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Why Isn't Mobile Commerce Bigger?

When will mobile commerce grow up?So eBay took a bit of a beating on its quarterly earnings call the other day, largely for its inability to monetize mobile. Money quote:

“[The company] acknowledged that the offline retail space has been sluggish for eBay, which is an area that eBay has invested in the past couple of years as an extension of its auction-based online space.

‘In general, I’d say that offline is taking longer to become digitized than we initially thought, and I think frankly it’s happening with us and with everyone else in the digital world,’ said John Donahoe, president/CEO of eBay, San Jose, CA, during the company’s fourth-quarter earnings call.”

To their credit, eBay isn’t backing off its commitment to mobile commerce:

“But we’re staying with the investment and the adjustments we’re making I would characterize as focusing more in some smaller areas to prove out the model and get viral effects, and then we’ll expand,” he said.

Of course, this begs the question: With all the growth in mobile, why isn’t mobile commerce bigger?

Well, a few reasons:

  1. Consumers aren’t ready. Undoubtedly, consumers still need to get a higher comfort level with buying online. As I mentioned yesterday, the trend line here looks pretty similar to the growth of “traditional” e-commerce; first comes traffic, then comes sales. Plenty of brands have seen modest success with their mobile initiatives. More will follow, without a doubt.
  2. Mobile doesn’t solve customers’ real problem. This one applies much more to mobile payments than mobile commerce generally. Mobile Commerce Daily talked with Paula Rosenblum of Retail Systems Research, who rightly said,

    “I think the fundamental issue with mobile payments is that they’re solving a problem consumers don’t believe they have,” she said. “I still like PayPal’s chances, because it allows consumers to avoid passing their credit card info to retailers and they can do it hands free using a phone number and PIN number.”

    Mobile payments depend on consumers changing their default behavior—pulling out their credit card—and that behavior isn’t all that difficult. While I’m generally bullish on mobile payments, until someone nails the user experience, mobile payments will continue to lag overall mobile growth trends.

  3. Mobile commerce is too hard to use. As big a role as the first two items play, this one’s bigger. Have you tried to buy something on a mobile site? Most mobile checkout systems need a lot of work. Yes, even if mobile checkout were dead simple, the first two issues would remain. But, no matter customers’ comfort level or usual behaviors, they’re only going to buy from the folks who actually make it easy enough to actually do so.

Does this mean that I think mobile commerce is dead on arrival?

Of course not.

When I first started working with the web in roughly 1994-1995, each of the items outlined above were also true. Most people weren’t comfortable buying online, established behaviors were easier, and, largely, most e-commerce checkout processes sucked. Mobile is going through some growing pains and will likely do so for the next year or so. But eBay’s John Donahoe is staying with the investment. And so should you.

My presentation, “The Truth: How the Social, Local, Mobile Web Affects Sales Online and Offline,” looks at how your mobile changes your customers’ behaviors—and how you can keep up with those changes:

And, if you’re interested in learning more about the future of e-commerce and marketing via the social, local, mobile web, register to receive a special report I’ve produced in conjunction with hotel marketing firm Vizergy, “Digital Hotel Marketing in a Multiscreen World.” While it’s targeted specifically at hotel and resort marketers, the lessons apply to just about any business. You can get your free copy of the report here.

You might also enjoy some of our past coverage of the social, local, mobile web and what it means for your business, including:

Tim Peter is the founder and president of Tim Peter & Associates. You can learn more about our company's strategy and digital marketing consulting services here or about Tim here.

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