Introduction
Do you know anyone who does not own a mobile device? Over 90 percent of consumers in the United States own a mobile phone and 42 percent own a tablet computer (Pew Research Center 2014). Consumers use mobile devices not only for communicating but with businesses as well. Searching for product information, inquiring about services, comparing prices, and purchasing comprise just some of the shopping functions done on mobile devices. How does digital change how firms do business? What are the differences between desktop computer shoppers and mobile device shoppers? Moreover, are firms prepared to do business in this changing environment? As tablet owners relax in the evenings, they are powering up those tablets, and using tablet time for shopping. Does this behavior differ from those sitting at their desktop computers and browse online? Understanding the differences between those shopping in electronic commerce and those purchasing in mobile commerce allows firms to gain a larger foothold in the digital commerce market.
Shopping on a mobile device has a year-over-year growth rate of 24 percent, and represents 10 percent of total digital commerce spending (comScore 2014). The expected rate of mobile commerce growth for the next few years is around 10 percent per year. Year-over-year e-commerce growth is slowing, while m-commerce growth may soon overtake e-commerce (Madrigal 2014).
Mobile devices connect consumer to all types of products and services. In fact, more than 50 percent of Walmart website visits are on mobile devices (Madrigal 2014). Purchases range from small downloads to large luxury goods. Selling services including insurance, bank-related, even stock trading services occurs on mobile devices. Thus, the revenue generated by mobile devices is growing. The average order value, or the revenue generated per order, is growing for both e-commerce and m-commerce.
Second to Black Friday (sometimes overtaking), Cyber Monday, the Monday after Thanksgiving, is the largest online shopping day of the year. More consumers shop online on this day than any other day of the year. Many of those shoppers are doing so on their mobile devices. In 2014, 22 percent of Cyber Monday sales were from mobile traffic (IBM 2014). The overall average order value for Cyber Monday was $124. For tablet users the average order value was $121.49 and $99.61 for mobile phone users (IBM 2014). Retailers are seeing value in mobile commerce sales. Yet, most businesses are unaware of how to harness the power of mobile commerce for revenue and consumer relationship building.
The consumer’s journey along the path to purchase has changed. How consumers move from need to purchase is much more complex. Not only have behaviors changed, noticed as consumers went from offline to online shopping, but also the resources used along the path. Search patterns, devices, recommenders, time, and location changed within the last 10 years. As mobile web traffic increases, taking advantage of these changes eludes many businesses. Retailers are unsure of how to take advantage of mobile in the consumer’s path to purchase. Businesses are getting lost, taking the wrong road, and need a roadmap. As businesses waffle, consumers are moving ahead.
Has the path to purchase changed electronic commerce shopping? Yes and no. Is online shopping going away? No way! Firms need to understand how to mesh online and mobile for the good of both the business and the customer. Consumers have not moved away from online shopping. Consumers have included mobile shopping. Businesses must learn to incorporate both.
How mobile is affecting online shopping is the question that businesses want to answer. Convoluted, the path to purchase contains many twists and turns. Shopping may start on a mobile device, online, or in the store and end on mobile, online, or in the store. Firms are still stumbling to synchronize clicks and bricks. However, now mobile is in the mix. Consumers are showing that mobile is shifting how they shop—from one retailer to the next, from one device to the next in one shopping trip, many times in just a few minutes in one location.
Mobile has the ability to transform business. It is bringing more customers, more interactivity, more engagement, and hopefully more revenues. Mobile did not happen with social. Likes did not translate into dollars. However, mobile commerce is not social commerce. Mobile commerce is not electronic commerce. Mobile commerce, however, does give firms the chance to extend other commerce opportunities. Mobile gives businesses the benefits of time and location. No longer do firms have to wait to interact with customers, nor do customers wait to interact with businesses. Mobile allows for interactions that are more individual. Personalization has truly become real.
Now, as with e-commerce, firms want to understand the value of going mobile and realize its potential as a strategic competitive advantage. Mobile commerce (m-commerce) refers to the ability to offer value through virtual transactions that allow for location-specificity and time-sensitivity, as well as the ability to build personalized relationships with the customer. It is not a by-product of e-commerce. There are certainly areas in which m-commerce can give firms an edge over their competition. Its ubiquity in location and time allows for the marketing of products and services to individuals anytime and anywhere. Translation of competencies learned through e-commerce, as well as the relational resources, to an m-commerce platform, can aid firms in gaining a faster and stronger foothold in the m-commerce arena. However, these resources must hold value not only for the firm, but also for the customer as well (Clulow, Barry, and Gerstman 2007). As consumer value is an essential element of competitive advantage (Fahy and Smithee 1999), firms seeking to use m-commerce as a marketing tool must keep in mind the value to the consumer and not the value of the technology, as was the case with many of the dot.com ventures. Many businesses are reluctant to invest in mobile commerce. There are costs involved, yet the benefits reaped by firms can offset the costs. Businesses must be willing to invest in the technology and marketing efforts needed to develop a robust mobile commerce platform that will thrive.
The proliferation of mobile devices has shown that mobile communications is a worldwide cultural phenomenon. Development of mobile commerce came about by users of mobile phones, tablet computers and other handheld devices. From school age children to corporate board members, most consumers have some sort of mobile communication device. Mobile devices are useful for personal communication through audio, video, and data outputs, and pertinent for organizations marketing through entertainment, promotion, customer service, and commerce transactions.
Several advantages exist for consumers, as well as marketers, in using mobile devices for shopping purposes. Marketers can target based on location to those customers within a geographic area. Identification of nearby patrons stimulates location-based promotions. Since most mobile devices have a single owner, personalization, along with location flexibility, allows for anywhere, anytime, transactions. However, there are also a number of disadvantages of m-commerce. Usability issues are of concern, including the smaller screen. In addition, most mobile devices are not as fast as desktop computers, nor do they have the battery life capacity for extended periods. With disadvantages aside, mobile commerce is a viable marketing channel.
Firms must question the value of several online strategies—electronic commerce, social commerce, and mobile commerce. Because of the time and costs of each, firms need to evaluate the value of each of these approaches. One way of assessment is determining the advantages these online strategies give to firms in the marketplace. Firms are more likely to develop a mobile commerce strategy because of the advantage it would give over the competition. Firms that are eager to choose a mobile commerce strategy will find mobile commerce aids in the development relationship with customers through interactivity.
The purpose of this book is to answer questions concerning the benefits of mobile commerce, and its commonalities and contrasts with electronic commerce, for a digital commerce model. We begin with an overview of what mobile commerce really is—a definition as well as an understanding of the devices used for mobile commerce. Looking at the value of mobile commerce to firms, we present practical applications of mobile commerce. How to develop a mobile strategy is key. We discuss how to develop and incorporate mobile commerce with other business strategies for effective mobile marketing.
Electronic commerce is still viable and we examine its validity along with mobile commerce. Mobile commerce is not electronic commerce, and we discuss the differences, as well as how one can enhance the other. Consumers use both electronic commerce and mobile commerce, as well as offline shopping, on the path to purchase, and using all in combination effectively can enrich the shopping experience. Lastly, we discuss total omnichannel marketing—using all channels effectively. We integrate the opportunities and challenges to bring an idea of the future of marketing, with an emphasis on both mobile and electronic commerce.
As early as 2002, Zhang and Yuan (2002) identified three dimensions of differences between mobile commerce and electronic commerce—technology, business models, and services rendered. We expand on these dimensions to discuss the devices used (technology), strategy and business model differences, and differences in retail services in an omnichannel environment.
Bringing practical information and ideas to both businesses, students of business, as well as those who are truly interested in mobile is the value of this book. It should be of benefit to those wanting to understand one of the routes in the path to purchase.