online and stores

11

Because of mobile’s unique ability to blur the boundaries

between different retail channels, it’s essential that retailers

develop their mobile strategies in line with the rest of their

business, rather than view it as a standalone channel.

Mobile’s use as a connector across channels means

functionality across every consumer touch-point is vital.

Developing dialogue between retailers and consumers

Mobile devices do more than simply let consumers access

retailers whenever and wherever they want – they also offer

retailers a chance to connect directly to their consumers.

This two-way interaction opens up a host of new and

exciting possibilities that simply weren’t feasible in the past.

At the same time it also creates challenges for retailers ,

such as tackling the logistics of real-time stockchecking and

price comparison.

Strategy in practice – Argos

With almost half of their total sales now arriving through

a multi-channel route, Argos built their mobile app around

their ‘Check & Reserve’ service.

By featuring real-time price and stockcheck information,

customers can shop wherever they wish and reserve a

product for collection at their nearest store, with the

guarantee that it will be there.

After reserving an item, customers receive a reservation

number for use at in-store payment kiosks. This smooth and

efficient application can also be combined with online or

catalogue browsing, adding the reassurance of reservation

to the standard process.

Mobile as a multi-channel integrator.

Mobile strategies

Mobile needs to be integrated fully into all areas of a retailer’s operations and seen as a cross-platform tool.

12

As m-Commerce continues to develop, an important aspect retailers must address is theusability and functionality of their mobile offerings.

Even the keenest mobile user will soon be put off by a site

where no consideration has been given to the needs of

visitors viewing it on a mobile device. The current trend is to

develop HTML5 websites that can be optimised for different

platforms, including iOS, Android, Blackberry and Windows

Phone 7.

Retailers need to ensure their sites are not just relevant and

useful but easy to use. The mobile interface and user

experience should be simple and intuitive for first time

visitors, focusing purely on necessary functions, stripping

out any excess elements more suitable for laptops and

desktop-based shoppers.

In addition to mobile functionality, retailers also need to look

at providing in-store WiFi to facilitate the use of mobile

shopping apps. Giving customers access to product and

sales information while in-store keeps them on-site rather

than using the WiFi services of other providers (such as

fast-food chains) and helps facilitate purchase.

Strategy in practice – Amazon

Amazon were one of the pioneers of m-Commerce, first

launching a mobile website in 2006 and working hard ever

since to create a user-friendly mobile shopping experiences

through their innovative app ideas. To save mobile shoppers

from extensive typing, Amazon’s app includes a number of

search options such as barcode scanning, voice search and

auto fill-in for typed searches, as well as the ingenious ‘Amazon

Remembers’, which uses photo recognition to search for

items viewed in real life.

Making mobile shopping user-friendly

Issues to address Solutions

Ease of navigation Specific mobile-optimised site

Slow load times Zoom in/drop down box content expander functions instead of linking to another page

The bother of typing on a phone Include options for quick access –e.g. ASOS’ ‘save for later’ function, ‘Amazon Remembers’, ‘Wish List’

Weak/unreliable mobile Provide free WiFi access to aid the use of mobile shopping appsnetwork access

It’s not enough for a mobile platform to just beuseful. For it to be a success among consumersit must also be easy to use and well designed.

Customers can easily access their stored ‘Wish Lists’,

delivery and payment details. The multi-platform

connectivity between Amazon’s core website and their

mobile app works because it accommodates all the ways

in which consumers use Amazon to shop.

13

With consumers turning to their mobile phones for a range of

shopping activities, it’s imperative that retailers configure their

mobile strategy so that it ties up with the way the phones are being

used to shop. All developments in regard to mobile need to be

taken with the customer in mind and in response to their needs.

What customers most commonly look for from their smart

phones is the ability to research products, locate stores and

check prices, so these functionalities need to form the basis

for mobile apps or mobile-optimised sites.

Tablets, on the other hand, are more a tool for inspiration

and browsing. As such, a tablet-optimised site would ideally

put the focus on product rather than pricing. Retailers trying

to cut corners by imposing a one-size-fits-all framework will

find their offering failing to satisfy users of either device.

Optimising mobile for consumers

The key to success is to develop mobile strategies that keep

the core customer needs in mind. For example, electrical

retailers should focus on multi-channel integration, such as

the Reserve and Collect services offered by Argos and Currys.

Grocery retailers like Tesco and Ocado have focused on the

‘on the go’ nature of m-Commerce by enabling mobile

customers to continuously add products to their online cart,

in the same way you’d update a shopping list as you

remember new items.

Mobile access is of particular importance to flash-sale sites

like Gilt Groupe, Rue La La and Amazon’s My Habit, which

offer short time frame sales, so acting ‘on the go’ is often

essential to consumers getting the offer they want.

Strategy in Practice – ASOS

Online fashion retailer ASOS was quick to recognise the

importance of smart phones as a channel for connecting

with customers, launching a dedicated platform, ASOS

Mobile, in response to the spike they saw in mobile visitors

to their standard site.

This awareness of the needs of their mobile consumers also

led them to overhaul their online magazine in August 2011 to

make it more useable for their growing market of tablet users.

The new e-magazine app is tailored towards consumers

browsing for inspiration and features click-through

functionality, linking clothing in articles to the e-store, so

customers can shop directly from fashion editorials.

Customer-centric mobile strategy

Mobile Tablet

Browsing for fun

InspirationPrice checking

Product infoMobile strategy must be customer-centric in order to be relevant and engaging for targeted consumers.

Personalising the mobile experience

14

A more personalised mobile experience is a great way to make

consumers feel more valued and boost their perception of a

brand. Uninspiring mobile apps with poor design will soon

drop off the radar. Only the apps that are relevant and

engaging will become established and regularly used over the

long-term.

The retailers at the cutting edge of app development, like eBay

and Amazon, have already incorporated personalised aspects

into their mobile apps, such as wardrobe function and

‘Remembers’. By tailoring app functions to their customer

specific needs, people will see the app as a valuable tool to use

when shopping.

Mobile marketing – getting the balance right

Because consumers carry their mobiles at all times, particularly

when shopping, they become a powerful tool for retailers to

build a rapport with their shoppers. Thanks to ever-improving

network connection speeds and WiFi access, mobiles these

days can support images, sound and video, giving retailers a

diverse range of ways to interact with their customers on an

ongoing basis.

This continued interaction can be encouraged by asking

customers to join SMS messaging lists or follow the retailer on

Facebook. It’s important to always be on a customer’s radar

and mobile access makes it easier for retailers to make their

presence felt in an increasingly competitive market. The trick is

to keep communications as targeted and personalised as

possible and not to sour the customer by bombarding them

with an excess of irrelevant marketing.

Using CRM technology to target discounts

Mobile discounts can be highly targeted and personalised by

analysing CRM data. This data offers a rich source of insight

into shopping patterns and habits, letting retailers drive loyalty

by tailoring communications to specific consumer groups,

rather than offering a discount to the masses.

Mobile lets the more engaged customers request exclusive

discounts through QR code or downloadable e-coupons which

they can redeem at the point of sale in-store.

Better targeting through location-awareness

Location-based services such as FourSquare and Shopkick

enable retailers to target discounts and promotions to

customers when they are in the vicinity. The opt-in nature of

these services, where customers have to actively sign up or

‘check in’, means that retailers gather valuable data about

consumers and can more easily target deals and offers to

customer types. Mobiles can also incorporate the social aspect

of shopping, linking applications to social networking

platforms so customers can share their shopping experiences

with their friends.

Personalising the mobile experience is vitalto ensure that a retailer’s mobile strategy istargeted at the right consumer.

The challenges of price transparency

15

Barcode scanning and recognition applications allow customers

to compare online and offline prices in an instant, making

them more price-sensitive than ever before. This extreme

transparency leads to shoppers using stores as a changing

room prior to a later online purchase, or diverting them to a

competitor’s store offering the same item at a lower price.

It’s therefore important that retailers make sure there’s a

level of consistency across their own offline and online

pricing strategies to avoid this cross-channel cannibalisation.

How to respond to increased price comparison

Defensive response

• Emphasise value added services – draw a customer’s

attention away from direct price comparison with

product bundles to create a better overall offer

• Differentiate your offering – unique items or private

labels make it difficult for customers to make direct

comparisons with competitors

• Facilitate multi-channel shopping, e.g. enable

customers to make an online order in-store if a product

is out of stock, before they go to a rival store or

online competitor

Acceptance response

• Open pricing policies – increasingly, retailers are

embracing the price-conscious, tech-savvy shoppers and

becoming more open and transparent about their pricing

• Free comparison functions – retailers who integrate free

shopping comparison functionality into their apps, such

as Amazon and eBay, give customers the reassurance

of total price transparency

• Advertise on comparison apps – US electrical retailer

Best Buy pays for their ad to show up whenever a

customer scans an electrical item using the shopping

comparison app, TheFind

Determining the most efficient level of price transparency will vary from one retailer to the next.The exact make-up of their approach and response will depend on their industry, products soldand the competitive environment.

16

Addressing security and privacy issues

Security

Our research shows that one of the biggest barriers to

m-Commerce growth is the security fear of consumers, with

87.8% identifying it as a significant factor deterring them

from shopping using a mobile device.

Losing a phone can pose a security threat, but simple

safety measures like passwords and automatic sign out

can eliminate much of the risk. Furthermore, the rapid

sophistication of mobile devices and their security

measures now equals the same level of protection offered

by laptops or personal computers.

Just as the associated risk with online shopping decreased over

time, so too will it with mobile devices as market penetration

increases and consumers become more aware of the safety

measures in place. This process can be aided by retailers doing

their part to communicate what security measures they have

in place to protect their customers’ details.

Privacy rights

When it comes to shopping on mobile devices people are

particularly wary of disclosing personal details. Retailers

need to make consumers fully aware of what data is being

taken and how it is being stored. Giving consumers the

choice to opt out of entering some information may

also help to increase mobile usage.

Reassuring consumers about security and privacy

Make mobile users feel secure

• Phones and apps must be sufficiently password-

protected and consumers offered the same level of

protection as seen with credit cards

• Communicate the ease with which an account on an

app or mobile site can be deactivated should security

issues arise

• Include trusted online payment options such as PayPal

or YourCash, where customers feel more comfortable

storing credit card details

Communicating about privacy

• Educate consumers about their privacy rights

• Specifically gain consumers’ consent before requesting

personal information needed to proceed

• Ensure consumer data is protected and communicate

what is being done to prevent hacking

Communicating openly to consumers about securityand privacy issues will be key to increasing numbersand frequency of mobile shopping.

17

Payment – assessing what is available

The projected growth of m-Commerce over the coming

years makes it essential for retailers to simplify their mobile

device check-out procedures to a one-click process, while

also ensuring maximum security.

With new technology such as digital wallets (NFC, Visa’s

e-wallet, the Google Wallet app) and mobile payment

options such as PayPal, YourCash and Square, there’s no

shortage of choice when it comes to payment processing.

The stumbling block is getting consumers to trust these

new payment methods. As we saw in the early days of

PayPal, there will initially be a high level of abandoned

purchases, but as word spreads about these new methods,

consumer confidence will grow. Using sites such as PayPal

adds an additional layer of security, instead of storing bank

details directly on an application or mobile site.

Using a mobile device as a portable digital wallet has been

made possible through Near Field Communications

technology which enables quick-touch payments in store

and is suitable for small purchases but is not as secure for

larger transactional values. Retailers with smaller

transactional goods and a focus on quick service will need to

identify the demand and benefits of installing and upgrading

their infrastructure to accommodate these POS terminals for

contactless payment.

Strategy in practice – PayPal for secure mobile payments

PayPal is a platform that can be utilised by retailers as a

secure payment method. Starting out as the secure

transactions measure for eBay, its use has since spread to

many multi-channel retailer sites. PayPal uses passwords

and PINs so consumers’ payment details are easily

accessible, yet secure for the individual to make an

online purchase.

Strategy in practice – Barclaycard transforms buying on

Britain’s high streets

Barclaycard, in conjunction with Orange, launched the UK’s

first contactless mobile phone payment service in 2011.

The service allows customers to make high street purchases

up to £15 nationwide simply by tapping their ‘Quick Tap’

mobile handset against a contactless reader at over 50,000

stores. It uses a secure SIM-based approach, providing a

single point of contact for customer care as well as ensuring

enhanced payment security. A revolutionary integration of

mobile devices and retail, the service gives customers the

ability to purchase goods without card or cash and has

already attracted the involvement of major brands such as

Wembley Arena, EAT, Subway and McDonalds.

Retailers need to choose appropriate payment methods for their mobile service and identify if NFCterminals would be beneficial if installed in their stores.

18

The four core mobile KPIs

Useful metrics to monitor

Even though measuring the performance of mobile

strategies is still in its infancy, its imperative for retailers

to set out KPIs unique to their business and consumers,

before a mobile platform is designed and launched. With

clear objectives and an understanding of consumer

behaviour and demand, m-Commerce will have longevity

and develop into a lucrative channel.

The core KPIs can be split into four main groups: Adoption

and Usage, Engagement, Conversion and Customer

Retention. Monitoring of these metrics will feed back into

various areas of the business to influence strategy. Not all

measures available will be useful for all retailers; it depends

on how the channel will to be used in the wider business plan.

1. Adoption and Usage

Downloads

• The number of times an app had been downloaded is a

useful metric to quantify interest and reach

• When, how and where (through which mobile platform)

the application has been downloaded. This provides

useful data to measure the success of advertising,

updates and launches

• Installation of updates to an app shows the extent of

retention and ongoing usage by customers

Visitors

• The numbers of new and returning visitors to a mobile site

• The number of visitors to a standard website by mobile

device users will tell retailers whether they need to invest

in a mobile-optimised website

Usage

• The numbers using the app and repeat usage will quantify

the audience attracted, showing peaks and troughs

2. Engagement

Traffic

• The frequency of consumer visits over time, the

functions used, and screens viewed, along with how

long they spend on each section can all be used to

measure levels of engagement

Abandonment

• The number of people giving up on an app or site before

completing their journey, and the point at which the

drop-out occurs will highlight failings and identify how

this can be addressed

3. Conversion

USP

• The conversion metrics of an app’s USPs are a great way

of measuring engagement and loyalty and gives an

indication for ROI. USPs can be based on a variety of

things including:

– revenue through purchases

– driving footfall into stores through check-ins

– registration and use of coupons

• Quantity of product reviews, browsing time and

customer satisfaction through added services and

support are USPs being leveraged by retailers such as

ASOS, who communicate heavily with consumers via

social networks. ASOS can also be used as an example of

driving conversations between consumers and

capitalising on sales by flexing stock levels using the

indications of consumer preferences through ‘likes’

4. Customer Retention

Feedback

• Feedback from consumers gives a retailer tangible

insight into what consumers want, like, dislike and

would use more if improved

• iTunes, Android Market and Windows Marketplace

allow customers to post app reviews of apps, which

can be a valuable source of information for making

future improvements

Maintaining Interest

• Acting on feedback makes it possible to retain potential

dormant app users by showing a willingness to take on

their suggestions. There is then also an opportunity to

educate them on new developments and reward loyalty

Case Studies

The following case studies provide a detailed overview of

how retailers have put some of the aforementioned key

mobile strategies into place and reaped the benefits of

being at the cutting edge of m-Commerce.

Each retailer has fulfilled certain requirements with their

mobile strategies to make them successful. eBay’s

innovative apps excel in the aspects of personalisation and

functionality. H&M’s app taps into the demands of its core

customer base while integrating a social media element to

maintain a customer-centric focus. Meanwhile Ocado’s

mobile app has simplified the purchase process whilst

offering benefits to today’s more environmentally

conscious consumer.

21

eBay’s trend-setting mobile apps

eBay was one of the first retailers to launch a mobile

platform across all parts of its operation. ‘eBay Marketplace’

was first to become mobile enabled in 2008.

In April 2010 eBay unveiled a revamped Marketplace fashion

site with the aim of making it more visually stimulating for

their target audience. Buoyed by the success of the original

Marketplace mobile app, eBay wasted no time in launching

a Marketplace fashion mobile app just three months later.

The eBay fashion application is arguably one of the most

advanced of its kind and is widely used. Shoppers can

browse, buy and even virtually ‘try on’ an assortment of

designer, vintage and branded merchandise. Features such

as ‘The Closet’ and ‘The Style Gallery’ have added

interaction and personalisation to the proposition.

The Closet has created a shopping medium which engages

consumers in a way that, hitherto, was very much the

province of the traditional store. And it does so in a way that

makes it even more personalised than a traditional store

experience and with more product options too.

‘The Style Gallery’ is eBay’s online runway and fashion

directory, showing the latest trends and styles with click

throughs to similar products at discounted prices. In this

sense, the application allows consumers to browse and

gather inspiration and ideas around what they’d like to buy.

‘The Vault’ is another initiative and offers a range of

limited-time sales and exclusive products.

eBay’s mobile apps have not only created additional

revenue streams, they have also tapped into a consumer

need for instant information, constant newness and

on-the-go stimulation.

22

Ocado leading innovation in grocery m-Commerce

As a specialist internet retailer in the grocery sector,

m-Commerce is at the core of Ocado’s service offering. As of

September 2011, over 16% of all their transactions were

through mobile devices. After re-launching its iPhone app in

April, the retailer has continued to tap the market in 2011 by

developing apps for the iPad and Android platform.

The apps are loaded with innovative features aimed at

making product selection and the path to purchase as

simple as possible. A barcode scanner allows shoppers to

scan products anywhere at any time and add them to their

basket. There’s a jotter function that provides a product

search for complete shopping lists and the Android app also

includes a voice search for products via Google Speech

Recognition. Not to be restricted by connectivity, the app

also has an offline sync function that allows customers to

update their shopping list with changes once they are back

online. The app also recognises that not all shops are the

same and offers adjustable shopping lists for different

occasions, such as birthdays or the weekly shop.

Being a solely online provider, Ocado is very aware and

astute about its green credentials. A new feature

incorporated into the app alerts customers to an Ocado

van already scheduled to make deliveries in their area

when they are choosing a delivery slot. This leads to a

significant reduction in fuel costs, emissions and Ocado’s

overall impact on the environment.

To raise awareness of its new app, Ocado ran a pop-up

‘Shopping Wall’ at One New Change in London from

August 26 to September 1. The exhibit consisted of

the retailer’s most popular products and respective

barcodes on a wall that customers could scan using their

mobile devices. Products scanned were then added to the

shopper’s basket for delivery. The event gained significant

press interest while actively promoting the usability and

capability of m-Commerce solutions.

23

H&M drives traffic to stores with mobile catalogue

In the summer of 2010 H&M debuted its first mobile

application with the intention of driving traffic to its store

locations. The app enabled users to view fashion videos and

photos of products which could be enlarged to show more

granular detail, along with price and product information.

The ability to locate the nearest H&M, view opening hours

and create wish lists that linked to social network sites,

helped turn the app into a compelling, interactive catalogue.

H&M made the decision to not make the application

transactional. However, through the hidden coupons

incorporated into the app, H&M has a quantifiable measure

of engagement through the number of coupons redeemed

in stores.

Transactional functionality can be added at a later stage

once the popularity of the app justifies the significant

additional investment in inventory systems that will

be needed.

More recently, H&M has focused its attention on mobile

advertising spend to drive footfall to its stores. A banner ad

showcasing in-store discounts has been run on the Pandora

mobile app. A click takes the consumer to a mobile landing

page where they can browse the advertised products and

download the H&M app.

The H&M app delivers all the functions necessary to meet its

consumers’ demands. The consumer-centric app has been

designed with a great understanding of its users and their

lifestyles, as reflected by the strong presence of social media.

24

This report has been produced by Verdict Consulting for Barclays Corporate. All content has been

researched, developed and produced by Verdict Consulting at the request of Barclays Corporate for the

purpose of this report. All charts, data and statistics featured in this report are the product of this research.

October 2011

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