Taking Retail Mobile
DM: So Eric, explain the relationship between the two companies please.
EA: Sure. Venda is the world’s largest on-demand eCommerce provider, and a specialist in multichannel commerce. As of December 2010, approximately 100 retailers of all sizes were using our platform to handle millions of transactions each month. For the mobile part of our offering, we use the Digby Mobile Commerce Software Platform. We’ve been working with Digby for two-years. We were looking for a partner with the same mindset and DNA as Venda, a multichannel business that could provide a quick, cost-effective rollout for retailers and when we looked into it, we settled on Digby as the best company for the job.
DM: So how many retailers are you working with on mobile?
EA: We are currently building mobile propositions for around 15 – 20 retailers, and there are probably another 20 seriously considering it. All retailers are making the same assessment. The retail market is flat, so households are not spending more money, and many are actually spending less. They are also spending money in a more fragmented way. They are still shopping, but they buy through catalogues and call centres and the internet. And mobile is a very important part of this multichannel experience. Not just mCommerce in its own right, but as a channel that also helps the catalogue, the call centre, the online store and the physical store.
DM: Which is where you come in David. What have been the key factors behind retailers getting mobile?
DS: We are a US-based company, and this really started accelerating in the US when iPhone adoption hit 15 per cent in the summer of 2009. When that figure is reached, it’s an accelerator for mass-market take-up of any technology.
Retailers could see so much traffic coming to their website from smartphones, and these people were getting a horrible user experience, and as smartphone adoption continued to accelerate, the retailers started to throw up their hands and saying: ‘We’re losing customers because the experience they are getting trying to access our website on their phone is so terrible.’ So then we started to see this wave of mobile website adoption in the US, and it has carried over to Europe.
Anyone with a website can look at their traffic logs and see a significant acceleration of traffic from smartphones, so they have to do something. It’s not acceptable to take what they have done on the PC web on a 10 or 15-inch screen, and jam it all onto a small screen.
The next issue is around multichannel. All we do is mobile and retail. We live at that intersection. You have the catalogue/call centre, the store, the web, and mobile, and mobile is the glue that sits on top of the other three channels, and if it’s done right, it can leverage all the investment the retailer has made in those other channels.
In the US, we say that if someone in a company is in charge of multichannel, he will ultimately proxy for mobile, because it will be even more significant to the store than the web.
There were $4 trillion in retail sales last year, and only 6 per cent of those were online. Online is growing faster than offline, and we know all about the online, but nothing about the other 94 per cent. This is why mobile represents such an opportunity for retailers, to leverage the power of mobile while the customer is in the store.
DM: That’s interesting, because I have this theory that, apart from a lick of paint and the occasional EPOS upgrade, the interior of most retail outlets has not really changed much in the last 20 years. But that over the next few years, it will change massively as retailers start to cater for smartphone usage in their stores. How do you see it?
DS: I totally agree with you. We see three horizons for mobile phone usage. Number one is where we are extending access to the website. That is where we are now.
The second is adding the ability to engage with customers out and about or in a store, and through branded experiences. So allowing the customer to check into a store for example, but most retailers do not want to be disintermediated from that experience. So they have to help the customer move from buying online to buying online while in store. The reward is that tracking those interactions will tell them far more about how the consumer buys than just footfall or EPOS data on its own.
The third is where we start expanding on the in-store capability, where the phone is used in store to pay for things, where the engagement deepens so the mobile becomes a combined payment/loyalty card and we agree, it will transform in-store investment over the next three to five years.
EA: Everyone knows they need to go mobile, but when you ask them how prepared they are for it, most will admit that they have not really thought about it. There are concerns over the cost and the complexity, how to do it. Even in the UK, a lot of large retailers have not made the move yet.
We are showing them that the traffic to their website coming from mobile devices is growing, and at the same time, the conversion rates for those users on the main site is poor, significantly lower than online, because the mobile experience is rubbish, so they can see the need for this instantly. The technology we make available to customers helps them to address the need for an mCommerce strategy in a cost-effective way, with rapid rollout.
DM: So what is the attitude towards mobile like now, among the retail community?
EA: There is some confusion around whether they need a mobile site or an app, but most accept that they need something.
DS: We have been at this for almost five years, and when we started the company, people laughed and told us there was no way people would use their phone to buy physical goods. So up until the end of 2009, typically, people would say that they think they should do this, but they were not sure what to expect from it, so they would ask us to do it for nothing, and take a commission on sales by way of payment. That perspective has changed dramatically, because a lot more traffic is coming to the site, so it’s easy to justify the expense of a mobile site and apps when you see the traffic and the conversion rates, and now no-one wants to give commission on sales, because they know it’s going to be significant.
DS: In the US it is table stakes – the minimum requirement is that you must have a mobile website. We deal with several companies who have significant investment in bricks and mortar stores. Toys “R” Us is an $800m online business, but they do $9bn in-store, so they are interested in figuring out what are the use cases they can develop, so that their most loyal customers can be engaged when they visit the stores. So that might involve barcode scanning, setting up geo-fences and determining when these are breached – all of these things have never been done with retailers, so there’s going to be a degree of experimentation for each use case.
DM: And what about looking beyond retailers. Do you see a day when every FMCG/CPG brand like Coca-Cola will have a permanent mobile web presence in the way they have a permanent presence on the full web?
DS: We will see more brands creating a permanent mobile web presence, but as we see it, mobile is the nearly-perfect vehicle for direct interaction with consumers, so the brands that touch the consumer directly the most are the ones that are likely to want to engage with them via mobile.
But if you think of the grocery store as a marketplace where products from thousands of suppliers are fulfilled directly to consumers, then you can imagine that at some point, we will see those guys exposing the marketplace to their CPG suppliers, and they will pay for this exposure on the device. So someone walks into the store and checks their phone to see what the retailer has for them, what is that worth to Colgate and P&G to be able to hit them with offers when they know they are in the retailer’s store?