Mobile Commerce: No Time to Stand Still

Mobile commerce is a driving force behind the dramatic and accelerating pace of change in the retail industry. More than ever before, consumers are relying on mobile devices to interact with brands and retailers. This has been the trend for the past several years, and so far 2013 has been no different. Four notable trends are leading the way this year:

1. The emergence of the tablet as the more influential shopping device. With the mobile device install base expected this year to eclipse the traditional desktop install base, it's clear mobile devices are playing an increasingly important role in influencing online shopping behavior. Tablets are quickly emerging as an even more influential shopping device that smartphones.

In comparison to smartphones, tablets generate a higher percentage of mobile traffic to e-commerce sites, have a higher conversion rate and a higher average item order value, and account for larger percentage of e-commerce sales in the U.S. The influence of the tablet will make it more important for retailers to optimize usability for the device. The smartphone will remain a critical component of retailers' omnichannel strategies, and smartphone experiences will need to continue to evolve, but retailers who adopt a "tablet first" approach in 2013 and beyond have a competitive edge.

2. The evolution of couch commerce vs. in-store shopping experiences. Today, shopping on mobile devices has two primary use cases: on the couch and in-store. "On the couch" shopping primarily refers to experiences on a device the consumer owns. Data from insight and advisory firm RetailNet Group shows that the top five couch shopping capabilities offered by retailers include the following:

• mobile-optimized websites that aid in image-based product discovery (for example, those provided by Shoe Carnival and Mountain Hardwear);
• digital shopping malls (e.g., Google Catalogs and flit.com);
• digital catalogs;
• gift registries; and
• content-based, educational destinations such as the GardenMinder app offered by Gardener's Supply.

In-store shopping refers to capabilities created on devices a retailer owns and provides to the consumer or store associate in one of their brick-and-mortar locations. The top in-store capabilities, according to RetailNet Group, are:

• endless aisle;
• digital signs;
• guided selling;
• clienteling; and
• mobile point of sale.

Moving into the second half of 2013, it will become increasingly important for retailers to determine which couch shopping and in-store experiences make sense for their customers. For instance, pure-play online retailers should obviously focus exclusively on couch shopping experiences. Retailers with brick-and-mortar stores need to be thinking about their omnichannel strategy — e.g., how to connect couch shopping and in-store experiences seamlessly across touchpoints.

3. The arrival of smarter mobile shopping experiences. Retailers entered 2013 knowing that the adoption of desktop devices will be eclipsed by the adoption of mobile devices. As a result, you're seeing that the traditional "desktop first" design, with its long-form content and larger screen size navigation, is beginning to be replaced by "mobile first" design, where the mobile consumer is put front and center. This approach greatly simplifies user experiences for shoppers and development strategies for retailers.

Moving into the second half of 2013, I expect that retailers will continue to focus on differentiating their mobile experiences with richer, more interactive user interfaces that are channel and device specific. For example, "in-store mode" for mobile websites will emerge that detect when a shopper is in a retailer's store via geo-fencing and/or the device's GPS, enabling the brand to provide an experience that's specific to its physical environment. Wal-Mart's in-store mode exemplifies what we'll see in the second half of 2013 and into 2014.

4. The emergence of the elusive digital wallet. The idea of a digital wallet has been around for a long time, but it's never been fulfilled due to the complexity of the challenges in the ecosystem — namely financial institutions, device manufacturers, credit card companies, technology vendors, retailers and others not being able to agree upon standards. With Apple's release of Passbook in iOS 6, we'll start to see the first steps towards overcoming these challenges in 2013, namely because of Apple's influence in the industry.

Today, iOS comprises a large percentage of the consumer mobile market and, perhaps most importantly, Passbook solves a real consumer problem. By aggregating loyalty program information, from coupons to boarding passes, in one central location on their mobile device, consumers no longer need to manage separate, retailer-specific silos of information through email, mobile apps and other digital interactions.

In time, Passbook will connect payment processing to retailer purchases online and in-store (Apple intentionally steered clear of payments in the first release), taking the next step towards fulfilling the dream of the elusive digital wallet. Other vendors such as Google and PayPal will follow suit with similar solutions, further pushing the digital wallet to reality.

While obstacles such as card present transaction fees for in-store purchases as well as what the main technology will be for processing payments (near-field communication, electronic barcode scanning or another standard) still need to be dealt with, consumer adoption coupled with increased retailer development of integrated solutions with Passbook will accelerate the emergence of the digital wallet in 2013. Stayed tuned to see what entity wins the land grab for this extremely valuable position in the retail technology landscape.

As we enter the second half of 2013, many trends will shape mobile commerce, but few will have as much influence as these four.

Gary Lombardo is the solutions marketing lead at Demandware, a provider of enterprise cloud commerce solutions. Gary can be reached at glombardo@demandware.com.