Mobile Phones Emerging As Fourth Sales Channel, Cisco Study Shows Retailers Tap Into All Touchpoints

Mobile devices
are quickly emerging as a fourth sales channel for retailers, according to a new study from Cisco Systems. The company’s third annual e-commerce study found that the rise of social networking and advanced mobile technologies has redefined the online experience and is enabling retailers to capture new sources of revenue by implementing mobile strategies.

Conducted by the Cisco Internet Business Solutions Group (IBSG), the study assessed 45 retailers from North America and Europe in three categories (Global 500, Web 15 and Innovators) and looked at two aspects of online shopping from the consumer’s point of view.

“Mobile presents a revenue opportunity for retailers and opens up a new era of multichannel retail,” said Dick Cantwell, vice president of IBSG’s Retail / CPG Practice. “Multichannel retailing has morphed into a web of shopper touchpoints across stores, catalogs, mobile devices, and the Internet. Retailers must start offering shoppers an ‘interconnected shop’ if they are to take advantage of the mobile opportunity.”

Based on the adoption of their advanced mobile capabilities, the Cisco study identified a Top 10 list of retail sites. The ranking went as follows:


2. Best Buy
3. Sears
4. Circuit City
5. Quelle
6. Otto
7. Macy’s
10. Argos Home Retail Group

According to the report, the Top 10 sites not only delivered flawless execution on the foundational capabilities, but they also offered advanced capabilities that are redefining the online experience.
While many retailers have viewed e-commerce and mobile applications as separate discussions, the study pointed out that providing mobile access will become part of the e-commerce experience. “Customers will soon expect to use their mobile devices to find stores, research products, make purchases, and manage their accounts,” the study stated. “In anticipation of this market opportunity, retailers should evaluate mobile and multichannel strategies that allow customers to access retail product information anytime, from any device.”

Currently, there are three times as many mobile-phone subscribers (3.3 billion) as Internet users (1.3 billion) worldwide. Cisco expects mobile commerce to follow an adoption pattern similar to that of cell phones. Early retail adopters are already finding ways to factor the mobile phone into multichannel service delivery. For the more basic mobile offering, retailers are using SMS (Short Message Service) to communicate promotions, provide a two-way service for customers’ questions, and offer item availability and delivery updates. The Cisco IBSG survey found that:

• 42 percent of retailers provide the ability to view product information on a mobile device through reformatted web pages or specific mobile pages
• 15 percent offer the ability to conduct transactions (make purchases, complete inventory queries, etc.)
• 10 percent are using SMS to provide information or answers to customers’ questions
• 6 percent have webpages and a URL specifically designed for mobile use

In addition, the study pointed out that with the rise of social networking, web-based multimedia, and mobile commerce, retailers can now select from a broad range of technologies to reach customers.

The explosive growth of social networking sites like MySpace and Facebook, virtual worlds like Second Life, and multimedia sites like YouTube have transformed customer behavior and expectations for online experiences. While social networking started with the young and tech-savvy, it is increasingly reaching the mainstream as consumers 35 and over are joining social networking sites in droves. For example, Facebook reported a 286 percent growth in members aged 35 and over from May 2006 to November 2007. Social networking has grown on a global level, with the number of European log-ons (127 million) surpassing that of the United States (124 million). The Cisco IBSG survey of e-commerce sites found:

• 17 percent provide the capability to connect to communities of interest
• 52 percent provide customer reviews for products
• 50 percent have advanced visualization tools
• 50 percent provide multimedia such as video
• 50 percent offer customer support through multiple channels, such as click-to-chat

The Cisco third annual e-commerce study can be downloaded in full here.

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