Mobile Shopping Shifts

A recent survey of end users shows a significant shift of mobile device commerce types. In the past, it mostly has been virtual and digital goods that people have bought directly from their mobile devices.


Games, ring tones, songs and other content are prime examples. Over the last couple of years, though, the amount of physical goods purchased directly from a mobile has shifted.


More users are buying physical goods than ever before. Also, in terms of change, the biggest growth is physical goods and the biggest decline is purchasing of ring tones. 


There are many potential repercussions. The volume growth could suggest the emergence of a "mobile commerce" behavior and therefore a  business opportunity that is distinct both from online commerce and "brick and mortar store" retailing. 


Also, since most digital goods are small transactions, while physical goods will range widely in price, the methods of payment are likely to change. In the past, it probably has made most sense, for most people, to use simple billing direct to a mobile service bill for such small purchases.


That won't make sense for the wider range of physical goods people now are buying. But the big trend is the emergence of a distinct mobile commerce business.

How Far Could PayPal Go in Virtual Payments?

You might draw a couple of conclusions from PayPal's heightened profile in the retail payments space. You might argue that PayPal, of all the present major contenders, is the only company that has a reasonable chance of disintermediating the Visa and MasterCard payment information networks and brands.


You might also conclude that the walls between e-commerce and "commerce" are starting to blur. In the future, the difference between an "online" and a brick and mortar shopping experience might be less clear.


You might further conclude that the "currency tendered" in a transaction increasingly could take on new forms. Today, no matter what form the transaction takes, the payment is in, in the U.S. market, U.S. currency. In the future, other forms of value might be exchanged.


There are lots of legal and regulatory issues to be settled, to be sure. But some transactions might occur in equivalent virtual stores of value such as points, credits, tokens and other forms of stored value. Not that it will happen soon, or at all, but someday the currencies could extend far beyond "U.S. dollars and cents."


In one sense, that is a linear extrapolation from what PayPal now is doing. Rather than tell consumers which payment method is best for them, PayPal is working to accept all types of payments: plastic card, NFC, the new “empty hands” mode or barcode scanning.


Right now, PayPal is simply trying to let consumers decide how to pay, so long as PayPal is part of the transaction clearing, and so long as the currency, no matter what physical "channel," is U.S. currency. In principle, though, markets could develop that allow other virtual currencies to be used, as well.

E-Reader Use Has Double\d Every Year since 2010

Nearly a third of adults in the United States now read books on a tablet or e-book readers.

Only 13 per cent of respondents who currently don't read books electronically said they are "very likely" or "somewhat likely" to start doing so in the next six months. 

Some 77 per cent said they are not likely to do so, with half of the group saying they almost certainly won't.

The Harris Poll results, though, might not be reflective of actual user behavior. Many respondents have in the past suggested they would not use e-readers, but their behavior is not congruent with those sentiments. 

Will New iPad Boost Mobile Broadband Subscriptions?

The iPad's impact on mobile broadband could be substantial, according to Kevin Smithen, an analyst at Macquarie Securities USA.


Perhaps 30 percent of purchasers of the new device will use it on carriers’ networks, up from less than 20 percent for prior- generation iPads, Smithen says.


For AT&T and Verizon Wireless, that may mean an extra $45 a month per iPad subscriber, on average, Smithen said. 


Such forecasts rely on an assumption that the higher definition display and Long Term Evolution fourth generation network capability will entice new iPad users to watch more entertainment video, and to do so in mobile settings outside of home and workplace settings. 

Amazon Original Progrramming?

It appears Amazon will mirror Netflix, Hulu, and YouTube in funding original content to add distinctiveness to Amazon streaming video services.


Amazon appears to have tipped its hand that it will be funding original content for the Amazon Prime streaming video service in recent days, but video isn't the only area where Amazon is blurring the lines between its role as a distributor and a new role as publisher.


In its books business, for example, Amazon already has become a publishing entity, not simply a retailer of other publishers' products. Something like that is expected for the Amazon Prime streaming service as well.


In that regard, the streaming services are following a business strategy long used by video networks and distributors alike, namely original programming as a way of creating differentiation and uniqueness for a particular service.


Cable TV networks, for example, long have built on a signature series or two to pull viewers into the channel, while most of the fare is more familiar and not "unique" licensed material. That seems to be the same thinking driving investments by Netflix, Hulu and YouTube in original programming not available elsewhere.


Netflix, for example, is producing an original series to be produced by Media Rights Capital. The drama series "House of Cards" will be executive produced and directed by David Fincher and executive produced by, and starring, Kevin Spacey.

Netflix reprtedly got rights to the series by offering a relatively unusual commitment of two seasons, or 26 episodes. Given that the price tag for a high-end drama is in the $4 million to $6 million an episode range and that a launch of a big original series commands tens of millions of dollars for promotion, the deal is believed involve an investment by Netflix of more than $100 million. 

Such a move is traditional for premium cable networks trying to increase value and add uniqueness to their services, and Netflix clearly is aware that unique content not available elsewhere will be a draw for its streaming service and subscriptions.

"He Who Enrolls, Controls," So Mobile Marketing Will Drive Mobile Commerce

A new study by Juniper Research forecasts that near field communications will facilitate transactions valued at $74 billion globally by 2015 as NFC is increasingly used for the payment of goods in-store and as transport tickets.


So is that a big deal? It depends. U.S. retail spending is something on the order of $3.6 trillion to $4.7 trillion a year, by way of comparison, depending on which purchases one wishes to consider, and exclude. Also, it isn't yet clear how fast NFC-enabled mobile payments might take hold. It is conceivable other methods will grow faster.


But there are some reasons why mobile payments could grow faster. It isn't just consumer demand that will drive transaction volume, but retailer business need, that could provide the adoption trigger. 


Richard Crone, CEO, Crone Consulting, notes that mobile banking has become "table stakes."


The more important issues might be that "the entity that enrolls the customer, controls the opportunities." To the extent that mobile payments provides other values, mobile payments might simply be a vehicle for a broader effort to create a better relationship with customers.


"Service interaction in every channel is changing because of mobile," Crone says.

Apps are a way for retailers to expand their customer relationship management efforts and user base. To the extent that mobile payments changes unidentified, anonymous prospects into customers a retailer knows quite a lot about, and can reach, through multiple channels, with the right offers, at the right time, in the right place, mobile payments could grow faster than expected.

Mobile apps, for example, have a strategic role to play in the mobile commerce business, says Crone. “The entity that enrolls the customer, controls the opportunities,” says Crone.

“The second rule is that whoever loads the mobile app controls the transaction sales cycle,” says Crone.


So the increasing use of mobile devices as an alternative to credit cards and paper tickets is one of the fastest growing segments of the mobile commerce market, Juniper Research says. 


What might not be so clear is the reason for the change, or the specific implementation. 

Do Users "Need" Mobile Broadband for Their Tablets?

Do users need a mobile broadband connection for their tablets? Not in all cases, especially when that choice means buying yet one more mobile broadband plan, and when a mobile-capable device costs $100 more than a Wi-Fi-only version. 


To the extent that tablets mostly get used in locations where there is Wi-Fi available at no incremental charge, namely home and workplace, there is little marginal incentive, in many cases, to pay a more-expensive device and one additional mobile broadband plan. 


Some of us would be that will not fundamentally change until more end users have access to "family or multiple device data plans" that allow a single account to share one bucket of data usage. Those plans are coming, but are not generally available, nor is it clear what the pricing will be. 


The expectation would be that such a plan will cost significantly less than buying a separate mobile broadband account for each device on the account.