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The
mobile phone revolution is one of the most extraordinary
technological (and sociological) developments of our
age, representing an almost evolutionary step forward
in communication. The fact we can now talk instantly
over long distances from almost anywhere is almost
as useful to us as would be genuine telepathy. But
while consumers have adapted to using mobiles with
ease, the commercial world has yet to work out how
best to exploit the medium. Retailers have been trying
to turn it into an effective service delivery channel
since the dot com era, but for years the customer-facing
applications technologists proposed have always seemed
just a little bit ahead of its time.
Now, perhaps, that is changing. With a vast number
of consumers becoming familiar with multi-function
phones and technologists finally grasping that, as
with internet retailing, the key to success is integration
with core retail systems, it’s now possible
to see how mobile phones could become a genuinely
productive and profitable platform for retailers.
Many are now using and actively promoting SMS alert
services to tell customers when goods are in stock,
or confirm delivery times. Online technology retailer
dabs.com has integrated an SMS solution with its delivery
systems, while Argos now offers a text-based reservation
service fully integrated with its store network.
Safe
& sound
Retailers are eager to know whether or not mobile
phones can be used securely for payment. Here too,
some early adopters are leading the way. HMV is working
with CRM and ecommerce specialist Digital Rum on an
SMS/mobile internet-based service that will allow
customers to buy CDs, DVDs and computer games (see
M/C news pg 24 for further information).
The Txt2Buy service will be promoted in national magazines
and newspaper advertisements that carry an ordering
code for new entertainment titles. Customers texting
the number printed will be sent a link to a secure
mobile internet site where they can make payment using
a credit or debit card. The whole process should only
take a couple of minutes, after which purchased items
are sent direct to the delivery address. There is
no need for customers to register for the service,
but they will be offered the option of saving their
card details to a secure mobile wallet to speed up
future transactions.
“We want to give our customers access to the
widest possible selection of music and entertainment
content however and whenever they require it,”
says Gideon Lask, head of internet at HMV. “Our
new text service fits perfectly as an extension of
this approach.
“It’s not going to take off immediately,
but as awareness grows and trust in this way of doing
things develops, we’re likely to see a gradual
take up by consumers in a way which will complement
our stores,” he continues. “We will monitor
consumer response for the next few months and if there
appears to be a genuine public appetite for this service,
we will consider how best to roll it out across a
range of media, including broadcast and posters.”
Mobile payments specialist Upaid enables consumers
to carry out mobile top-up, or pay bills via SMS,
and the technology is already finding applications
in retail. In France, Galeries Lafayette store card
holders can use SMS to authorise bill payments from
registered bank accounts. “Where consumers use
a registered mobile number to pay their own bills
from a registered payment instrument of their choice,
the risk of fraudulent transactions is virtually zero,”
claims Terence Trench, director for business development
at Upaid. “Such services can be offered to a
mass market because there are no special requirements
for sophisticated handsets or additional applications
on phones.”
Nor are the mobile evangelists overly concerned about
consumer nervousness over security, pointing out that
the technologies used to secure these transactions
are the same as those found online. They can also
cite the recent launch of an advanced mobile banking
platform by First Direct as evidence that security
technology has improved. But flawed security, or the
public perception that security is flawed, could still
constrain mobile payment services.
“There’s going to be some more work needed
on security,” says Mike Newman, managing director
at Pacific Retail Systems. “The encryption will
have to be a lot stronger as we move into a 3G world.
As long as you can secure the device to the user then
you can start using it for payment. The really big
problem at the moment is that phones can be stolen.”
He wonders if biometric devices, possibly fingerprint
readers, might eventually be used to authenticate
mobile transactions. Russell Tarr, vice-president
of sales at Digital Rum, favours a more pragmatic
solution in the near term, with payment made through
a secure online wallet, activated by a PIN. As he
points out, consumers are already used to the concept
of online accounts.
Cashing the chips
But not all mobile payments will happen online. Near
Field Communications (NFC) technology, development
of which is being led by the NFC Forum, a consortium
of companies including Philips, Motorola, Visa, Nokia,
and Mastercard, enables payment via chips embedded
in mobile phones, which interact with NFC-enabled
devices when within about 10cm.
The technology is being trialled in various locations
around the world, including the French city of Caen,
where Orange mobile customers can use NFC-enabled
Samsung phones to buy goods in stores including Monoprix
and Galeries Lafayette. NFC could be used to enable
interactive applications, like touching a phone to
a film poster to download a trailer, and also enables
peer to peer communication more rapidly than WiFi
or Bluetooth.
The EU is about to fund a three-year research project
investigating possible applications of the technology.
The project is called Store Logistics and Payment
with NFC (StoLPaN). Its objective is to develop a
new shopping experience with an NFC-enabled mobile
phone. The consumer will not only be able to pay with
the phone but also to gather product information,
make price comparisons and use e-coupons. The project
consortium has over 16 members – among them
Philips, Motorola, Hyperion, Bull, SUN, Triveneto
and T-Systems. The project starts 1 July and will
be completed by 2009.
NFC could also be used as a platform for in-store
marketing. By using either the customer’s own
mobile phone or devices mounted on shopping carts
to interact with shelf-edge equipment, retailers could
offer the consumer more detailed product or stock
information and try to exploit cross-selling opportunities.
Customer
loyalty
The technology could also breathe new life into store
cards. “What often happens is that you get the
loyalty card, you use it to get the discount, you
go home, you put it in a drawer and you never use
it again,” says Francesco Prato, business development
manager for NFC at Philips Semiconductors. “But
if you get a loyalty card on your phone then it’s
always right there in your pocket.”
Using mobile phones to send promotional messages or
special offers to loyalty scheme members’ mobiles,
instead of via the post, would also generate savings
on the cost of producing, printing and distributing
paper vouchers (and the cost of the fraud that can
be associated with them) – although retailers
will have to be careful not to annoy consumers with
unsolicited messages they might interpret as spam.
BT Expedite has built a mobile channel into its CRM
solution, allowing companies to send barcodes or discount
voucher numbers via SMS to targeted customers. These
would then be scanned or typed in at the PoS by staff
when presented by the customer. Jonathan Bowen, product
manager for enterprise solutions at BT Expedite, says
the company is currently in discussion with two customers
about using the technology, and hopes to sign an agreement
with at least one of them during the next two or three
months.
“One of the benefits of this solution is you
get real-time feedback,” he explains. “So
you might text out to 2,000 people, see how they respond,
and then the promotion could be tweaked. A lot of
the cost could be funded through
trade promotions.”
Pacific Retail Systems’ Store Trader solution
already acts as the foundation for a project of exactly
this type atthe convenience store Jacksons (now Jacksons
@ Sainsbury’s) in north-east England. Trials
began in August and September last year, with a full
rollout following in December. In January the store
reported a seven to nine per cent increase in footfall.
“The customer gets the bargain, without putting
in too much extra effort,” says Pacific’s
Newman. “The retailer gets information about
what’s selling.”
Further into the future, the next step will be to
take advantage of the ability to send richer content
to mobiles. Bowen says BT Expedite will be examining
the possibilities for sending out this sort of content
next year. The company is also looking at ways of
using mobile phone cameras. “We have had some
conversations internally about customers being able
to trigger downloads to their phones when they take
a picture of a 2D barcode with their phone camera,”
he says. “The barcode would go to a URL, then
the content would download. You could use that for
comparison shopping too, to look at how expensive
something is elsewhere.”
So where once the mobile channel looked like a cul-de-sac
to retailers suddenly there are multiple opportunities,
many of which clearly have commercial potential. “Retailers
just need to experiment a bit, and not listen to the
hype, or to the negativity, about it being expensive
and difficult,” says Neil Garner, managing director
at Glue4 Technologies. The technology and the infrastructure
has arrived, retailers now need to take a look to
see how they can best take advantage of it.
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