By Glen Korstrom
More consumers than ever before are buying products using smartphones and tablet devices.
The phenomenon is forcing retail executives to decide how best to approach the growing potential revenue source and how big an investment merits being spent to be on technology’s bleeding edge.
The main options are either to develop an independent corporate application or funnel corporate sales through a third-party app like the one that Vancouver’s Mobio Identity Systems Inc. produces.
A ForeSee Results survey released January 10 illustrated why executives should pay more attention to the rise and rapid evolution of smartphone apps.
The U.S. company found that 450% more people bought items using their smartphones during 2010’s Christmas season than they did during the same time in 2009.
It surveyed 10,000 visitors to large e-commerce retailer websites and found that 11% of them made purchases through smartphone apps. Last year, only 2% did.
Robert Pearson, Best Buy Canada’s (BBC) vice-president of e-commerce, is aware of the potential revenue bump that “m-commerce” (mobile commerce) could give his Burnaby-based company.
BBC partnered with Research in Motion Ltd. in 2007 and allowed the BlackBerry creator to co-develop a pilot BBC app that was discontinued in 2009.
Knowledge gleaned from that pilot app, combined with the rapid rise of smartphone sales, prompted Pearson to assign 10 staff to help design a template for a BBC app that can be used on platforms such as Google Inc.’s Android operating system.
More than 360,000 people have already downloaded BBC’s first iPhone version of that app, which the company launched in August. By the end of January, Pearson expects downloads for BBC’s app will surpass 400,000.
Vancouver-based Atimi Software Inc. has helped design apps for the New York Times and Vancouver Canucks. It helped BBC with some elements of the app’s creation, such as getting approved by Apple Inc.’s iTunes store.
“We’re working on our second version of our iPhone app,” Pearson said. “It’ll have the capability for users to be able to see the availability of stock in stores. They will be able to do store pickup in the new version as well.”
The main options for retailers who want to increase sales from smartphone users include:
- using staff to develop a corporate app secure enough for credit card sales;
- hiring a consultant to create that app; or
- using a company such as Mobio, which has a secure app of its own and charges clients a nominal commission when customers use it to buy products.
Mobio’s smartphone app facilitates sales for clients such as Vancouver’s Ethical Bean Coffee Co., whose customers first download the Mobio app.
They then enter credit card details into Mobio’s app and use their phone’s camera to take a photo of a barcode known as a QR code. Mobio’s app scans that photo and communicates the sale request to the third-party client.
For example, the National Football League’s Jacksonville Jaguars put menu pamphlets in cup-holders so fans can scan QR codes from their seats if they want a beer or a hot dog.
The request is communicated to the stadium’s kitchen and runners deliver the food.
Mobio piloted its product with all of its clients until March. Since the company started charging for its services, CEO Clovis Najm said Mobio has generated tens of thousands of dollars in revenue from clients.
He told Business in Vancouver that he expects his 16-employee company to generate six-figure revenue in 2011.
But not all retailers are embracing m-commerce.
“I know a few guys who have tested Mobio out and ended out opting out after the pilot,” retail analyst and DIG360 Consulting Ltd. owner David Gray said.
He added that’s often because the corporate executives doubt the return on investment will be high. Mobio charges both a startup fee and a single-digit percentage commission on each sale.
Time spent strategizing about the perfect app can be valuable, but Gray advises corporate executives not to be paralyzed with strategy or to use strategizing as a sophisticated way to procrastinate.
“The main thing is at least to have a mobile version of your corporate website,” Gray said.
Mobile websites are different from apps because they’re accessed via web browsers. They load quicker than conventional websites and are easier to navigate on a smartphone.
Creating a mobile website is not simply a baby step toward having an app that can process sales. It’s also the way of the future, according to Igor Faletski, who is CEO of Vancouver’s Mobify.
“You’re not going to have an opportunity to create apps for every platform or phone that comes out,” said Faletski.
“We at Mobify take your existing desktop e-commerce site and make it look amazing on any mobile or tablet device.”