Australia is perhaps one of the worldwide leaders in mobile shopping, known as m-commerce, with our love of smartphones seeing the population is readily embrace the newest shopping channel. This can have both positive and negative repercussions for retailers, depending on how businesses manage their own use of the m-commerce.

Those who fail to engage their loyal shoppers quick enough face the possibility of losing them to more nimble retailers who are reaping the benefits of customers keen to shop on the go.

According to statistics by PayPal, one of the most m-commerce savvy companies operating in Australia at the moment, the catalyst of the growth of m-commerce locally is our high penetration of smartphones, which sits at around 52 per cent of the population, in comparison to the US at 44 per cent. This places Australia in the top two to three nations for smartphone ownership in the world.

Adding to this has been the quick uptake of retailers with mobile optimised sites. Andrew Rechtman, director of SMB, retail services, and strategy at Paypal, reports to Inside Retail Magazine that around 80 per cent of PayPal’s largest retail customers have fully optimised mobile websites. Of course, it could be argued that PayPal’s retail customers are among the most progressive in the business when it comes to embracing technology, but even so, it’s still a fairly impressive figure. Balance this with the statistic that 28 per cent of PayPal transactions conducted in Australia are carried out on mobile devices – the largest of all countries PayPal is represented in.

“More and more of the page views on shopping sites are happening on mobile devices,” says Rechtman. “That growth was over 300 per cent last year and is showing no signs of abating. “That’s much faster than we’re seeing in traditional e-commerce by a factor of 10 or so,” he said.

“The core movement of consumers’ eyeballs from computers to mobile devices and the time of day when that is happening is expanding.”

Key periods for mobile shopping include commute times, but this is now spilling over to what Rechtman calls “couch commerce” – “people sitting on their couch at home at night, maybe watching TV with one eye and keeping an eye on the mobile device or tablet with the other”.

Justus Wilde, CEO of specialist e-commerce and digital consultancy, Ambique, says the m-commerce market, despite its relatively recent introduction, has already undergone significant change. “The strategy has shifted for retailers because the mobile market has changed so much since the introduction of tablets,” Wilde says.

“There’s so many more devices now, there’s a lot more to think about, and from a transactional point of view, devices are being used for different things as well.”

Mobile phone and tablets have different use cases, with tablets having a much higher propensity for purchase. While retailers are starting to capitalise on this, Wilde says that many retailers are not doing as much as they could.

Optimisation

It’s no longer enough to have a simple website for shoppers to view on a mobile or tablet device to perform effectively, a website must be ‘optimised’, according to experts.

That is, a separate platform must be created that can be viewed specifically on the smaller screens of smartphones (as well as tablet devices including iPads or iPad Mini) without having to pinch, click, or expand the image on screen. Wilde says conversion rates drop significantly if a retailer’s site has not been optimised, though he notes that not everyone shops on a phone, with a majority of consumers using smartphones primarily as a research mechanism. To add some weight to this, however, a quick look at the average traffic from mobile devices for Amblique’s 30 apparel clients in March 2012 was 19.6 per cent. In March 2013, this figure elevated significantly to 36.7 per cent. “Not everyone has done mobile optimisation, but it’s certainly on everyone’s agenda,” says Wilde.

“If you were doing your website today you would be crazy not to launch mobile and desktop together.” One of the simplest paths to optimisation is to implement ‘responsive design’. According to Wilde, it’s not easy to convert a mobile site because it needs to have different usability and sometimes different content. Apps can be tricky as they need to be customised for Apple, Android, Blackberry, and Windows devices individually, creating extra work and cost, although the benefits are the interaction available with a phone’s camera and GPS function.

But responsive design allows sites to be built which cater to different contexts, screen sizes, and functionality. The basic proposition behind responsive design is that a retailer is required to build just one website which is able to adapt the layout and information it displays depending on the screen size – perfect for accommodating smartphones, tablets, and desktop computers. Australian retailers to have implemented responsive design include Sportscraft and Saba.

“If you take responsive design to the enth degree you would have a different experience if you were on an iPhone if you hold it horizontally or vertically, and with tablets horizontal or vertical also gives different screen real estate and what you can do with that,” says Wilde.

“I think there’ll be a really big adoption of responsive design because it is almost a one size fits all approach where retailers can future-proof this incredibly fast changing mobile space and build a website that a consumer can use on a number of different devices.”

Mobile payments

Another precursor to success in m-commerce is optimised payment flow.

Removing friction is key to getting it right, says Rechtman. “Whereas people might be willing in a PC environment where they’re sitting down on a chair and have good conditions to go through a lot of hurdles to sign up and register interest and put in details before you order, you can’t do that on a mobile device,” he says.

“People won’t go through the process of signing up to become a member before they buy something. Removing all that friction is critical.” PayPal provides a mobile express checkout which passes on delivery details of a customer to the retailer, as well as a ‘log in with PayPal’ service where all a customer needs to add is their PayPal login.

“People just don’t have the patience and ability to enter credit card numbers and expiry dates, CVV number, and delivery address, it all just gets too painful on a mobile device.” Wilde agrees.

“PayPal have had a lot more success than normal payment methods because it makes the process easy.

“Those kind of considerations are really important – how do you reduce the input of information, because it’s fiddly on a mobile device,” says Wilde.

Omni-channel

Tying into m-commerce is omni-channel, and how mobile devices can be integrated with the instore experience. Mobile loyalty programs and payment methods have seen strong innovation in the last 18 months, but the space is yet to be fully developed, leaving a gaping opportunity for retailers and technology providers to cash in.

Initial applications enabling omni-channel interactions include the use of NFC (see story on page 14) for payments – a battle ground waiting to happen for micro-payment providers. Perhaps the most high profile of mobile payment evolutions is Google’s Wallet product, which has been followed swiftly by several other players in the market.

NFC loyalty applications that identify a member at the POS instead of presenting a physical card instore are also experiencing growth in uptake.

“Mobile devices can break down the barriers between the offline world and the online world,” says Rechtman.

“People are already using their mobile device initially for price comparison or product selection in a retail environment, but they are now starting to using their mobile device to make payments at a physical point of sale,” he said.

“Mobile can add a lot of value in ordering ahead and we’ve partnered with several retailers. We power the payments that sit at the back-end, but the real consumer value part of the proposition is that on my way in to work, I can place the order for my coffee and pick it up on the way through, rather than standing in line for 10 minutes to order and then have a coffee made for me.

“Those kinds of experiences are starting to take off in a big way.”

Augmentation is another important element Wilde predicts will bridge the gap between online, mobile, and physical stores.

“Augmentation doesn’t apply to all retailers, but if you are a jewellery retailer you can use a phone and put it over a hand and it will show an image of the hand with a ring over the top,” explains Wilde.

“You could also take a photo of yourself and augment clothing on you, or take a photo of your room and put a lounge of chair in it and see how it looks.

“There’s a lot of use cases for that in retail.”

This story originally appeared in Inside Retail Magazine. The August/September issue, featuring exclusive coverage of the 2013 Westfield World Retail Study Tour is available now. For more information, click here.