October 23, 2011
Last week, about 100 of the country’s top re/e-tailers gathered in New York at Mobile Shopping Fall to get the latest and greatest scoop on who’s doing what in the mobile shopping arena.
The big takeaway from the conference is that, well, there is a ton going on, but there remains a lot of uncertainty about the direction and form that mobile will take at the physical point of sale.
At the moment, the name of the game is APPS. Just about everyone is focused on apps and the kinds of enhancements that make the online buying experience on smartphones and tablets lots better. Mobile offers platforms that serve offers to consumers before they step foot inside the storefront and help to influence what happens once they are inside.
The big eye-roll on the offers front, no big surprise, is redemption. At the moment, that process is filled with friction and headaches for the retailer, with fraud and tracking being sort of two sides of the same coin. Most worry less about the former (they seem less concerned, since they’d actually like the opportunity to make a sale and upsell). Tracking, on the other hand, runs the gamut of just making it easier for merchants and consumers to redeem offers, which everyone agrees right now is broken, to being able to mash up customer redemption data with other valuable data about the person (their buying history and even what they may have purchased the day they redeemed their offer). This sounds like it should be easy, but it is a real challenge.
There was an interesting discussion of mobile payments adoption/ignition in the panel in which 1-800-Flowers and Saks participated. A question was asked about NFC – my all-time favorite topic – and the takeaway was that it would not start at the big retailers but rather at the bottom tier of merchants since they don’t have the big technology queues to contend with. And that NFC would ignite, because it would become a part of the consumer’s daily shopping experience, since the smaller “Main Street” merchants are where people do most of their shopping today. Interesting perspective.
That served as a nice segue to my session, which was all about the value proposition for mobile commerce. My message was that, in my opinion, in this edition of payments chicken-and-egg, that it was merchants who were needed the most to get on board – but that they were, by and large, also the most skeptical, given the lack of clarity around a technology standard.
A few highlights from my talk include:
• Payments 101 is that it only works when enough consumers use enough of the same kind of payments method to persuade enough merchants to accept them – then consumers and merchants both perceive value in using and accepting that method. Today, that is a mag-stripe card of one sort or another – credit, debit, prepaid. Tomorrow, that will be mobile in some form or fashion.
• While everyone focuses on the impact and value of the consumer in igniting payments, my view is that the merchants have held and still hold the keys to igniting payments, and that won’t change when it comes to igniting mobile payments. If there’s no acceptance, there’s no payments.
• The challenge today is that for both consumers and merchants, the payments process is not all that broken. It’s easy, it’s fast and it’s consistent. You whip out your card, swipe it and it works. It’s also secure. Consumers have been trained to know that if anything happens to their card transactions, they are protected by their issuer – they know who to call and who will protect them.
• For merchants, the current experience for them is also easy, fast and perhaps most important, it’s consistent. That makes it possible for merchants large and small to have and support one consistent payments acceptance experience across multiple locations. It means that training new people, which is a constant in retail given all of the turnover, is not all that complicated. It also means that training consumers is a non-issue. Everyone knows how to remove card from wallet, swipe and go. And most people have a card of some kind – credit, debit, prepaid – and use it to buy stuff at the point of sale.
So, what has to change in order to add value and ignite mobile payments? I offered four things …
• First, merchants need to believe that mobile payments is the future. That one is not hard.
• Merchants need to believe that enough people will want to or will use mobile to pay at the physical point of sale. That was hard until Starbucks proved that 4million or so people were willing to download an app and use it to pay at one merchant. It showed us ubiquity is not a requirement for mobile payments acceptance. (I have my own data point for what percentage of the population has to adopt mobile payments for it to tip, send me what you think and I’ll share my thoughts)
• Merchants need to understand what direction mobile payments will take. This is confusing. There are competing visions for mobile payments, because there are many ways in which it is being introduced today – bar code, mag-stripe/card-based like Square, NFC Ã la Google Wallet and ISIS or cloud-based like we are seeing PayPal innovate around.
• Merchants have to have some sense of when all of this will actually take place so they can plan for it. (Again, I shared my thoughts with the group, if you share yours in the Comments section below, I will respond to your remarks.)
I riffed on these topics for a little bit and will share my talk on the site. There were a lot of good questions and some consensus that (a) 2012 won’t be the year that mobile payments will ignite – not even close and (b) this time next year, we will have a few more tangible pilots to examine, and so will know a whole lot more than we do today.
To underscore that point, I asked the room to vote, with a show of hands, how many of them were planning to deploy mobile payments initiatives at the physical point of sale in the first half of 2012. I don’t think any hands went up. A few sprinkled here and there when I asked about the second half (and no, I could not read their name badges from the podium). So, it is clearly very early days.
Our thanks to the Mobile Shopping Fall organizers for putting together such a great conference and such a professional program. Certainly worth putting their spring conference on your schedule.
We’re always on the lookout for opportunities to partner with innovators and disruptors.
Learn More