My first real experience with e-commerce was back in 1999, when I was part of the team that launched one of the first online retail luxury websites.Â Back then, people thought we were crazy. When we approached some of the leading luxury brands in the world, their typical initial reactions included:
- "People aren't going to buy online. They prefer the experience of shopping in a store."
- "It's not safe to give your credit card number online. You are going to get ripped off."
- "Maybe people will buy CDs or books online, but they are not going to buy anything expensive."
- "It is too expensive to build and maintain a quality e-commerce website."
Many of these retailers made the decision that the internet was not for them. They saw online shopping as a fad that would never take off. They also believed that being on the internet would damage or cheapen their brands.
We all know how this story ends.
Online sales went from $27.5 billion in 2000 to $143.4 billion in 2009. While retail sales have declined during the current economic downturn, e-commerce continues to enjoy double-digit growth.
Companies that hesitated to engage in e-commerce quickly found themselves at a heavy competitive disadvantage. Today, virtually every major brand is online and online sales account for a substantial percentage of all retail sales.
Deja Vu all Over Again
Flash forward to 2010 and I'm hearing all of the same arguments again. This time, though, the subject is mobile e-commerce.
What is mobile e-commerce?
Mobile e-commerce is e-commerce conducted on a mobile device like a smart phone, iPhone or iPad. This is done through an app (short for application) that device owners can download to their mobile device. Once the app is downloaded, users have the power to use the mobile device to make purchases from virtually anywhere.
While this sounds like a great innovation, many retailers remain skeptical and have thus far chosen not get into mobile e-commerce. The most common worries companies have about branching out into mobile e-commerce are:
- Scale: How difficult is it to build and manage multiple device-specific apps (applications)?
- Submission and support: How difficult is it to get Apple or other providers to approve the store's app and to modify that app?
- Cost: How expensive is it to build, integrate and maintain the e-commerce app?
They also fear that customers won't be comfortable using their mobile devices to make purchases and that the mobile storefront won't be as easy to use as the company's traditional website.
The Good News
The good news is that a number of companies are developing software platforms that will make the process of developing, launching and maintaining mobile e-commerce apps both relatively simple and remarkably cost efficient.
Recently, Magento had the public launch of their mobile e-commerce platform, Magento Mobile.
This platform, which has been drawing raves from beta testers, includes a number of e-commerce tools, including:
- Full integration with a store's catalogue
- Manage multiple devices
The "skinning" capabilities of the program allow businesses to fully replicate the look and feel of their current online store, so there are no real issues with brand integrity. More importantly, the process of tasking your business mobile can be done in a relatively short time frame. For the simplest projects, Magento Mobile can be implemented in less than a week.
Once implemented, the app is submitted to iTunes for approvals.
Currently, the Magento Mobile platform works only with iPhone, but they promise full integration with iPad, Smart Phones and other mobile devices within a year.
Mobile will be a Big Part of the Future of E-Commerce
Where iPhones, Smart Phones and iPads were once considered to be a luxury or only used by tech geeks, they are gaining in popularity at almost an alarming rate. In the United States alone, there are over 100 million smart phones and iPhones in use.
The latest research shows that this is just the beginning:
- The GartnerGroup estimates that by the end of 2012 there will be 150 million people using mobile devices to purchase goods and service worldwide.
- An ABI Research Study predicts that shoppers will order $2.2 billion in physical goods via mobile in 2010.
- The same study predicts that $119 billion in goods and services will be purchased with a mobile phone in 2015.
Another key advantage of mobile e-commerce is that it targets an audience that is comfortable with online shopping and has the financial resources to make major purchases. The Yankee Group research team found that iPhone users:
- Average 32 years of age with $100,000 of household income
- Spend more time on the mobile Internet. The average mobile phone user spends 19 minutes a day browsing the mobile Internet, while the average iPhone users top 37 minutes per day browsing the Internet.
- Average iPhone customers downloaded nearly 13 apps during the past 90 days
While mobile e-commerce is still in its relative infancy, companies that have already jumped on the bandwagon are enjoying the financial benefits. Here are just a few examples:
- SEARS: Through their mobile App Sears2Go, Sears sold two $300,000 John Deere tractors
- Gucci: In just 10 months, 600,000 people have downloaded the Gucci Mobile App.
- Priceline: Created a mobile App and found that many customers liked using their phones to make hotel and flight reservations literally at the very last minute.
- Other early adapters include Kenneth Cole (which found that iPad users spent an average of 20% on their mobile purchases), The North Face and the Miami Dolphins.
Until recently, the complexity and expense of "going mobile" was beyond the reach of most small and entrepreneurial companies. Thanks to advances in technology, those barriers no longer exist.
What does this mean for entrepreneurial retailers?
Opportunities to be the first mover (or among the first movers) in the digital e-commerce space don't come along every day, but it has come along today.
Jon Gelberg is the Chief Content Officer at Blue Fountain Media, where he oversees a wide range of content initiatives including Blue Fountain Media's "Business Learning Center." Read more about Jon here.