The Mobile Commerce Explosion

The Mobile Commerce Explosion It’s happening right now all around you. Although the “outrageous transformation” has yet to occur, more and more people every day are turning to their smartphones for shopping convenience and comparison. For a Christmas gift for his girlfriend in 2010, Tri Tang went shopping for a Garmin global positioning system (GPS). He found exactly what he wanted at a Best Buy store for $184. 85. But instead of dropping it into his cart and proceeding to the cashier, Tri pulled out his smartphone and typed in the model number.

He found the exact same Garmin GPS on Amazon’s Web site for $106. 75, with no shipping and no tax. Tri is part of a growing number of consumers using their smartphones to find the best deals, even when in a store with the product in hand. According to Mike Duke, CEO of Walmart, smartphone-enhanced shopping has ushered in a whole “new era of price transparency. ” The “old” traditional model of using advertising to get a consumer in the store no longer works.

In that old model, if a retailer got a consumer in the store, it could reasonably assume that the consumer would make the purchase there.

Not so anymore. Once consumers find what they want in a store, they’re turning to their smartphones to compare prices and read product reviews. According to a Nielsen survey, 38 percent of all U. S. consumers now own a smartphone. In a 90-day period from March through May of 2011, 55 percent of consumers who bought a “wireless” phone purchased a smartphone with all the apps (most of them free) necessary to scan bar codes and compare prices. According to another survey conducted by IDC Retail Insights, 45 percent of smartphone owners had used them to compare prices while in a retail store.

As IDC’s Greg Girard explains it, “The retailer’s advantage has eroded. The four walls of the store have become porous. ” To fully comprehend how quickly this transformation is generating speed, consider the findings of IBM. According to Coremetrics, a division of IBM, on Black Friday (the day after Thanksgiving) in 2009, mobile devices accounted for only 0. 1 percent of all visits to retailers’ Web sites. In 2010’s Black Friday, that number increased to 5. 6 percent, a 50-fold increase. And it’s not just limited to smartphone-enabled price comparisons.

Many smartphone owners are turning to their smartphones for service. According to an Accenture study in 2010, 73 percent of smartphone owners preferred to use their smartphones for basic assistance over talking to a retail clerk. So, the very notion of “personalized” service is on shaky ground. This used to be a stronghold for brick-and-mortar retailers, claiming that the shopping experience was more meaningful because shoppers were engaged by sales people instead of technology. Now it seems that smartphone-wielding savvy shoppers prefer technology over the personal touch.

Matt Binder was hoping to save some money, just like Tri Tang at the beginning of this case study. But Matt was more than willing to save just a couple of dollars, whereas Tri saved almost $80. Armed with his smartphone and Amazon’s Price Check App, Matt found a 2Gb USB drive at a Best Buy store for $11. 99. When he snapped a photo of it, his Price Check App alerted him that Amazon had the same USB drive for $9. 99. Matt opted for the cheaper price. Now, $2 may not seem like a lot but Matt didn’t have to go anywhere else to make his cheaper purchase.

He did it right there on his phone in the Best Buy store. As Matt explained it, “I wouldn’t drive somewhere else to save $2. ” And he didn’t have to, thanks to the mobile commerce explosion. Questions 1. How do you think large brick-and-mortar retailers like Best Buy and Walmart can compete in a world quickly moving to smartphone-enhanced shopping? Do you think smartphone-enhanced shopping will outrageously transform brick-and-mortar retail, perhaps putting many retail chains out of business? Why or why not? 2.

Many retailers are creating proprietary in-store apps for shoppers. Some of these apps help shoppers find the location of products in the store, while others recommend complementary products based on product searches. For an in-store app, say, for a Best Buy store, identify and describe three additional features that you believe shoppers would benefit from and encourage them to make purchases in the store. 3. Esurance (www. esurance. com) has a slogan that states, “People when you want them, technology when you don’t.

” This speaks very much to the increasing role of technology in customer service. What do you think about this? Can (and should) technology take over the primary customer-facing role for an organization, especially a retail store? Will stores like Nordstrom lose their competitive advantage based on superior customer service? 4. What about people who can’t afford a smartphone? Will they be disadvantaged while shopping? When do you think smartphones will become affordable to all, say in the price range of $40 to $50?