CENTER STAGE: Physical Context Drives Mobile Commerce; NearbyNow Paves Way For Shoppers to Find & Buy
In brief: Moving on with another in the “best of” selection of executive interviews from the Netsize Guide 2010 and setting the stage for a new white paper revealing the results of the Netsize Mobile Trends Survey looking at mobile commerce acceptance and attitudes. We speak with Scott Dunlap, Founder & CEO of NearbyNow, a U.S. – based provider of personal shopping services.
The sale of digital goods continues to be a robust business. In fact, the Mobile Entertainment Forum (MEF) – the global trade body for the mobile media and entertainment industry – told MSG in this podcast that overall confidence in the mobile entertainment market continues to climb. Little wonder that the organization projects that the value of the mobile media market will rise from $32 billion for 2009 to $36 billion for 2010. (listen to the podcast here.)
However, the much more exciting opportunity could be mobile commerce that bridges the digital and physical worlds, allowing consumers to pay for real goods and services using their mobile phones and mobile retail apps.
MOBILE COMMERCE SURVEY RESULTS
Indeed, consumers see real value in mobile commerce and the convenience of being able to find and buy goods (digital and physical) at the moment of inspiration. It’s a profound shift that we’ll explore in more depth when Netsize releases the next in its series of thought leadership white papers analyzing the results of its milestone Mobile Trends Survey 2010.
By way of background, Netsize conducted a survey of over 1,000 professionals and practitioners across 67 countries to gain insights into key trends that top the industry agenda, including the advance of mobile applications stores, progress towards global mobile commerce and the pivotal importance of mobile as a means to bridge our virtual and physical worlds. (Download the apps report here.)
CONTEXT MATTERS A LOT (!)
But it’s not just about buying stuff with our mobile phones; it’s about enhancing our complete retail experience and transforming our mobile phones into what some call the fourth retail channel.
It’s not so far-fetched. Already, consumers – particularly smartphone owners – are researching and purchasing goods and services on the move. In fact, Compete, a Kantar Media company that produces a quarterly Smartphone Intelligence survey, forecasts a mobile shopping “explosion” this year as more people use their phones to comparison shop and ultimately buy goods on the go.
At the other end of the spectrum, a January 2010 survey of holiday shoppers from Motorola found that more than half (51 percent) of consumers across 11 countries used their mobile phones for in-store activities such as comparison shopping and for obtaining peer feedback, product information, and coupons.
All this bodes well for companies that enable retailers to offer opportunities for new levels of consumer connection.
INTERVIEW WITH NEARBYNOW CEO SCOTT DUNLAP
Success in retail is all about helping consumers find and buy what they want most. NearbyNow, a U.S. – based provider of personal shopping services, has taken this experience a step further, providing mobile shopping applications for magazines, brands, and retailers so that their consumers can stay updated on the latest products, buy online, or even locate and put products on hold at a nearby store. In 2009 the company released a succession of iPhone applications for lifestyle publications such as GQ, Seventeen, Brides, Lucky, Runner’s World and others, all based on their iPhone Platform. NearbyNow currently partners with more than 65,000 stores across the U.S. and continues to build mobile applications for leading lifestyle brands, retailers, and publications. Scott talks about the future of shopping and the role of social interaction.
Q: NearbyNow started out as a way for consumers to search all products and sales available at local shopping centers using the Internet or mobile phones. Now you build branded iPhone application to drive local purchasing. Please explain this shift.
A: Our original service allowed consumers to walk into a shopping mall and find any product they wanted in the size and color they wanted – even put it on hold –before they got to the mall to buy it. Over time we noticed that the same items were in demand over and over again.
We dug into the numbers and consumer behavior, and we found out that it’s really six or seven magazines and a couple of TV shows that most influence consumer purchasing. The real fashion-conscious demographic – teens and women aged 25-to 35 — were using their mobile devices to look for products that they saw in the magazines. Most of them were looking nearby, so they could try them on or try them out.
To connect and measure this, we built iPhone applications for the magazines. Consumers can see all the products that are in the magazine in one place and type in their size to find the closest store that has it. We connect the user from inspiration to trial.
Q: You have begun experimenting with new combinations of services around mobile shopping. What can you share?
A: We have over 1 million mobile shoppers now, and it has become clear that “mobile shopping” has unique patterns of user behavior in discovery, purchasing, and social networking. An example is the Brides Dressing Room, the first wedding and bridesmaid dress locator application on a mobile device. We found out that when looking at bridal gowns, most brides want feedback from a close set of friends, not everyone on Facebook. So we built a feature that allows a bride to send a picture of the dream dress to friends and family to get instant feedback via e-mail. It’s a mini-social network capability designed specifically for interaction around a single purchase, albeit an important one.
Q: We already have social networks such as Facebook, where we can post the purchases we are considering? Why create mini-networks?
A: The Bride example made sense because there was more social interaction prior to purchase than we had seen with any other item. We actually found that no one wanted to post the wedding gown they might buy on Facebook. It’s just not a broad social network play. It’s about communicating with a small group of folks involved in the wedding. There is a specific purpose to this network and we need a different kind of social network, not the tools that Facebook and MySpace provide.
Somewhere between the magazine and the in-store purchase is where all the action is happening. Capturing this on a mobile device says so much about purchasing behavior – who influences it, what products are considered, where they are considered, and more. It’s just amazing!
Q: Another thing that is amazing is the conversions on the mobile advertising. What are you seeing?
A: The conversion numbers are great, but the biggest impact is really about having information about purchasing that can be fed back to advertisers and retailers. Magazines are taking the data – which shows the number of consumers they reach and how much purchasing they incentivized – and handing that back to their advertisers, who can’t get enough of it. Having a mobile app allows magazines to answer a lot of questions about conversion that they couldn’t quantify before. In many cases, they can even show demand that was generated after the product had sold out, and how much business that represents. It’s very powerful.
The overall conversion to purchase per use is about 6 percent. What’s really fascinating is how that breaks down. Of the 6 percent, 5.5 percent are converting by finding a nearby store and purchasing there. The remaining one-half of one percent is purchasing the item directly from a mobile Web site.
Q: Do you expect that to change going forward?
A: As the user base grows, we expect this to come down some. But I don’t think the ratio of in-store to online purchasing will change that much. Offering both online and in-store alternatives really blurs the barriers between the physical and digital Internet world. It’s important to note that mobile shoppers will always have a foot in both worlds, constantly evaluating between a product available now down the street, or cheaper online if you are willing to wait and pay for shipping. You can think of it as a “convenience curve” that trades off price for convenience and immediacy. The ultimate price is probably found online; the ultimate convenience is paying a premium to have the item brought to you wherever it is currently geo-located. In all of these scenarios the role of mobile is to be a connector device. It gives you that world of physical and digital options at all times.
Q: Mobile commerce, mobile advertising, mobile social networking. Where do you see the growth opportunity?
A: There is a big opportunity for mobile to increase commerce for both online and physical stores, but the biggest opportunity will be innovation from mobile advertising. In the short term, companies like NearbyNow that host many apps on the same platform can give advertisers an opportunity to reach a wide range of people who are actively shopping. This solves the “reach” problem that holds back a lot of advertisers. NearbyNow will evolve into an ad network, but using ad “units” far more powerful than banner ads. We’re talking engaging experiences, like how-to videos to get a celebrity look, a catalog of all the products in the video, and using the phone to make an appointment with a nearby stylist to help you purchase and try it on. These are things we are doing today.
From here we will see a lot of innovation on mobile ads. How about a coupon that is only good for one hour to stop you from buying online? How about a similar ad targeted to people shopping at Nordstrom to get them to come to Macy’s? Once the capabilities can reach millions, the whole game is going to change. That’s the power of mobile shopping.
THE NETSIZE GUIDE
The Netsize Guide – which features exclusive interviews with 28 industry senior executives at leading companies and organizations including Havas, M&S, MMA, Nokia NAVTEQ, PayPal and Sony Music Entertainment — provides unique perspectives and reveals how players across the mobile ecosystem are preparing to meet the challenges and take advantage of the opportunities ahead.
The Netsize Guide 2010 also includes the results of Mobile Trends Survey 2010, an online survey asking +1,000 mobile professionals and practitioners across 67 countries their views on these key themes and their insights into trends that top the industry agenda, including the advance of mobile applications stores, progress towards global mobile commerce and the increasing importance of mobile across a range of business verticals.
Finally, the Netsize Guide 2010 presents detailed data on the wireless telecoms sector in 41 countries, including revenues, market shares and value-added service offerings for messaging and billing of 194 mobile network operators worldwide.
Disclaimer: Netsize is an MSG supporter. Peggy Anne Salz is author of the Netsize Guide 2010.
July 19th, 2010 at 6:52 pm
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