U.S. Retailers Tip-Toe Through Mobile Commerce Minefields

It began, arguably, with the iPhone two years ago and it hasn't let up: Consumer excitement about today's breed of Web-friendly smartphones is undeniable. So it's reasonable to expect that, by now, most major retailers would be running great mobile commerce sites designed to capitalize on this long-awaited blossoming of the Mobile Web. Reasonable, perhaps, but not real.

Instead, the U.S. M-Commerce space is floundering as merchants drag their feet deploying purchase-capable mobile sites or find their mobile initiatives stalled by an avalanche of obstacles beyond the anticipated mountain of incompatible platforms and mobile browsers. The problems encountered are legion. They include a vacuum of standardization for everything from design, programming, payment processing and even URL naming to fears about carrier conflicts over the types of permitted content and a Catch-22 business strategy about how much, and when, they should embrace M-Commerce.

(Related stories: A Mobile Retail Quagmire: The Checkout and Mobile Site Designs: A Standards-Free Wild West.)

The definition of true M-Commerce varies wildly, so we offer our own: The ability for a consumer to make a purchase solely by using a mobile phone. Most existing mobile sites don't, and some _ such as Walgreen's mobile site _ allow actions but not transactions (in the sense of actually buying something). If the process requires the consumer to use a desktop/laptop for each purchase, it's not true M-Commerce. (We'll give a pass to chains that force the consumer to make a one-time Web visit to initially set up the account.) If the process merely sends text message promotions, that's not M-Commerce. Limiting the phone's purchases to items that must be picked up in a store doesn't count and when a retailer does buy-online-pickup-in store for products that Amazon could have easily shipped, that's not true M-Commerce.

With these hurdles, it's no surprise a look around the mobile commerce world reveals a rather barren landscape, at least if the goal is to find major retailer sites with full functionality. Amazon has one, but that's to be expected as it is a company born not of brick and mortar but of technology. Not having brick-and-mortars to worry about makes life so much easier. Also, Amazon operates on a home-grown E-Commerce platform that _ unlike some other legacy business platforms used by traditional retailers _was comparatively simple to mobilize.

There are a handful of major multi-channel retail chains that have true mobile commerce sites, including Sears/K-Mart, Wal-Mart, Barnes & Noble, CVS, Dell, Foot Locker, Ralph Lauren and Victoria's Secret. But most of the majors either have no mobile presence or it's mobile but not at all M-Commerce. Target is the quintessential example of such a chain.

Target allows mobile customers to search and browse its site, see product ratings, access a store locator and view general Target ads along with mobile-only ads. For iPhone users, it also offers a gift finder function. Almost everything it seems, except being able to actually buy anything.

Target spokesperson Kelly Basgen said that Target currently does not have the ability to offer a true M-Commerce site.

Business issues aside, the underlying technical reason for all these problems is clearly the inherent differences between sites on phones and on desktops. That's certainly not a surprise to anyone, but there has been an expectation of standardization, an implicit belief that there would be general rules for how such sites would function. To date, there has been no widespread acceptance of any such rules. "The mobile phone is fundamentally incompatible with the Web as we know it," said Stephen Slezak, marketing director at Digby, a company that creates M-Commerce sites. "Everything on the Web is designed to work with powerful processing and big screens. Some retailers spent millions optimizing for those screens and all is lost on a 2-inch or 4-inch screen and a device that can't run stuff like Ruby. There isn't even Flash on the iPhone."

Retailers should accept the fact that merely porting their existing E-Commerce sites to mobile devices is a dead-end idea. Most bells and whistles must be sacrificed. For example, Tom Emmons, the man in charge of mobile development at Sears Holdings, said there are significant content and functionality differences between Sears' main Web site and its Sears2Go mobile site. The mobile version has most, if not all, of the same products, but little of the design pizzazz. It's also not easy to determine which products are available for purchase from the mobile site until a consumer tries to make a purchase.

"Sears2Go versus Sears.com is like night versus freakin' day," Emmons said. "Mobile users are insanely utilitarian. They want to go in, look at something and get out." If Sears' experience is any indication, those mobile users also want to buy things. Emmons is fond of telling M-Commerce skeptics about the $3,000 lawn tractor purchased by one customer over a cellphone

But this is not necessarily a problem. Customers legitimately seek a very different—and much faster—experience on a mobile device. But streamlined and small is not something most E-Commerce development teams warm to easily.In some ways, the current state of M-Commerce is reminiscent of the days before broadband Internet access was widely available. Companies with fancy Web sites risked angering users still stuck with dial-up, folks who didn't want to wait five minutes for complex pages to load. With mobile, retailers need to strike a balance, presenting sites with enough functionality to enable decent product search, selection and payment while remaining cognizant that not everybody owns an iPhone (and even those that do are limited by that device's restrictions). Indeed, only about five percent of cellphone users have joined the Apple-ites. "There are still tens of millions of Motorola RAZRs out there," Slezak said. "You don’t want to alienate them but you still want to give those with the better phones the best experience possible to turn them into (Mobile Web) junkies."

Today, the iPhone may be the most powerful M-Commerce platform, but it's way of presenting data sometimes presents limitations that less sophisticated phones avoid. (On our own site, the iPhone has difficulty seeing stories with multiple pages, something much lower-level phones can handle easily. Apple's going its own proprietary way is not always a plus.)

The list of M-Commerce challenges and potential pitfalls is long and subject to debate. Some, such as the high expense of mobile data plans and the painfully slow rollout of high-speed (3G and beyond) wireless networks in the U.S., involve issues beyond the control of tech teams working on M-Commerce deployments. However, there are plenty of M-Commerce headaches that are primarily technological in nature:

  • Lack of standardization, forcing developers to craft multiple mobile sites that can deal with myriad devices, multiple browsers and various screen sizes
  • Sites that don't automatically recognize when a user is coming in through a mobile device, sending them to the full-fledged site. Not all retailers with mobile sites even have a consistent way of notifying its visitors that a mobile site exists.
  • Inability by many mobile browsers to handle the complex, processor-taxing technology that drives regular E-Commerce, such as Ajax, Flash and Java
  • Difficulty crafting systems that can continually check for problems in the delivery of mobile pages when phone vendors update, upgrade or retire devices and browsers
  • Mobile carrier backlash and content restrictions
  • Glitches when presenting purchase pages due to improper device discovery and rendering
  • Headaches in maintaining secure transaction frameworks for customers
  • Uncertainties about controlling costs for outsourced technology and services
  • Unforeseen issues when integrating into existing POSes Some of these issues are major obstacles, but little things can also effectively mess up an M-Commerce site. It won't take long for impatient mobile users to give up if retail sites force them to scroll in various directions or otherwise search for tools, such as "Add to Cart" buttons. This is triply true if the site design doesn't indicate to the user that there is anything they need to search for.

    Another booby-trap is a site's shipping and payment procedure. Filling out forms is bad enough with a full-size keyboard. Doing it with a cellphone is enough to make even the most enthusiastic M-Commerce experimenter disconnect."If all they ever want to do is extend their Web site or somehow kind of dumb-down their site so it can be consumed on any mobile device, that's a first step," said Dave Sikora, CEO/Founder at Digby. "But while that appears easy on the surface, there are complexities even there that have to be addressed: How do you test it on all the devices out there? Is there a testing lab that's common for people to plug into? How do I know what my site going to look like on AT&T's network versus Verizon's network versus Sprint's? Can we simulate what the site is going to look like with one bar of service versus five bars? How does the Google Android phone process this color orange versus the RAZR, which maybe can't process images and colors in exactly the same way?"

    It takes a pretty smart phone to deliver a decent M-Commerce experience and phones have come a long way in terms of smarts. Most experts trace the current smartphone boom back to the June 2007 launch of the iPhone. That's more than two years ago, virtually a lifetime in the world of technology, and yet the number of fully-functional, multi-channel retailer M-Commerce sites can still be counted on one hand, give or take a few fingers.

    Sears' Emmons said it took him about two years to "learn the field," to a point where he felt comfortable with M-Commerce. Because of the steep learning curve, retailers that have yet to really focus on mobile risk being left behind. "It shocks me that more companies aren't getting involved and getting involved faster," he said.

    Sears, which outsourced the creation of mobile sites for Sears and K-Mart, explored crafting the sites in-house but eventually pulled the plug. "What we saw was that doing it ourselves was going to be prohibitively expensive regardless of the business case," Emmons said. He said that, while Sears used a third-party to build the sites, it was still crucial for the company to form a special M-Commerce team separate from the existing E-Commerce group. "We have a dedicated mobile team," Emmons said. "You can't just have a Web site team that's already super-busy and doesn't have the time and budget, doing mobile. The online team doesn't understand mobile and they don't think it's important enough for them to spend their time on."

    As if the technical barriers aren't enough, there's also the question of ROI. Many big retailers are just now "starting to believe that people will buy things on a mobile device" and are "slowly and gradually" embracing M-Commerce, said Ran Farmer, managing director of Netbiscuits, a company that creates mobile sites and sells a platform allowing business to make their own.

    Cisco in late 2008 conducted a detailed analysis of mobile sites and their functionality and found that only 12 percent of the 65 mobile retail sites it tested allowed for mobile transactions, said Edward Westenberg, director of Cisco Internet Business Solutions Retail and Consumer Products division.

    That's double the number found a year earlier. Interestingly, the report uses the word "transaction" leading one to believe it means "purchase." However, one of the mobile sites Cisco lists as being transaction-capable, the one deployed by Walgreens, offers prescription refill and status checks but no product purchases. (To be fair, prescription refills are certainly revenue to pharmacy chains, but the very nature of medical prescriptions makes them simply nothing like product sales at most retail chains.)Westenberg's partner in the study, Joanne Bethlahmy, director of the Cisco Consumer and Retail Internet Business Solutions group, said she expected to find more mobile sites offering transaction capability. "Certainly, it's a bit of a surprise that it's taking as long as it is to develop mobile commerce," she said.

    Some observers, including Michael Dulong, SVP of business development at mobile payment platform provider Billing Revolution, argue that retailers were caught off-guard by the sudden advance of M-Commerce-ready mobile units that, unlike predecessor devices, actually had the ability to deliver decent mobile purchasing experiences. "My view is that the major retailers have been caught behind the eight ball when it comes to mobile commerce for a number of reasons," Dulong said. "I think the first major driving factor is that smartphones have jump-started the evolution of mobile commerce and caught the industry by surprise. Nobody in the mobile industry was ready for this, much less the E-Commerce industry."

    Many retailers held off on launching mobile sites due to the fact that mobile shopping was a horrific experience on regular tiny-screened cellphones and because they were uncertain people would want to buy things on them even if that wasn't the case. Given the popularity of larger-screened smartphones and Emmons' assertions that the Sears2Go and K-Mart mobile sites are doing well, that excuse is losing its viability.

    Nevertheless, even retailers supposedly aware of the better capabilities of new devices might have dropped the ball. "I know Best Buy and others have only very basic mobile sites that allow users to enter a ZIP code to find the nearest store and/or click to call the nearest store," Dulong said.

    The fact that M-Commerce takes place over networks owned by a handful of carriers might also give pause to retailers already squeamish about deploying mobile sites. Although the carriers will reap the benefits of M-Commerce's growth, they can impose restrictions on certain types of data, noted Impact Mobile CEO Gary Schwartz. For example, he said Verizon has issues with text message content. "If I have a text message and I want it to say, `Hey, we have jeans on sale, here's a link. Go to our M-Commerce storefront and buy them,' I can't do that on Verizon," Schwartz said. "They will scrape it out. They don’t want you to do anything they can't control on their Internet portal."Netbiscuits' Farmer agreed there are differences in the types of data the various carriers support. "Some carriers don't allow you to deliver video," he said. "Some require an image to be delivered in a certain format."

    Cisco's Westenberg, who often speaks to retailers about their mobile commerce plans, said "the majority realize the number of phones out there providing an experience they consider to be good enough, which is to say roughly the same as online, is growing dramatically," he said. "The actual penetration is still only 14 or 15 percent, but they recognize this is very important." However, he pointed out there are retailers "that are sort of followers," Companies that "kind of know this is going on, but will dismiss it as not so important." Nevertheless, he's observed a change "from an almost unwillingness to even discuss this several years ago to where they now really want to know what to do. But nobody's been able to provide them with a recipe for success."