The next battleground for consumers will be via their smartphones and tablets. And the potential market will be massive, with eMarketer estimating that by the end of 2013, there will be over 30 million smartphone users in the UK alone.
The business case for the further development of m-commerce is clear. And with an appetite for digital goods that shows little sign of slowing, coupled with 4G fast data connections, the environment for a revolution in digital retailing is set to take place.
And it appears that UK consumers like to shop with their mobile devices: Research from VoucherCodes.co.uk has shown that nearly a quarter of Britons have used their phones to make a purchase.
Said Max Jennings, co-founder of VoucherCodes.co.uk: "With vast swathes of the general public smartphone equipped and smart shopping technology widely available to retailers, the conditions are right for a period of significant growth in m-commerce. The UK has traditionally been ahead of curve when it comes to e-commerce and it's good to see the same can be said for mobile retailing."
For businesses the advantages of selling digital goods is clear:
- Inventory can be stored on low-cost cloud-based services
- Delivery is direct to a consumer's device with no logistical processes to negotiate
- Payment can be made instantly
- Digital goods can be sold 24/7
- Low overheads
- Full integration into an existing online store
Many retailers with an existing online presence, selling digital goods that are complementary to their existing product lines can be a great additional sales channel that can deliver many upselling opportunities. It's important to assess what kind of digital products could be sold, and if they are appropriate for access and delivery via mobile devices.
It is also critical to understand the sales process. Services now exist that offer a one-stop-shop for budding e-goods retailers. From music and games, to digital accessories to personalise a mobile device, these services can help your business succeed in this new market. Some of the leading platforms include:
Says Phil Rothwell, marketing director at ecommerce software supplier, SellerDeck: "Singly m-commerce is the biggest game-changer in the digital product market. The PC isn't quite dead, but its role is changing and market share decreasing. The good news is that if you support Windows, iOS and Android devices, you'll cover most bases. The bad news is that scrambling up the m-commerce learning curve is going to take time and effort."
The mobile digital economy
One of the most powerful aspects of mobile commerce is the immediacy that can be instilled in a potential customer. As these consumers see goods or services they want to buy they no longer have to wait – and potentially forget to make the purchase – when they get back to their desktop PC. They can make the purchase immediately using their phone or tablet.
As PayPal advise: "Rapid mobile adoption by consumers means that they no longer look at m-commerce as a novelty—they now expect leading merchants to provide them with a convenient, available-everywhere mobile shopping experience. And because mobile has the ability to influence in-store retail sales, with so many price comparison and location-based marketing mobile apps now available, m-commerce is as much an imperative as an opportunity for merchants."
Businesses that want to move into selling digital goods via mobile platforms should plan carefully to ensure the services they offer don't disappoint their customers. A survey from the Econsultancy is telling in that it revealed only 9% of consumers are happy with the payment system used on m-commerce sites. Just as a smooth and uncomplicated checkout process is vital on a website, this is even more important when selling digital products on mobile devices.
And as SellerDeck's Phil Rothwell continued, mobile commerce is a moving target that will mean your business has to constantly evolve its services across all mobile platforms. "Keeping up with new mobile platforms as they come on stream is a major problem, and one that the industry hasn't faced since the PC became ubiquitous," Phil advised.
"For instance, if more people are ordering in iOS and Android based devices, you have to ask if your content is going to be compatible.
We recently set up a .pdf download on a page that was supposed to populate an iframe in a browser. On some smartphones and Kindle devices this didn't work, so we had to make some changes. These days you have to understand how your customers will handle this, you can't assume that if your offerings work in a Windows environment they will be compatible with other devices."
The massive popularity of apps is also a key driver behind m-commerce. Consumers love their apps, and if they are presented with an attractive proposition to buy, they want few barriers to do so. As PayPal explain:
"App stores like Apple's App Store and Google's Android Market are continually innovating by providing a new value chain with additional monetization models like buy and try, in-app offerings, subscriptions, and more to invite ever more consumers and merchants into m-commerce."
Whether your business builds a mobile optimized website or an app to showcase the digital products for sale, Sylvain Reiter, development director at Cyber-Duck advises: "Check pricing and ensure margins are always correct.
Security – making sure that you have the highest security procedures in place is vital. Try to find a way to get visitors to return to your store, by pushing notifications and offers or finding a "hook". There is a lot of competition out there and they are all doing this. As much as there is a plethora of choice available to consumers, research shows users still like to be loyal to businesses that reward them."
Getting started with selling digital goods
Selling digital goods could be a massive and potentially lucrative channel to develop. Follow this checklist to get started:
1. Assess the competition in your market place for any similar services
2. Research your existing customer base. Do they want to buy digital products on their mobile devices?
3. What mobile devices will your business need to support?
4. Is a website optimized for mobile devices more appropriate than an app?
5. Don't forget that sales taxes apply to some digital goods. Build these taxes into your prices
6. Carefully consider how digital goods will be licensed to users and what consumer rights legislation could impact on these sales
As consumer purchasing increasingly moves to digital goods purchases on mobile devices, those businesses that can understand this new channel will be able to become market leaders in their sector. PayPal concluded: "As far as some merchants and developers are concerned, having a mobile website or app is as critical to your brand today as an Internet presence was in the late 90s. And having both a mobile-optimized website and a consumer friendly app is an unbeatable media combination for merchants seeking mobile brand dominance.
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