How Mobile Is Transforming Retail

It won’t be long before you could be anywhere — in either a private or public setting — and could scan everything in sight. The phone will ask you if you are buying or selling, superimpose a price tag on each item, and ask you if you want to complete the transaction virtually or in a store.An app like this could come in handy when you spot someone in the airport wearing a coat that you covet or when you fall in love with an antique clock at a friend’s place. So just how will your phone — with the help of a good broadband connection — use pixilated images to price the products? That is where eBay’s database comes in. The Silicon Valley company, which started out 16 years ago as a marketplace for the sale of goods between individuals, today has an extensive inventory of new products and a huge database of quirky old ones.

eBay is zooming in on the precise moment when people become aware of and interested in a product and making it easy to point, click and buy using PayPal, its mobile payment service. It is called situational commerce and Steve Yankovich, the company’s vice president of innovation and new ventures, promises “it is going to change everything.”

It is already changing that nature of what eBay is and does. “It is no longer just about e-commerce; we are now playing in the ocean of all commerce, “ says Yankovich, who, along with PayPal President David Marcus, will be attending the Mobile World Congress in Barcelona February 23-28.

It is no surprise that eBay now exhibits alongside mobile operators at the show. Mobile is core to eBay’s business, whether it’s facilitating the actual transaction or the payment processing itself. Today, the company says, one in three eBay Marketplace transactions has a mobile component.

eBay mobile finished 2012 with $13 billion in payment volume — more than double what it generated the prior year — and PayPal mobile handled almost $14 billion — a 250% increase over 2011.

In 2013, the company expects each unit to exceed $20 billion in payment volume, a testament to how the mobile revolution is rapidly changing the retail landscape.

The next wave of services is ushering in a dramatic blurring of the lines between e-commerce, m-commerce and high-street retail. Nearly half of local shopping now starts on a mobile browser and approximately one in three mobile transactions is actually done in store. “For us the smart phone is the hub — it is absolutely key,” says Yankovich.

Physical retailers are starting to use Internet technology to make consumers’ lives easier in several different ways. Soon there will be no more worrying about redeeming coupons or loyalty points — anything you have earned in the offline or online worlds will be digitally recorded and automatically credited at time of purchase, no matter where you buy. Since payments are mobile they will no longer be tied to old-fashioned cash registers, freeing sales assistants inside stores to help customers check out and pay from the aisle or changing room. Context-relevant location-based shopping experiences will become the norm, meaning customers will be able to skip waiting in line, by ordering remotely and then picking up their food or favorite drink in-store.

In this new omni-channel world, merchandise and promotions will not only be consistent across all retail channels, adapting to consumers who want to use different channels simultaneously — the offers will be personalized according to a specific consumer’s purchase patterns, social network affinities, website visits, loyalty programs and other mined data.

eBay is helping lead the way. It plans to launch new hardware at the Mobile World Congress and will showcase some of its state-of-the art services.

Almost a year ago the company launched a PayPal Here mobile card reader device that competes directly with Square, a credit-card reader and mobile app developed by Twitter co-founder Jack Dorsey. To date neither company has launched a comparable solution for countries that predominantly use chip and pin technology. At MWC PayPal will announce that it plans a European launch for a fully-encrypted, palm-sized chip and pin device that can be paired with an existing smartphone via Bluetooth. The device will be available in the UK this summer and rolled out to other countries later. Greedy Goat, which sells ice cream made from British goat’s milk in Borough Market, a popular London food and produce market, will be among the first to use the device to accept credit card payments.

Card reader devices aid small businesses that normally would not be able to handle credit card transactions. But a key to eBay and PayPal’s success in the market is that the majority of its innovative new services work with existing hardware. A few of those services include:

  • In France, customers can already order a meal from McDonald’s on smart phones via the GoMcDo app or online. They can pay with PayPal, scan their confirmation QR code at a kiosk at any of the 30 participating locations, and “check in,” eliminating the need to wait in the general line. PayPal is rolling out a similar service at Jamba Juice in the U.S. and has partnered with NCR, the payment solutions provider, to make it easier for other restaurants to integrate this payment method into their existing systems. (This service will also be offered at two of the restaurants inside the Mobile World Congress this year.)
  • In the United Kingdom, customers at over 400 Pizza Express restaurants can settle their bills without having to flag down a waiter. Once they are done eating, all they need to do is pull up their Pizza Express app and pay with PayPal. The waiter is notified wirelessly on his POS system and the customer is free to walk out the door.
  • In the Netherlands, shoppers in Amsterdam’s trendy 9 Straatjes district can use PayPal to directly buy what the mannequins are wearing in the store windows with a single tap of the button — whether the store is open or not — and have it delivered to an address of their choosing.
  • In the U.S., an eBay-developed Holiday Gift Finder iPhone app for toy store FAO Schwarz suggests gifts for shoppers based on gender, age, price range and product type, leveraging available inventory in the FAO Schwarz eBay Store. Shoppers can buy the item through the app using PayPal.
  • eBay’s mobile marketplaces app is now available in eight languages in 190 countries around the world and localized versions of eBay’s RedLaser comparative shopping app are available in Brazil, the U.S., UK, Germany, France, Italy, Spain and Australia.

Major operators like Vodafone are putting near field communications (NFC) at the center of their m-commerce strategies. The SIM-card-anchored service, which requires specially-adapted mobile phones and point-of-sale terminals, aims to replace the plastic cards populating customers’ wallets and purses. (See the story on pages 6 and 7.) But like PayPal’s Marcus, Yankovich dismisses NFC, which has been slow to roll out. “NFC doesn’t matter. We don’t need it,” he says.

In keeping with its broader goal of addressing not just e-commerce or mobile commerce but all commerce, eBay has launched a Red Laser bar code scanning app that helps consumers comparison shop in the physical world. It also launched a Red Laser “In-Store Experience” service that helps retailers communicate with their customers on the home screen of a kiosk by showing special offers, store maps, and items relevant to them when they step into a particular store. Best Buy was the first retailer to partner with RedLaser and geofence its roughly 1,100 US locations (when customers who have opted in get close to a store, or go to a particular part of a store, promotions pop into their smartphones). It was quickly followed by Target and Walgreens, which geofenced nearly 1,800 and over 8,000 stores in the U.S. respectively. “We want to help people experience the physical store in a different way,” says Yankovich.

If Yankovich has anything to do with it expect the company to keep powering things that don’t look at all like what was once considered a typical eBay transaction, whether it be in physical stores or on mobile phones.

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