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Consumers HAVE changed because of mobile. Deal with it.

2010 August 12

At eTail in Baltimore today, Abhi Dhar, CTO Walgreens provoked the crowd saying, “Consumers have changed because of mobile. Deal with it.”

This statement sums up what we’ve heard here at eTail this week and what retailers report their customers doing.

While not all retailers offer robust mobile offerings — or even any mobile commerce offering at all — mobile (and social media) are affecting consumer decisions. Customers read reviews and compare prices on social media sites, often while standing in the retail store.

Retailer after retailer asked the question, “Should I do mobile web or native apps?” It was deja vu all over again. It’s the same debate mobile bankers had early last year. Abhi Dahl said “BOTH are very important.” I agree.

In mobile banking, we’ve found that banks must offer all three technologies: Mobile web, SMS, and native applications. Many retailers are still resisting hoping to avoid the fragmentation bankers have resigned themselves to.

David Siegel of 1-800-FLOWERS said, “Don’t try to change customer behavior, market to where they are.”

Customers look for brands using their mobile browser. Retailers should have a mobile site. Customers look for brands in their phone’s app store. Brands should have an app.

Companies resisting building a strategy addressing channel fragmentation are just wasting time and ceding market share to their competitors. Many retailers, including 1-800-FLOWERS said that mobile web accounted for over half their mobile sales. The many mobile web proponents I spoke with seemed to consider this evidence that mobile web is the “right” way to do mobile.

My opinion on this stat is that companies only offering mobile web are potentially missing out on 50% of mobile sales. Maybe these users would buy on mobile web if the native app weren’t available. Maybe. Remember, Apple had to create the App Store in response to overwhelming jailbreaking of the iPhone because Apple insisted mobile web was all we needed.

What do we leave to “maybe” in ecommerce?

In ecommerce, we spend millions in site redesigns because we think it’s affecting conversion by a few percentage points. Mobile is a disruptive, market changing force that is likely to become as big or bigger revenue channel than ecommerce. Turning away 50% of revenue anywhere else gets you fired.

Mobile is not yet a major revenue channel. Retailers rarely share conversion rates, but the consensus guidance seems to be in the low single digits (3-5% seems right). Colin Sebastian from Lazard Capital Markets estimated 2010 U.S. mobile commerce sales would be at $2.5 billion, with eBay and Amazon representing 60% of that total (Sabastian said they represent 25% of the ecommerce market).

Mobile commerce revenue now isn’t tremendous. But, each loyal user now represents hundreds, thousands, or even more users in the future. Choosing not to serve your customers in a particular channel all but drives them to the competition. Now is the time for organizations to learn how best to serve their customers in the mobile channel.

As Jeff Dennes of USAA said, “If you don’t have enough [mobile] budget, get a bigger budget.”

Now is the time for companies to aggressively commit to mobile and emerge the market leader.

Customers are making decisions using their mobile phone. It’s up to retailers to decide to serve their customers.

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