As you read this opinion piece, you might get the feeling I'm the Grinch trying to steal Mobile Christmas. I'm not. Think of me more as the Ghost of Mobile Christmas Future.
As Black Friday and Cyber Monday approach, there is a lot of hype about the role mobile will play in this year's holiday shopping. In its recent "Holiday Mobile Shopping Study," mobeam's neighbor in Silicon Valley, InMobi, forecasts 60 million people will use smartphones while shopping this coming weekend, with 21 million – 36 percent – intending to make a purchase directly from their phones.
If you're a retailer, a consumer packaged goods producer or smartphone manufacturer, you're probably reading all this great news with some excitement. Sadly, there is a big disconnect between the hype and the mobile commerce reality.
Let's quickly analyze the data above. Twenty-one million people making purchases on their smartphones is indeed a big number and shows that consumers are embracing mobile commerce. But because NFC contactless payments have not yet matured in the U.S., these are 21 million people making purchases away from point of sale cash registers. How can retailers entice consumers into their brick and mortar stores? One tried and true method is coupons.
Another recent study by the research firm eMarketer forecasts that nearly 10 percent of U.S. adult mobile phone users will access and redeem a mobile coupon this year which equates to 19.8 million consumers. Capitalizing on this trend is Walgreens, which introduced a new mobile app that will send coupons to consumers that they can use at any of Walgreens' 7,700 stores. With the growing acceptance of mobile coupons, it seems like Walgreens' holiday shopping mobile coupon program is a perfect method to tempt shoppers into their stores.
But here's a part of the 2011 holiday mobile commerce story that is being left out of all these reports and analyses. The kind of mobile coupons that Walgreens is offering will only work at their 7,700 stores. Why? Because it uses a special 2D composite barcode that is read by special 2D barcode scanners that Walgreens has installed. The problem is that in the U.S. alone, there are more than 3.6 million more retailers beyond Walgreens, and virtually all of the rest of those rely on the ubiquitous 1D barcode, more commonly known as the UPC symbol, and 1D barcode scanners for coupons and inventory.
You may ask, "so what?" After all, there are over 400 mobile coupon apps that display the conventional UPC symbol coupons in the iPhone app store alone, and countless retailers are emailing coupons with these 1D barcodes that people can pull up on their smartphones. Well, here's the "so what": 1D barcodes CANNOT be scanned off smartphones. No, really. They can't. That means these 400 mobile coupon iPhone apps don't work, and the mobile coupons sent by email create pretty significant inconveniences at point of sale for both consumers and retailers.
The way laser scanners "see" the reflection of the black and white lines of a 1D barcode is incompatible with the backlit way information is displayed on smartphone screens. In fact, as screens become larger, brighter and higher definition, the problem only gets worse. Mobeam estimates there are more than 165 million 1D laser barcode scanners in use around the world, and switching them out is not going to happen overnight, or even over the next few years.
But that's okay. Black Friday 2011 is still going to see more mobile commerce usage than in any year before. But I predict that as big as the hype is for this year, it will be completely dwarfed by the reality for mobile commerce next year.
For Black Friday 2012, consumers can expect to find new types of commerce apps that will make shopping easier and more convenient than they're imagining today. Consumers will be able to locate scarce and sought after items instantly on a map, walk into stores and comparison shop prices by scanning inventory barcodes included on the label of every item, receive in-store incentives to buy complementary products to what consumers are shopping for that very second, summon a sales associate to their exact locations inside a crowded department store, even complete purchases in store aisles without going through checkout lines. I promise you, mobile retail is going to evolve very quickly.
Some of these new mobile retail technologies will be completely new, and some will harness the availability of existing technologies. To make mobile coupons work, they have to work at every retailer that wants to accept coupons, and that means envisioning a solution beginning with the technology already present at point of sale, not necessarily beginning with the state of the art on handsets. Across the mobile industry spectrum there are many companies planning to bring new shopping, loyalty and payment technologies to market, promising to make Black Friday 2012 a truly pivotal moment in mobile commerce history.
Happy holidays, and happy shopping.
Chris Sellers is CEO of Mobeam.