What Goes Mobile?
By Leslie Belcher, President, Jesta I.S. Inc.
Ten years after national commercial platforms for mobile commerce were launched in the Philippines and Japan; they are slowly beginning to emerge in the North American market. Residents in rural parts of the Philippines and other developing nations routinely pay bills through their smart phones, while people in Japan and Europe canbuyproducts as well as train and airline tickets using their mobile phones.
The accelerated growth of mobile commerce, combined with the acuity of location-based applications makes it possible for direct response retailers to use the mobile channel for locally targeted mass marketing. One estimate, according to Mobile Marketer, puts worldwide mobile phone connections at 4 billion; while another by Neustar and SMS Mobile Marketing predicts that mobile revenue in the United States will reach $3.3 billion by 2013. SMS text messages dominate mobile advertising in markets like the U.S today, but coupon to phone and location based marketing are emerging.
A recent study by Coda Research agency has revealed that mobile ecommerce in the US shall grow at a compounded rate of 65% between 2009 and 2015. According to this study, mobile phones will constitute 8.5% of all ecommerce revenues in the US. Here is an estimate of the mobile commerce market in absolute terms:
The rapid growth of banking and bill paying activities with mobile phones aside, today’s retailer must be looking towards some rapid development of new marketing strategies. Three areas seem to be emerging as real opportunities: coupon to phone, product locators, and location based marketing. All three rely heavily on existing robust CRM data bases, integrated ERP and POS systems that readily interact with various web services. In the case of product locators, near real time inventory status and true distributed order management functionality are essential ERP functions since the consumer is being directed to sites with product on hand. POS systems are being asked to readily support scanning of bar coded coupons on smart phone displays.
Mobile coupons are the next evolution of the traditional printed coupon and they’re growing in popularity. The YankeeGroup released a consumer survey report in November 2009, which found that 73 percent of respondents were interested in receiving mobile coupons via SMS or MMS. The same report also predicted that mobile coupon redemptions would increase tenfold over 2010. A new report from Juniper Research, forecasts that consumer usage of mobile coupons will generate close to $6 billion globally in retail redemption value by 2014. This new approach to coupon marketing will place tremendous pressure on legacy POS systems to adapt to scanning smart phone displays at the register. Not only will the POS system need a scanner that can physically read the phone display (laser scanners will not), but the POS software will need to be able to handle what amounts to ‘timed pricing by customer’. With this kind of capability being implemented as the cash desk, it is essential to have robust, comprehensive, and real-time accessible CRM databases that can customize campaigns based on customer buying histories and customer loyalty programs.
Smart phone applications now offer various product search tools. Google offers freeware like Barcode Scanner and Googles that can locate a product based on its barcode or a photo image. They offer not only where to buy based on your location, but price comparisons and some retailers offer inventory checking. Product Search for mobile with local inventory lets a user see if, say, a Nikon Coolpix camera is in stock at a nearby Best Buy or Sears and then provides basic directions to get there. Consumers can then tap on an adjacent “in stock nearby” link and navigate to the seller’s page to see whether the camera is in stock. This is approach has exciting potential for the retailer who can provide accurate near real time inventories by product and by site. The obvious risk is alienating the customer who drove out of her way to the store only to find the item was not on hand. The pressure on the ERP system to update the Web Service with accurate on hand inventories by site is critical to success.
The third emerging Mobile marketing strategy involves location based marketing to mobile devices. Google for example is updating its Buzz applications to not only recommend close by retail services, but provide reviews and relevant information along with the obvious directions. Some retailers combine e-coupon pushes to the mobile user to further entice the consumer. The reliance on robust CRM data is critical to the ultimate success of this marketing approach. To be effective, location-based marketing requires the ability to target appropriately, by both geography and context. As much as mobile consumers are looking for places and things, they are also looking for information (directions, reviews, recommendations, help). Part of what makes hyper-local targeting effective is having both the right kinds and the right depth of content to go with relevant ad inventory and offers.
The future of e-Commerce utilizing new smart phone technologies is growing exponentially over the next several years. Retailers that invest in their IT systems to tap into this emerging market can grow market share and revenues successfully.
About Jesta I.S. Inc.
Jesta I.S. is a leading supplier of business solutions in supply chain management systems for manufacturers, distributors and retailers primarily in the soft goods and specialty industries worldwide. Jesta I.S. is recognized for its expertise, innovative products and services and its commitment to evolving business solutions in today’s rapidly changing business world. Jesta I.S.’ solutions process essential business management information for well known industry leaders including Perry Ellis International (NASDAQ: PERY), PUMA (German: PUM), Genesco Inc. (NYSE: GCO), Town Shoes Limited, Tween Brands Inc. (NYSE: TWE), Cole Haan, Haggar Clothing Co., Cavender’s Boot City and DSW Inc. (NYSE: DSW) as well as many others.
Jesta I.S. Inc.
P: 1-888-925-5152
Email: info@jestais.com
Web: www.jestais.com
Copyright (2010) Jesta I.S. Inc. ALL RIGHTS RESERVED. All information contained in this document is the property of Jesta I.S. Inc. Vision Store is a trademark of Jesta I.S. Inc. All other company and product names are trademarks or service marks of their respective owners.
The challenges of internet retailing
By Leslie Belcher, President, Jesta I.S. Inc.
At the dawn of e-commerce, retailers were skeptical about the potential to grow sales via the web. Today, however, by integrating e-commerce into their business models, retailers are realizing the Internet’s positive contribution to overall sales. For many retailers, e-commerce has become the gateway into previously inaccessible markets. However, entering this new world of opportunity comes with some strings attached: the Customer is a significantly more sophisticated shopper; inventory fulfillment needs to be optimized; and existing stores must be part of the e-Commerce strategy. It is not enough for retailers to be Multi-Channel capable. Retailers must be seamlessly ‘Cross Channel’ as well.
Customers that shop in the bricks and mortar stores are also passing through the gates of e-commerce and are becoming better informed about the products they wish to purchase. According to eMarketer.com, 70% of online shoppers are making their purchase decisions based on product/service reviews, ratings, and/or advice from friends or family. Only 3% indicated they would rather have advice from sales people.[1]
While consumers appear to benefit from the competition in the market, they have also been impacted by the economic downturn. Each purchase takes on more meaning as consumers cut back on discretionary spending. They are becoming much more informed, willing to actively research products and the companies that sell them.. The Internet has been critical in giving consumers access to other consumers – allowing them to share a wide variety of information and opinions. As they become more informed they become more demanding; consumers now expect a particular level of not only quality, but social responsibility.
At the end of the day, consumers call the shots. Their spending may be slowing but their product/service expectations are on the rise; they want to be able to buy anywhere, ship anywhere, and return anywhere, and still retain the ability to shop online or in-store.
While it would be reasonable to conclude that consumers’ expectations for uniformity make perfect sense, the reality for retailers is very different. Shoppers often receive inconsistent messages from their experiences of buying online and in-store. It is critical that retailers integrate e-commerce into their business models in order to assure their systems are able to uniformly identify their products, promotions, and customer base. As a result we’ve seen the advent of business intelligence tools as companies actively gather as much information as possible about their products and customers.
Internet retailing requires availability of both internet technology and distance payment methods. In their most basic form, multi-channel retailers are using disparate systems, run by separate organizations (and importantly, separate inventories) for each channel. While each unit may be profitable, finding and harnessing synergies to enhance that profitability throughout multiple channels remains elusive. As a result, each channel is effectively run as a separate business, sharing only a common brand logo.
With regard to manufacturing and production, retailers could face logistical complications, government regulations and communication barriers. Moreover, retailers with stores are forced to maintain a balancing act between lean inventory and production capacity. If they are too aggressive they can lose sales by having too few products in stock, however if they attempt to maximize capacity they increase their chances of being overstocked. Web retailers often avoid this problem by using a drop-shipping model (products are delivered to customers directly from the manufacturer).
Sharing sales, inventory, and customer data is perhaps the most critical first step to achieving the benefits of multi-channel retailing. Even if systems are not yet fully integrated, decision makers, from customer service representatives all the way up to the C-level executives will be more informed.
As noted, business intelligence tools are critical in providing decision makers with accurate real time and consolidated information. Adopting a single integrated ERP platform that can manage all channels with the same toolset has many benefits. All initiatives are analyzed and managed together. Inventory visibility is complete and can be shared with the customer and supplier alike in near real time. Customers can easily check in-store availability or the status of an order on-line. Stores can expand their capabilities by presenting various options to customers when confronted with a stock-out such as reserving an incoming unit, sending the customer to a nearby store, or placing an order.
It is critical that management consider shaping their organizations to encourage the success of the brand, not the channel. Brick and mortar retailers have traditionally fostered a sense of friendly competition amongst stores, districts, and regions. However since each was driven to achieve its own goals for their given geography, cannibalization was not an issue.
The boundaries separating brick and mortar from e-commerce retailers are becoming blurry; both types are in search of new markets and consumers. As a result, competition has increased and consumers now expect store-based prices and promotions to match those found online and vice versa. For many consumers, shopping on the web is equivalent of yesterdays “window shopper”.
Very few small to medium sized retailers have bridged the chasm between multi-channel retailing and cross-channel brand management; they have successfully transformed their organizations to give customers what they want, when and where they want it, and benefit from streamlined, efficient management, and greater inventory flexibility. Ultimately, these retailers will be outperforming their peers.
Transitioning from a single channel retailer, to varied levels of multi-channel integration, to the ultimate in cross-channel optimization, one thing has remained constant: the customer. The truly customer-centric retailer has always understood this, and has built up the technical capabilities as quickly as budgets have allowed. Opening up new channels has opened up a new customer base. Integrated reporting has allowed marketers to better target the increasing client base, resulting in higher margins. Those new profits can help fund an integrated system that leverages an inventory investment that can dramatically increase returns and decrease stock-outs. Finally, an integrated cross-channel ERP strategy/system unites the business, reduces costs and optimizes forecasts and execution. All aimed at giving customers what they already expect: anything, anywhere, anytime.
About Jesta I.S. Inc.
Jesta I.S. is a leading supplier of business solutions in supply chain management systems for manufacturers, distributors and retailers primarily in the soft goods and specialty industries worldwide. Jesta I.S. is recognized for its expertise, innovative products and services and its commitment to evolving business solutions in today’s rapidly changing business world. Jesta I.S.’ solutions process essential business management information for well known industry leaders including Perry Ellis International (NASDAQ: PERY), Puma (German: PUM), Genesco Inc. (NYSE: GCO), Town Shoes Limited, Cole Haan, Haggar Clothing Co., Cavender’s Boot City and DSW Inc. (NYSE: DSW) as well as many others.
Jesta I.S. Inc.
P: 1-888-925-5152
Email: info@jestais.com
Web: www.jestais.com
Copyright (2010) Jesta I.S. Inc. ALL RIGHTS RESERVED. All information contained in this document is the property of Jesta I.S. Inc. Vision E-DOM is a trademark of Jesta I.S. Inc. All other company and product names are trademarks or service marks of their respective owners.
[1]“ E-commerce in a recession”,p.6 www.eMarketer.com,
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