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SOCIAL MOBILE COMMERCE
An analysis of the future implications of Social Mobile Commerce on the retail industry in
the United States.
Kristen Batchelor Andrew Charnesky Daniel Ramos Anne Robles Alex Vander Linde
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Table of Contents Executive Summary ................................................................................................................. 4
Research Question ...................................................................................................................... 4
Topic in Context: ......................................................................................................................... 4
Expected Futures: ....................................................................................................................... 5
Alternate Futures ........................................................................................................................ 5
Strategic Business Implications ................................................................................................... 6
Path to a Preferred Future: ......................................................................................................... 6
Abstract ................................................................................................................................... 7
Topic in Context ....................................................................................................................... 8
Introduction ................................................................................................................................ 8
Boundaries and Structure ........................................................................................................... 9
Current Situation ...................................................................................................................... 10
Experts and Jargon .................................................................................................................... 11
Trends ....................................................................................................................................... 13
Stakeholders ............................................................................................................................. 16
Trend Analysis and Strategy: .................................................................................................. 17
Scenarios: .............................................................................................................................. 22
MobileMe ................................................................................................................................. 23
Pocket Genius ........................................................................................................................... 24
Bottleneck ................................................................................................................................. 26
Darkness ................................................................................................................................... 27
Future Business Implications ................................................................................................. 31
Opportunities ............................................................................................................................ 31
Threats ...................................................................................................................................... 33
Ethical Considerations .............................................................................................................. 34
A Path to Emergence: The Preferred Future ............................................................................ 35
Summary ................................................................................................................................... 38
Appendix ............................................................................................................................... 41
References ............................................................................................................................. 42
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Central Question:
What are the future implications of social mobile commerce (SMC) for business to consumer
businesses in the United States given the rise of social media, mobile technology and electronic
commerce?
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Executive Summary
Research Question
Today, there are 90 cell phone subscriptions for every 100 people in the United States and the
average Facebook user spends about one third of their Facebook time on a mobile device (FCC 2011;
Gartner 2011). Clearly, social media when combined with mobile
technology is a powerful force in today’s society and promises to be for
some time. The implications of social media and mobile technology with
regards to commerce in retail businesses will be investigated in this
report. Specifically, the main driving forces that will be used to
understand the future trajectory of social mobile commerce are: the proliferation of mobile devices, the
rising influence of social media, and the amount of data being collected about consumers. The total
amount of mobile commerce spending in the United States will be used as the dependent variable in
answering the central question.
Topic in Context
In looking at the future implications for social mobile commerce, focus will be placed on the
United States because it is the largest consumer market where companies have started to take
advantage of social mobile commerce initiatives and techniques. Although the future role that SMC will
play in business is not well understood, most companies and experts predict its increasing influence.
Preparation for this scenario and other potential scenarios will be at the core of this report.
Definition of Social Mobile Commerce (SMC):
Socially enabled commercial interactions that are either facilitated or augmented through mobile devices
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Expected Futures
By projecting currently available data, the most likely future (which may or may not actually be
likely) was established using the Institute for the Future's scenario development methodology. This
methodology was employed in order to create multiple scenarios under which the independent
variables and uncertainties exhibit a full range of possibilities. It was chosen in lieu of alternatives
because of the large technological and societal shifts that are expected to occur as a result of SMC. By
projecting the independent variables (please see the Appendix), incorporating potential disruptions,
analyzing expert opinions, and performing a strategic analysis of the current environment, a wide range
of trajectories were created. The baseline, or expected, scenario from these projections is called
MobileMe. It depicts a world where SMC is able to grow through ample data security and business
adoption that results in a world of increased convenience, word of mouth referrals, and improved
business to consumer relationships.
Alternate Futures
Though the expected scenario is the most likely, uncertainties must be accounted for; therefore,
a range of scenarios within the cone of plausibility was developed so that business recommendations
would be robust and adaptable. The main uncertainties for the future of social mobile commerce are
the presence of legislation and the development of security measures for mobile phones. In the Pocket
Genius scenario, society has fully embraced social mobile commerce and the economy runs smoothly
without cash while incorporating a new social currency that values influence and referrals. Meanwhile,
in the Darkness scenario, the lack of security measures has allowed organized crime to flourish, which
plunges the United States into a depression. Critical private information is exposed to hackers who then
use it to blackmail business leaders and politicians.
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Strategic Business Implications
This range of scenarios presents both emergent opportunities that must be capitalized on and
potential threats that should be prepared for as much as possible.
Figure 1
Opportunities: Threats: Increased consumer spending Adjusting to and avoiding crossing the privacy line
More effective advertisement spending Emerging government legislation limiting SMC opportunities
Improved relationships with customers Potential data monopoly (FB, Google, Apple) Increase market share Hackers and identity thieves Become more data driven with product launches and production levels
New customer relationship management (CRM) techniques must be adapted or companies will die
Path to a Preferred Future:
Although there is a wide range of possible scenarios, businesses must be prepared to navigate
and succeed in any possible future. After analyzing each scenario and creating Futures Wheels, it was
discovered that businesses should:
1. Embrace new platforms and technology 2. Establish systems for consumer data collection 3. Utilize collected data to identify – and develop solutions for – niche consumer
problems 4. Vigilantly protect consumer data 5. Create a Protective Coalition of Social Mobile Commerce Companies (PCSMCC) to
hedge risk of restrictive government legislation 6. Reward consumer engagement by developing a universal social currency
If businesses follow these steps, it is not guaranteed that they will reach the preferred scenario,
but they will be best prepared for a wide range of potential outcomes resulting from the trend that is
social mobile commerce.
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Abstract Since 2000, the percentage of cell phone subscriptions in the United States has more than
doubled (FCC, 2011). Social media has successfully capitalized on this increasing trend by developing
mobile applications. In 2011, over 60% of Twitter’s traffic was from mobile alone (Gartner 2011).
Meanwhile, businesses are beginning to collect and analyze increasing amounts of information on
consumers. Social mobile commerce (SMC) is emerging as a result of these megatrends. If implemented
properly, SMC will allow businesses to effectively and efficiently market to customers and thus realize
increased sales. It is therefore crucial that businesses analyze the forces driving social mobile commerce
as well as the uncertainties surrounding it to better understand how they can integrate SMC into their
business models. The central research question examines how mobile phones, social media, and big
data continue to fuel social mobile commerce as a powerful strategy. Analysis of past data on these
driving trends will be used to create projections. Business adoption, adequate security measures, and a
legislatively supportive government are all large uncertainties surrounding SMC; however, if correctly
implemented, social mobile commerce will lead to stronger customer relationships for businesses that
will ultimately result in increased sales.
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Topic in Context
Introduction
Currently, social mobile commerce is manifested in social network notifications of peers’
purchases, in-‐store mobile self-‐checkout applications, and text message coupons. These are just the
beginnings of the social mobile commerce revolution that could radically reshape business to consumer
relationships. SMC aims to streamline the entire purchasing transaction and make it possible from
anywhere. Consumers should welcome advertising because it will be targeted to them and come from
their friends. Price comparisons should be instantaneous and purchases should be secure and effortless.
Finally, telling the world or just a few friends about your experience should be both rewarding and fun.
Social mobile commerce will expand as fast as businesses can create initiatives that add value to
their consumer’s purchasing experience. It is all about the consumer experience and if businesses can
find a way to improve it by making it more convenient, more fun, or more interactive they will see sales
increase. By analyzing the proliferation of mobile phones, the rise of social media networks, and the
increasing amount of data collected the future of social mobile commerce can be projected into a range
of possible futures. Businesses must also be aware that privacy concerns and legislative action pose
serious risks to its growth.
The number of mobile cellular subscriptions has risen from approximately 42 million in 2000 to
over 250 million in 2010 (FCC, 2011). Mobile advertising revenue doubled from 2010 to 2011, jumping
from $304 million to $702 million in 2011 (Petey, 2011). It is difficult to measure and project social
mobile commerce because it is still in its infancy, and its direct effect on sales remains to be seen, but E-‐
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commerce can be used as a proxy for SMC because their adoption by businesses follow similar
trajectories. Since 2000, e-‐commerce has grown from 1 percent of retail sales to approximately 5
percent in 2011 (U.S. Census Bureau, 2011). The mobile application market has grown twenty times
from 2008 to 2011, rising from $200 million to $3.8 billion. Almost half of all the people accessing retail
sites employ mobile devices to do so (ComScore 2011). As these statistics show, mobile technology is
growing in the United States at a rapid pace and businesses have already begun to capitalize on its
ability to reach consumers.
This report sets out to determine the role social mobile commerce will play in strengthening
business to consumer relationships with the goal of improving consumer purchasing experience which
will lead to increased transactions. The report will focus on SMC in the United States because it is the
largest consumer market in the world. Before explaining the trends driving social mobile commerce and
the stakeholders it affects, the definition of SMC and the current state of the market must be assessed.
Current trends will be projected using quantitative data and qualitative information that will be used to
develop a range of scenarios. A preferred scenario will be identified and a path to that scenario will be
determined. Major uncertainties still surround the arena of social mobile commerce, however, and
businesses need to be on the lookout for signposts of these different possible scenarios in order to be
adequately prepared for the future.
Boundaries and Structure
The purpose of this report is not to predict what social mobile commerce will be in the future
but to provide recommendations for businesses so that they can be prepared for a wide range of
possible scenarios. For the purposes of this report, SMC is limited to socially enabled commercial
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interactions that are either facilitated or augmented through
mobile devices in the United States. An example of SMC today
can be seen on the next page. (Figure 2)
It is important to note that SMC does not include banner
advertising as seen on Facebook or other sites or blanketed emails
by Groupon or LivingSocial because these are not inherently social.
All social marketing efforts are not created equal, for example:
traditional social network ads (a banner on Facebook) fail to engage
96% of users, but 71% of people claim reviews from family
members or friends exert a "great deal" or "fair amount" of
influence (Harris Interactive, 2010).
Current Situation
The current state of Social Mobile Commerce is relatively
limited. Although there exist plenty of daily deal sites, QR scanners,
mobile price check tools, and text messaged coupons there is not a
market presence that incorporates social networks and mobile
technology to facilitate sales. There are, however, clear indications that
companies are looking to combine both of these aspects. For instance,
there is a mobile application called Apple Store that allows consumers
to self-‐checkout via their iPhone in an Apple retail outlet. Additionally,
Near Field Communication (NFC) mobile payment is already a reality in
Source: Apple Store Application
Figure 2
Figure 3
Source: Mobile Facebook
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Japan where 10% of mobile phone users have made tap-‐and-‐go payments last year (“Global Mobile
Statistics,” 2012).
There are three key factors that have brought social mobile commerce into the limelight: the
rise of social networks, increasing availability of consumer data, and mobile technology. Social networks,
whose popularity is a result of the rise of the internet, the network effect, and Facebook, have allowed
for very specific targeting of consumers and have made sharing of digital content, such as product
reviews, easier. The dramatic rise of mobile technology has resulted from more powerful mobile
processors and the increased convenience of being able to do things on the go. Lastly, both of these
trends have helped to augment the total amount of consumer data that companies can use to advertise
products.
Experts and Jargon
In order to fully understand the current condition of social mobile commerce, it is necessary to
know who the experts are, what they are saying, and how they are defining specific terms. There are
two primary classes of experts: those who research about or surmise the potential uses of social mobile
commerce and those who apply social mobile commerce strategies to real-‐life business situations.
Academics: The first category of experts could, broadly speaking, be termed academics. These
experts focus on adding to the knowledge base by polling consumers, forecasting, and creating
frameworks to help businesses understand the significance of social mobile commerce. These experts
largely conclude that it “has opened opportunities for new business models for electronic commerce”
but that businesses have not yet mastered the capabilities of this powerful tool (Liang & Turban, 2011).
Professionals: The second category of experts, people in business who are either trying to
position themselves for the predicted rise of social mobile commerce or the consultancies advising these
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companies, are more reserved about the actual potential that social networks like Facebook offer.
Though these experts may be inspired by academics, they are frequently discovering first hand what
capabilities and limitations exist. Most recently, several high profile retailers including J.C. Penney,
Nordstrom, and GameStop have all closed their Facebook stores within the last year citing inadequate
returns on investment (Lutz, 2012).
Figure 4
Expert Expected Trajectory
Sound Bytes
Consultants
Accelerating
ü "SMC will facilitate dynamic interaction...creating a customer connection"
ü "Mobile will bridge the gap left with traditional media and technology"
ü "Mobile technology is with the customer every day. It interfaces with customers in a multitude of ways."
Government
Unclear
ü “Democrats are inquiring what types of data Facebook and Twitter collect from users after social networking app Path collected users address book info and photos without users’ knowledge or consent”
Academic
Decelerating
ü “In 2011, the adoption of blogs, Twitter, and Facebook by the Fortune 500 appears to have leveled off. There is also a clear sign from some companies that these are not part of their communications strategy.”
Industry
Rapidly Accelerating
ü “While still in its infancy, mobile advertising will become an increasingly important component of the mobile landscape.”
ü “Social networking has been among the fastest growing activities for mobile users since December 2009.”
ü “For all brands operating in the mobile space, whether it be device manufacturers, operating systems, carriers, or mobile content developers; knowing how consumers are interacting with mobile will be critical in this increasingly competitive market.”
ü “The way audiences consume media is drastically changing and so too must marketing strategies.
ü “One can expect to see continued growth in the use of mobile device to obtain real-‐time price and product information in support of an intended in-‐store buying decision”
(Qwasi; Multichannel; Barnes)
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Considering that social media, data availability, and mobile technology have birthed social
mobile commerce, it only seems natural for Facebook founder and CEO Mark Zuckerberg and
Amazon.com CEO Mark Bezos to also be considered leaders in this field. Though these experts are no
doubt trying to incorporate social mobile commerce into their sites, other experts do not think they are
succeeding. Wade Gerten the founder of technology solution provider 8thBridge has stated that
Facebook is a poor medium to conduct commerce but a great forum to share knowledge about certain
products with friends (Savitz, 2012). Whether this will remain the case in the future is to be determined
and a subject of great consternation amongst the likes of Zuckerberg, Bezos, and other experts.
Trends
Social Networks: Among the main forces driving social mobile commerce to new levels is the
rise of social networks. This emerging technological trend continues to allow users to create and define
their shopping experience (“Bazaarvoice,” 2010). The 2010 social Commerce Summit reported that the
“customer’s voice is a form of viral media” as consumers use a wide breath of social media to make
purchasing decisions (“Bazaarvoice,” 2010). Not only has the rise of social networks offered a new
marketplace for consumers to purchase, but also as a marketing tool where they can share reviews
about experiences with products and services. As Facebook reached 840 million users, companies are
utilizing social networks not just to sell to customers, but to develop their brand and improve their
customer service through direct response to customers (“Bazaarvoice,” 2010; Internet world stats,
2012). Social networks will drive social mobile commerce as businesses utilize these networks to get
input from buyers and then target their product and marketing based on this social data. Despite this
opportunity, businesses need to know where to draw the line between beneficial involvement and
overstepping their boundaries (“Bazaarvoice,” 2010)
