Mobile Commerce Insider Featured Article

December 03, 2012

Retail According to SAP: An Untapped $617 Billion Mobile World, But Only if Retailers are Ready to Play

If a picture is worth a thousand words, then it goes without saying that two pictures are worth at least 2,000 words. In order to take advantage of the economies of scale that this represents, the folks at SAP retail recently cobbled together several infographics that highlight the mobile retail world of today (and given the rapid pace of mobile enhancements, especially in the retail space to some degree this also represents yesterday's world) and that of tomorrow.

The infographics highlight how users are currently putting their smartphones to use and how they will either put them to use tomorrow - or for the more progressive among us, how some stores are already moving ahead to deliver new mobile services that will change the retail landscape even further. Just to be complete, let's briefly highlight how yesterday’s retail world was (and for the retail laggards amongst us what many if not most still do today) and is working.

Let's throw in another thousand words and start with the world of yesterday just to be complete. The primary message here is one of customer dissatisfaction, and this retail example is no doubt the most prevalent out there. Is there anyone who hasn't experienced it many times over?

Today's mobile world allows retailers to add a great deal more value add to their services, based on mobile awareness on both the retailer and user end of things, as well as location aware capability and user proximity to a given retailer. Over the last several years, the retail mobile model shown below has been the hallmark of progressive retailers, but that was yesterday. Today, the model shown below is nothing more than table stakes - the minimum any retailer needs to do merely to stay in the game with competitors.

As the infographic shows, this model has resulted in outstanding mobile-driven revenue growth. By taking advantage of mobility - even within the somewhat limited model shown in the infographic above, retailers have been able to create revenue streams totaling a very significant $159 billion - or five percent of in-store sales. What retailer would not be thrilled to put themselves in play with so many new mobile dollars on the table?

Amazingly, the answer is that most retailers have been very slow to make the move. Many talk the talk, but the majority fails to walk the walk, placing themselves in an untenable competitive disadvantage while yesterday's progressive (and today's table stakes) players reap the benefits and the resulting competitive advantages.

That is all well and good, and $159 billion in mobile-driven revenue is a good start. But as we noted above, mobility moves quickly, and even companies that had been mobile progressives now need to understand what additional capabilities mobility brings to the retail table. Retailer leaders on the mobile front are now upping the level of their game, and they are beginning to take advantage of even greater capabilities. Among these are much better location-based service scenarios, much better real time business intelligence capability and much better resources for delivering real time offers to users.

SAP believes that over the next four years the mobile market will have evolved into a $617 billion market, and retailers will be able to tap into - and cater to - about 448 million mobile users. The SAP example shown below, which represents the evolution from today to tomorrow (or really from yesterday to where retailers already need to be today), points to one clear example: mobile generated coupons. Mobile coupons are proving themselves to be highly effective, with a 10 times higher redemption rate than the old school method! This is non-trivial, and underscores the capabilities of a mobile driven retail game plan.

The "foundational" retail message here is that of greatly enhanced retail customer service (we want to ask, so what else is new?), which in turn leads to far better customer satisfaction and the highly probable attendant increase in the all-important metric of customer loyalty. Customer loyalty is fundamental to ensuring that customers also deliver recommendations to their relatives and friends. In today's social and mobile-social world those recommendations are also likely to have a reach well beyond friends and relatives.

Mobility is clearly vital to retail success.




Edited by Brooke Neuman




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