Retail Practice Best Practices Guide

Critical Success Factors for Mobile Commerce

2011 Demandware, Inc. | www.demandware.com

Table of Contents
Executive Summary.................................................................................................... 3

Why Mobile Commerce is a Critical Part of an E-Commerce Strategy...................... 4 Developing a Mobile Commerce Strategy.................................................................. 5

The Secrets to Mobile Commerce Success............................................................... 6

Defining an Approach: Start with a Mobile Website, then Consider a Native Mobile App...................................................................................................... 7

Designing a Smarter Mobile - Web Experience.......................................................... 9

Plan for the Future.................................................................................................... 11

12 Case Study: Columbia Sportswear............................................................................

2011 Demandware, Inc. | www.demandware.com

Executive Summary
In many enterprises with Web-centric sales, the challenge of adding mobile commerce is daunting. But its a non-negotiable requirement, given the exponential growth rates that are happening across almost all sectors. The key is to get started and get learning. First, its essential to recognize that mobile commerce isnt just one more channel of the marketing mix. Rather, it unites all of your other channels traditional Web, telephone, and bricks-and-mortar. A solid mobile commerce strategy emphasizes the importance of simply launching an effective, highly functional mobile storefront thats accessible from the widest variety of mobile devices. Next, the challenge is to understand if its appropriate to harness the new waves of emerging technologies to deploy smarter native apps that exploit the unique capabilities of individual mobile devices. That is, do native apps align with the goals of the business and consumer preferences? The following white paper discusses the steps that forward-thinking companies can take to capitalize on the mobile commerce opportunity in the near-term and lay the foundation for longer-term success as well.

2011 Demandware, Inc. | www.demandware.com

Why Mobile Commerce is a Critical Part of an E-Commerce Strategy

As consumers increasingly turn to a growing range of smart, connected mobile devices to browse merchandise and transact their purchases, most forward-thinking retailers understand mobile commerce is now an indispensable component of the business strategy. Shop.org and Forrester Research found that more than 70 percent of online retailers have already begun to develop a mobile commerce strategy and more than 20 percent have implemented and refined their mobile strategies. And for good reason: the spectacular opportunity and early results virtually mandate that retailers adopt a strategy and make the investments necessary to tap this exploding market.

Shoppers will order $2.2 billion of physical goods from websites via cell phones this year, $1 billion more than last year and five times more than 2008.

According to ABI Research, Inc., a New York technology research firm, shoppers will order $2.2 billion of physical goods from websites via cell phones this year, $1 billion more than last year and five times more than 2008. What was once unthinkable is now a distinct possibility: the spectacular adoption curve of traditional e-commerce on the Internet could be eclipsed by mobile commerce. Morgan Stanley predicted that, by 2015, more users will connect to the Web through mobile devices than traditional desktop/laptop PCs and those users expectations will continue to rise: if its on their desktop, theyll want it and more on their mobile phone. Whats driving the explosive growth in e-commerce? Its all about the smartphone. A recent Nielsen survey found that smartphones accounted for nearly 30 percent of all phone purchases and that 45 percent of respondents indicated that their next mobile device will be a smartphone. With this level of adoption, mobile commerce could be a $200 billion industry worldwide within five years. And mobile commerce is about much more than purchase transactions. Mobile devices also influence purchases made in other channels as well. For instance, when making a fairly high-priced purchase of a household appliance, the consumer can perform point-of-sale research by scrolling through product reviews and customer ratings while standing in the aisles of the brick-and-mortar store. Deloitte recently found that 21 percent of consumers used mobile phones to help them shop. Of that group, 36 percent used a phone to visit a website to shop for products or services, 35 percent did comparison shopping, 29 percent researched prospective purchases, and 25 percent transacted a purchase from the mobile device. These trends will only accelerate as consumers continue to embrace mobile devices of all sorts and as vendors refine and optimize the online experience for these users.

2011 Demandware, Inc. | www.demandware.com

Developing a Mobile Commerce Strategy

Mobile devices represent far more than just an additional sales channel. In reality, mobile commerce is a new, efficient, anywhere means for consumers to access and leverage existing channels. That means your strategy must be holistic in nature. Mobile integrates your retail channels, finally enabling you to truly deliver a fully developed, cross-channel experience. Key steps in developing your strategy: Define Your Overarching Business Strategy Mobile should not be viewed as a separate initiative, but rather an integrated part of your existing multi-channel strategy. Determine how mobile commerce can best support your existing business strategy and support defined goals. If you want mobile commerce to drive revenue growth, your strategy should be very different than if your goal is to drive traffic to store locations or enhance the brand image. Understand Buyer Expectations Its essential to understand how your customers behave, what their shopping needs are, how they use mobile devices, and what they expect from your brand and their commerce experience. Your screen real estate on any mobile device is inherently limited so understanding the information hierarchy that matches customers mobile objectives becomes critically important. Understand the Technology Make sure you have a clear picture of the technology landscape and identify a methodology for delivering the appropriate experience to customers in ways that are efficient, scalable, and feasible for your internal resources to execute.

Mobile should be an integrated part of your existing multi-channel retail strategy.

2011 Demandware, Inc. | www.demandware.com

The Secrets to Mobile Commerce Success

Ultimately, success in mobile commerce hinges on the ability to deliver a shopping experience that leverages the unique characteristics each different device has to offer. Typically, consumers use mobile phones to shop while theyre on the go. They are going from place to place and dont have much time. That mandates a different set of assumptions and requirements. Once youve decided to move forward with mobile strategy, make sure you factor in the following musts: Customer Centricity Dont treat mobile as a separate channel. Instead, make it part of an overall multichannel retail strategy and embrace the fact that its just an additional customer touchpoint, a different medium by which the customer can enter your retail, service, or brand experience. Create consistent customer experiences across the channels, whether its a brand experience, pricing policies, or promotions. Speed A 2009 Forrester survey found that only 14 percent of U.S. Web shoppers with an Internet-enabled mobile device used it to make a purchase. But 50 percent of those who hadnt used it to make a purchase would -- if it was a faster experience. In addition, a recent study from Gomez (a Web and mobile Web measurement firm) found that 58 percent of mobile Web users expect website load speeds to be comparable to, or better than, what they experience on their personal computers. Security Confidence in security is critical. Make sure that payment methods minimize any risk-exposure for the customer. Mobile devices are susceptible to loss or theft, so consumers must firmly believe that their personal and financial information is safe. Feasibility Choose a model that is easy for your company to implement, manage, and extend. Mobile commerce is not a short-term trend or fad that will go away. So take a long-term view that reflects an investment in solutions and processes that are efficient and support your longer term objectives.

2011 Demandware, Inc. | www.demandware.com

Defining an Approach: Start with a Mobile Website, then Consider a Native Mobile App
Retailers today have two main choices in implementing a mobile strategy: A Website for Mobile Commerce Adapting an existing website for access from mobile Web browsers. A Native Mobile App Creating a mobile application that can be installed on a mobile device. Retailers must determine which option to pursue or pursue both in sequential or simultaneous phases. For most retailers, the best place to begin is by developing a mobile website that satisfies the shopping needs of most consumers and provides a foundation for a wider mobile strategy. Mobile websites offer a logical starting point for three key reasons: The Popularity of Mobile Browsers - Users are likely to view the website through a mobile browser, so its essential to ensure a high-quality user experience that extends the strength of the brand. If consumers encounter a website thats not optimized for a mobile browser and is therefore difficult to use, they will likely abandon the site and form a negative perception of your brand. Greater Penetration Mobile websites let your shopping experience reach a broader number of buyers by rendering the site in the mobile browser regardless of mobile OS Android, Apple iOS, Blackberry, or other platform. That means you reach a wider consumer base than by developing for one specific platform. Consumer Preferences By a wide margin, buyers prefer mobile websites over downloading a dedicated app. Sixty-six percent of consumers prefer to review content via the mobile Web, while only 34 percent prefer a downloaded app, according to a Mobile Experience Survey conducted by Adobe in October 2010. Starting with a mobile website can drive a higher likelihood of consumer adoption and satisfaction with your mobile strategy. Once your mobile commerce-optimized website is in place, you could consider developing a native, device-specific downloaded application (i.e. a dedicated app for the Android, iPhone, or iPad). Native applications make sense in certain circumstances: Powerful Brand If you are an online retailer with a powerful brand, you can drive consumers to download and use a native app.

2011 Demandware, Inc. | www.demandware.com

 Frequent Shoppers If you have loyal online buyers with high frequency on your current e-commerce site, they are likely to download and use a native app. Customer Affluence Native apps are primarily used on smartphones, which are more expensive than other mobile devices. If your customer base has the higher income or net worth to purchase and use smartphones, then a native app can make sense. A Richer Mobile Experience Native mobile apps can leaverage all the functionality of mobile devices, such as the camera or GPS, as well as provide the opportunity for offline purchases, such as when the buyer is on an airplane.

2011 Demandware, Inc. | www.demandware.com

Designing a Smart Mobile-Web Experience

When it comes to designing the user interface for your storefront, simplicity is the most important principle. The upfront work you do to understand your customers mobile behaviors and expectations for your brand will pay off as you determine the right information hierarchy, navigation, and templates for your pages. The nature of your business and the high-level objectives for mobile commerce also directly impact these elements.

When it comes to designing the user interface for your storefront, simplicity is the most important principle.

Emphasize the Top Three Use Cases on the Home Page For a large multi-channel retailer, prominently positioning the store-locator on the home page may yield significantly improved results. But an online specialty retailer might want to emphasize the search box. Based on your high-priority elements, the rest of your navigation must be simplified and optimized so that users have clear starting points for their mobile experience. Think Vertically Instead of the ordinary horizontal navigation across the top of the site, consider a vertically oriented navigation column that is better suited to the mobile-device form factor. Dont Waste Space With limited display space, virtually everything onscreen should be clickable. There should be an appropriate justification for each piece of information and everything should link to where the customer wants to go. Limit Choices Keep it simple. Regardless of other objectives, consumers ultimately want your products, so get them to product displays as quickly as possible. Layer after layer of subcategories is wholly inappropriate to the mobile format. Also, limit the number of links per page and space them appropriately for the mobile format. Inadvertent clicks on a mobile site are one of the more frustrating consumer experiences. Prioritize Position the most popular/ important categories, links, and products at the top so they are easy to access. The mobile device is not a browsing device. The information the user most likely wants should be in the most visible, easy-to-access positions. The product page on your mobile site must convey the most important pieces of information: price, description, images, and add to cart information. For more technical or complicated products, link to in-depth specs and additional information. Add ratings and reviews to help multichannel shoppers who mix browsing and purchasing on the Web.

2011 Demandware, Inc. | www.demandware.com

 Focus on Site Searches Regular reviews of site search results are crucial for mobile success. Be sure to review your internal searches for common misspellings and other terms that return null or incorrect results. And dead-end searches quickly lead to frustration and abandonment. Filtering options for search can be valuable. Let users target their searches to yield more relevant results and less scrolling. Streamline the Checkout Process More than ever, your checkout process has to be as simple and fast as possible, with minimal data-entry requirements. The checkout process must be fast and the interface challenges (small screen, small touch zones) magnify the importance of an efficient flow. Support for alternative payment methods such as PayPal Mobile and Amazon Wallet are crucial to minimize the need to enter basic address and credit card information. Get In Comparison Shopping Engines Mobile commerce sites must have a strong, optimized presence in comparison shopping engines in order to maximize the cross-channel benefit of customers conducting online product research while standing in a bricks-and-mortar location.

2011 Demandware, Inc. | www.demandware.com

10

Plan for the Future

Once youve launched a basic mobile storefront with the right features that make it easy to manage and maintain, you can expect to achieve a revenue lift of 1-3 percent in the near term. But additional opportunity lies ahead. Thanks to technologies such as HTML 5 and 4G networks, mobile commerce sites can expand their offerings to achieve a richer level of interactivity, personalization, and engagement with next-generation mobile devices. In particular, HTML 5 is already rapidly changing how retailers think about mobile commerce. HTML 5 enables retailers to support mobile Web browser-based shopping experiences with a rich user experience and the responsiveness and appealing performance of a native app. Retailers will have the option to deliver a mobile website leveraging the native capabilities of a smartphone without having to develop a native app. Capabilities such as barcode scanning, GPS geo-location services, real-time content sharing, and more will be feasible from within the mobile website. This offers retailers the ability to simplify the retail mobile strategy by developing a single mobile experience. Retailers should plan for the future by understanding the rapid evolution of the mobile marketplace and technology and building a mobile strategy nimble enough to adapt the pace of change.

2011 Demandware, Inc. | www.demandware.com

11

Case Study: Columbia Sportswear

Columbia Sportswear, a global leader in active outdoor apparel and footwear, launched a mobile storefront with Demandware Mobile. With a simplified navigation structure and a subset of template and feature customizations, Demandware Mobile enabled Columbia to launch the mobile storefront in less than six weeks. This new storefront Columbia.com/Mobile gives outdoor enthusiasts unprecedented access from their mobile devices to learn more about Columbia and its product line, find a local retailer, or shop on the fully ecommerce-enabled site. Some of the Demandware Mobile features include: Search Since mobile users are often in a hurry, Columbia conveniently presents search at the top of the home page for quick product lookups. Product Catalog and Categories - The full Columbia catalog is available from the mobile storefront, with key product categories, such as Men, Women, Kids, Accessories, Footwear and Outlets placed on the center of the home page. Product Subcategories - Consumers can easily navigate to product subcategories such as jackets, fleece, and shirts from product categories on the home page. Product Details Page - Product details are presented with images optimized for mobile screens, along with color availability, color, size and quantity selection, pricing, style, product description and features, and other information. Ratings and Reviews - Full product ratings, reviews, and product-details pages are all available from subcategory pages, bringing the full online shopping experience directly into the hands of the mobile consumer. Seamless Checkout - The checkout process is as simple and seamless as the main Columbia site. Its easy to add products to the cart, use a persistent shopping cart on all pages, and get order confirmations that include shipping options, tax, and total cost. Store Locator - A store locator lets users find nearby stores that sell Columbia products using the

Columbia mobile storefront homepage featuring primary navigation categories and store locator.

2011 Demandware, Inc. | www.demandware.com

12

smartphone GPS. Links on the store name opens Google Maps pages while links to the phone number dial the store telephone number. Cross-Channel Branding - The Columbia brand is seamlessly integrated across all pages on the mobile storefront and provides a rich cross-channel branding experience for customers, whether theyre shopping at one of Columbias retail partners stores, at its company-owned stores, at home or on the go. Privacy, Customer Service, and More - Persistent links to privacy, terms of the site, the Columbia Greater Rewards Program, customer service hotline, and Visit the Full Site are found across all pages. Columbias mobile storefront was built with Demandware Mobile, which leverages the rich capabilities of the Demandware Commerce platform that powers Columbias main website. Columbia simultaneously manages the day-to-day operations of both its e-commerce website and mobile storefront, through a single, unified environment. This greatly reduces the amount of site maintenance that must be done as well as duplicate changes and updates. In addition, with Demandwares integrated development environment (IDE), Columbia can customize, extend, and enrich the capabilities of its mobile storefront. For more information about Demandware Mobile, including a full list of features, examples of other leading brands using Demandware Mobile and best practices in mobile commerce, visit www.demandware.com/mobile. See for yourself - visit www.columbia.com on your mobile smartphone.

Columbias Mens Jackets category page featuring product image and name, price and customer reviews.

About the Author

As a member of Demandwares Retail Practice Team, Mary Halladay brings more than 17 years of experience in merchandising, online marketing, site production, team development, and P&L management to support Demandware customer deployments. Prior to Demandware, Mary managed the eCommerce business for adidas America. Her responsibilities included complete P&L oversight for the direct-to-consumer Web presence, including marketing, merchandising, analytics, design and development, operations, customer service, and fulfillment. Before adidas, Mary was a founding member of the team that launched Lucy.com and directed its customer service operations. Previously, Mary held a variety of positions in direct-to-consumer companies, including her own sport specialty store in San Francisco. She has also consulted for Title Nine Sports, a womens athletic brand in Emeryville, Calif. Mary has an MBA from the University of North Carolina, Chapel Hill and a Bachelor of Arts in history from Tufts University.

2011 Demandware, Inc. | www.demandware.com

13

About Demandware, Inc. The trusted, global leader in on-demand ecommerce, Demandware revolutionizes how businesses deliver customized shopping experiences to consumers in the digital world. Only Demandware combines the on-demand e-commerce platform rated No. 1 by industry analysts, an open ecosystem of partners that extends the value of the platform, and measurable commitment from its employees to client-revenue growth. Demandware continually sets standards for market innovation and client satisfaction. Demandware clients include industry leaders such as Bare Escentuals, Barneys New York, Columbia Sportswear, Crocs, Fredericks of Hollywood, Hanover Direct, Jones Apparel Group, Lifetime Brands, Michaels Stores, Panasonic, Playmobil, and Reitmans. About Retail Practice The Retail Practice team at Demandware is dedicated to helping clients increase their online revenue. Retail Practice has three key areas of focus: revenue growth, retailer advocacy, and industry thought leadership. The team consists of e-commerce experts across many different verticals with more than 100 years combined experience. Retail Practice members are product specialists skilled in the features/functionality of the Demandware application and know how to optimize revenue growth. The groups expertise also extends to defining end-to-end solutions that include merchandising, marketing (acquisition and retention), and design. Retail Practice team members are champions for the long-term value each client represents to Demandware, and act as the conduit in and between Demandware clients and the community.

2011 Demandware, Inc.

Demandware, Inc.

5 Wall Street, 2nd oor, Burlington, MA 01803

1 (781) 425-1400

www.demandware.com

2011 Demandware, Inc. | www.demandware.com