MOBILE STRATEGY FOR BIG-BOX RETAILMOBILE STRATEGY FOR BIG-BOX RETAILQ4 2010 | Rei Kasai | reikasai@gmail.com

Image Source: Oracle

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•Venture Advisor for Sierra Ventures, VC-firm with $1.5B under management•Focus on early-stage mobile and cloud technologies

•8+ years of mobile, 11+ in software•M&A strategy for a mobile payments venture•BD and Product leader for Dexterra, a multi-OS (iOS, Symbian, RIM, and Windows Mobile) mobile applications platform for carriers and ISVs•Customer development for Net6 (Acquired by Citrix for $50M in 2002), a mobile internet platform for consumer internet•IT Consulting for Octane Software (Acquired by E.piphany for $3.2B in 1999), first internet-based CRM software for enterprise

•UC Berkeley-Haas MBA•Contact info: reikasai@gmail.com, www.linkedin.com/in/reikasai

ABOUT THE AUTHOR- REI KASAIABOUT THE AUTHOR- REI KASAI

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•Globally, there are approximately 4.6B mobile subscribers = 68% of world population

•Mobile phones outnumber TVs 3 to 1 and PCs 5 to 1

•One mobile phone = One unique user, making it a precisely targeted communication channel

•Mobile technology (Smartphones and 3G high-speed data networks) finally mature and widely available to enable mobile retail

•In the U.S., 20% of mobile subscribers are Smartphone users (45M) and have the potential of using mobile retail today, growing to 50% by end of next year

•Aberdeen survey of 129 retailers found 38% are engaged in mobile retail (compared with 18% in 2008)

MOBILE IS AN IMPORTANT CHANNEL TO CUSTOMERSMOBILE IS AN IMPORTANT CHANNEL TO CUSTOMERS

Source: Chetan Sharma, Frost & Sullivan, Juniper Research, Gartner, Aberdeen

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GMOBILE APPLICATIONS IN THE RETAIL PURCHASE CYCLEMOBILE APPLICATIONS IN THE RETAIL PURCHASE CYCLE

Source: Adapted from GS1 and GigaOM

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GMOBILE FEATURES OF TOP 10 MASS MERCHANTS OF THE INTERNET RETAILER TOP 500MOBILE FEATURES OF TOP 10 MASS MERCHANTS OF THE INTERNET RETAILER TOP 500

•Retailers are experimenting. Best Buy, Macy’s, and Target have the broadest scope.

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Short Range•After the iPhone, prioritize mobile application development for Android over Blackberry

•Develop mobile applications than mobile web, for now

•Focus mobile app to be a productivity tool for product research in-store and outside

Long Range•Make mobile coupons part of a larger digital coupon platform strategy

•Pilot location based services to validate technology and approach

•Research shopping enabled TV and movies with iPad application

MOBILE STRATEGY RECOMMENDATIONS FOR RETAILERSMOBILE STRATEGY RECOMMENDATIONS FOR RETAILERS

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GANDROID WILL LEAD SHIPMENTS BY THE END OF THE YEAR

•Support for Android can’t be ignored. Android adoption growing very rapidly and will lead shipments by end of the year –due to broad GTM of availability on every U.S. carrier and over a dozen handset models.

•Blackberry is market leader, but ability to deliver a comparable apps user experience to iPhone and Android questionable. Blackberry is laggard for mobile web and app usage. iPhone and Android disproportionately drive mobile web and apps traffic, per AdMob.

•Windows Mobile should be de-prioritized too. Upcoming release garnered positive reviews, but will have limited availability on GSM networks (AT&T/T-Mobile) until the middle of 2011, when it will launch on CDMA networks (Verizon/Sprint).

MARKET LEADER BLACKBERRY IS LOSING SHARE QUICKLY TO ANDROID

IPHONE + ANDROID DRIVE MOBILE WEB AND APPS TRAFFIC

1. AFTER IPHONE, DEVELOP FOR ANDROID OVER BLACKBERRY1. AFTER IPHONE, DEVELOP FOR ANDROID OVER BLACKBERRY

Source: Nielsen, AdMob

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G4B MOBILE APPS DOWNLOADS = STRONG CONSUMER DEMAND

•iPhone shifted consumer behavior from navigating content through web browser to installing mobile apps to discover, view, and purchase content.

•iPhone and Android users spend at least 79 minutes/day using apps and download 9 apps/month per AdMob.

•While mobile web has broader reach and HTML5 provides mobile application like features (integration with GPS/camera and data storage), poor user experience of browsers for non iPhone/Android devices and lack of reliable mobile data services are temporary reservations for mobile web.

IPHONE AND ANDROID EQUALLY USE MOBILE APPS AND MOBILE WEB

MOBILE APPS PROVIDE BETTER USER EXPERIENCE THAN MOBILE WEB

2 . DEVELOP MOBILE APPLICATIONS THAN MOBILE WEB, FOR NOW2 . DEVELOP MOBILE APPLICATIONS THAN MOBILE WEB, FOR NOW

Source: Nielsen, Morgan Stanley, AdMob, Apple

Mobile Web = Mobile Apps Usage

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•Retailers can drive higher adoption and user engagement by aligning mobile app as information tool for product research in-store and outside than as a transactional use-case.

•Traditional search (Google on PC) is not a gateway for information on mobile. Mobile apps are discrete information search engines (Yelp, Fandango, Redfin, Weather Channel).

•Product research capability can be improved by:A.Focus help with shopping in categories consumers care about opinion of others (Baby, Home, Electronics) and price. B.Optimize interaction with products through bar code scanning, and visual search. C.Enable recommendation engine and 3rd party reviews to enhance product data.

TRADITIONAL SEARCH ON PC = MANY MOBILE APPS

STREAMLINED PRODUCT SEARCH WITH BAR CODE SCANNING

3. FOCUS MOBILE APP TO BE A PRODUCTIVITY TOOL FOR PRODUCT RESEARCH3. FOCUS MOBILE APP TO BE A PRODUCTIVITY TOOL FOR PRODUCT RESEARCH

Scan Research Buy

Source: Search Engine Land, Shop Savvy

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GINSTANT REVIEWS AND PRICING WITH BAR CODE SCANNING

•Mobile barcode scanning using Smartphone camera•Instant product information, user reviews, brick-and-mortar and online pricing data•5.5M Android and iPhone downloads•250K barcode scans in 24 hours for Xbox Halo Reach game•SDK available for retailers•Competitors Red Laser acquired by eBay June 2010 and SnapTell by Amazon June 2009•Current internet retailers that have barcode scanning in their mobile apps: Amazon, Sears/K-Mart, Target, and Best Buy

PRODUCT RESEARCH VENDOR SPOTLIGHT- SHOP SAVVYPRODUCT RESEARCH VENDOR SPOTLIGHT- SHOP SAVVY

Shop Savvy

Source: Shop Savvy

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GVISUAL SEARCH IS STILL EARLY BUT PROMISING

•Mobile visual search with Smartphone camera•Like barcode scanning, but with pictures for instant product information and pricing data•SDK available for retailers•Pilot with BestBuy and NexTag•Strong IP with PhD imaging recognition staff•Future application could include search in mobile video/TV content•Amazon is the only internet retailer that has visual search through 2009 SnapTell acquisition

PRODUCT RESEARCH VENDOR SPOTLIGHT- IQ ENGINESPRODUCT RESEARCH VENDOR SPOTLIGHT- IQ ENGINES

oMoby by IQ Engines

Source: IQ Engines

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•Mobile coupons are important to retailers because they can drive noticeable lift to online and physical store traffic (redemption of mobile coupons compared to paper coupons 16% vs. 1%).

•Technology has evolved from scans of paper to digital platforms for retailers and brands to collaborate in real-time to drive marketing programs.

•Adoption slow due to lack of personalization (mobile is personal, thus pushing generic coupons viewed as spam), problems with redemption at POS, and competition with online coupons.

•Mobile coupons can be successful if retailers incorporates mobile coupons as part of larger digital coupon platform strategy that anticipates redemption on .com and physical stores, as well as personalization through a customer ID.

MOBILE COUPONS TOP OF MIND

MOBILE AND ONLINE COUPONS ARE PART OF DIGITAL COUPONS

4. MAKE MOBILE COUPONS PART OF LARGER DIGITAL COUPON PLATFORM STRATEGY4. MAKE MOBILE COUPONS PART OF LARGER DIGITAL COUPON PLATFORM STRATEGY

Source: Compete.com, In-Store Marketing Institute, Target

Mobile Coupons Online Coupons

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•Digital coupon platform•Supports over 800 devices with SMS-based and Smartphone based coupons•In pilot at 16 retail locations with JC Penny in Houston, TX•Strong presence in Grocery with support at over 5K Safeway and Kroger’s locations•Proven technology with over 10M coupons issued•Challenging business model for retailers due to Cellfire wanting control of brand experience with consumers•Current internet retailers that have deployed mobile coupons: JC Penny, Macy’s, Target, HSN, and Overstock.com

MOBILE COUPONS VENDOR SPOTLIGHT- CELLFIREMOBILE COUPONS VENDOR SPOTLIGHT- CELLFIRE

Cellfire

Source: Cellfire

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•Digital coupon platform•End-to-end service for distribution, redemption, and reimbursement of coupons•Integrated redemption with existing POS through firmware upgrade to Motorola/ Symbol & Verifone•Provides retailers control over manufacturer coupons and eliminates fraud•Streamlines manual coupon processing for faster reimbursement•In pilot with McDonald’s for loyalty program and Winn Dixie for P&G, Con Agra, General Mills, Unilever, Coke, Pepsi manufacturer coupons

MOBILE COUPONS VENDOR SPOTLIGHT- INFINIANMOBILE COUPONS VENDOR SPOTLIGHT- INFINIAN

1

2

POS

Scanner/Payment terminal Infinian

Coupon Cloud

Source: Infinian

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•Location based services are important to retailers because they provide mobile marketing opportunities that are location context aware.

•Services such as Foursquare and Gowalla are gaining traction (2.5M+ users). Users are young (70% between 19-35), male, and a small early adopter market (5% of online users) per Forester Research.

•However, rapid mainstream adoption is expected. Facebook likely facilitate education of location based services through its “Places” feature given its broad 500M+ user base.

•Due to early nature of market and fragmentation of vendors, retailers should execute pilots to validate the technology and approach so that it augments existing user experience well.

LOCATION BASED SERVICES USERS ARE YOUNG AND MALE

FACEBOOK PROMOTING LOCATION BASED SERVICES WITH “PLACES”

5. PILOT LOCATION BASED SERVICES TO VALIDATE TECHNOLOGY AND APPROACH5. PILOT LOCATION BASED SERVICES TO VALIDATE TECHNOLOGY AND APPROACH

Source: Forester Research, Facebook

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•Loyalty program with in-store location services and promotions•Drives foot traffic to under shopped categories•Installation of proximity sensor for in-store navigation (GPS does not work indoors)•Similar to Cellfire, the application user experience is centered around the vendor (Shopkick), not the retailer or brands•Currently in pilot at 250 retail locations with BestBuy•Macy’s, Target, American Eagle, Sports Authority also running pilots

LOCATION-BASED MOBILE MARKETING VENDOR SPOTLIGHT- SHOPKICKLOCATION-BASED MOBILE MARKETING VENDOR SPOTLIGHT- SHOPKICK

Shopkick

Source: Shopkick

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•Geo-SMS mobile marketing•Delivers mobile promotions to consumers based on location and time•Creates geo-fences around retail locations to trigger promotions•No additional hardware necessary. Leverages carrier mobile network for location detection service•Deployed with The North Face at over 1000 locations in major metro areas to drive traffic to retail stores

LOCATION-BASED MOBILE MARKETING VENDOR SPOTLIGHT- PLACECASTLOCATION-BASED MOBILE MARKETING VENDOR SPOTLIGHT- PLACECAST

Source: Placecast

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G160M IPADS AND WEB TABLETS WILL SHIP BY 2015

•iPad apps are important to retailers because they provide new user experience to interact with video and m-commerce at same time.

•One of the fastest growing new consumer computing device ever, only behind Nintendo Wii and DS.

•Usage closer to PCs than mobile handsets. Users consume 3X more videos and spend 4X more time watching videos than PC users, and consume 5X more video than mobile users.

•iPad app could bridge e-commerce and TV/movies to enable the vision of interactive TV. Retailers could move into this new market through partnering with Delivery Agent.

IPAD USAGE MORE LIKE PC THAN MOBILE HANDSET

6. RESEARCH SHOPPING ENABLED TV AND MOVIES WITH IPAD APP6. RESEARCH SHOPPING ENABLED TV AND MOVIES WITH IPAD APP

Source: Yudu Media, MeFeedia

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•e-Commerce platform for TV and movies•Clients include: leading cable networks and movie studios (ABC, CBS, NBC, A&E, HBO, Fox, USA, MTV, Discovery, Paramount, DreamWorks, WB, Sony-Universal)•Supports web, mobile, iPad, iTV clients•Expertise in interactive marketing and merchandizing items within TV and movie content•Outsourced fulfillment•In pilot with Cablevision and Comcast for iTV

SHOPPING ENABLED TV AND MOVIES VENDOR SPOTLIGHT- DELIVERY AGENTSHOPPING ENABLED TV AND MOVIES VENDOR SPOTLIGHT- DELIVERY AGENT

Source: Delivery Agent

NEXT STEPS

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•Impact of PayPal’s future consumer mobile wallet strategy

•Retailers’s role in the eBook market

•Retailers’s role within the digital home market driven by Apple TV and Google TV

ADDITIONAL INSIGHTS TO BE INVESTIGATEDADDITIONAL INSIGHTS TO BE INVESTIGATED

THANK YOU

APPENDIX

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•Rapid innovation in 3-S’s to connect people, places, and things with mobile

•Sense and Connect•Built-in cameras, GPS, motion detection, WiFi, microphone•Navigation, location, direction•(NFC/RFID)

•Search and Learn•Visual search•Image recognition•Augmented reality•Geo-data/ Maps•(Bar codes/QR codes)

•Share and Discuss•Social networks•Micro-blogging, status updates, check-ins

LOCATION-BASED SERVICES ARE THE FOREFRONT OF INNOVATION IN MOBILELOCATION-BASED SERVICES ARE THE FOREFRONT OF INNOVATION IN MOBILE

Source: Adapted from Dr. Phil Hendrix, immr

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•Ubiquitous access to 3G enables mobile internet and applications anywhere

•For the first time in history, data used more often than making calls

•US leads subscriber growth and surpassed Japan Q1 2010

•Japan is leader for 3G services, followed by W. Europe and N. America

•E. Europe, APAC and MENA to reach ~20% by 2011

•S. America to reach ~20% by 2015

3G (HIGH-SPEED MOBILE DATA) FINALLY MAINSTREAM WITH OVER 1B SUBSCRIBERS3G (HIGH-SPEED MOBILE DATA) FINALLY MAINSTREAM WITH OVER 1B SUBSCRIBERS

Source: Morgan Stanley, Chetan Sharma

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•Global Smartphone market will be dominated by four players: #1 Symbian (Nokia), #2 Android (Google), #3 RIM (Blackberry), and #4 iOS (Apple)

•Symbian will remain on the top due to Nokia’s volume and push to mass markets

•Android will be leading Smartphone OS in U.S. by end of year

•Smartphone will overtake PC as the most common device to view the internet by 2013

•50-70% of mobile devices will be a Smartphone by 2014

•All mobile devices in U.S. will be a Smartphone by 2015

IN THE GLOBAL SMARTPHONE MARKET, SYMBIAN WILL REMAIN #1 AND IN THE GLOBAL SMARTPHONE MARKET, SYMBIAN WILL REMAIN #1 AND ANDROID WILL OVERTAKE BLACKBERRY AND IPHONE TO BECOME #2ANDROID WILL OVERTAKE BLACKBERRY AND IPHONE TO BECOME #2

Source: Gartner , Frost & Sullivan

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GCUMMULATIVE TOTAL OF 160M IPADS/TABLETS WILL SHIP BY 2015

•iPad is one of the fastest growing new consumer computing devices ever

•Reached 1M units shipped in 28 days. Compared to Nintendo DS and Wii in 15 days, iPhone in 75 days

•43M iPads/web-tablets will ship by 2015

•Longer replacement cycle of 2-3 years for iPad and web tablet vs. 1-2 years for Smartphone will create a cumulative total of 160M units by 2015

IPAD ON TRACK TO BE MOST SUCCESSFUL MOBILE DEVICE LAUNCHES

IPAD WILL DOMINATE WEB TABLET CATEGORY

THE IPAD HAS THE POTENTIAL TO BE A MASS SCALE MOBILE DEVICETHE IPAD HAS THE POTENTIAL TO BE A MASS SCALE MOBILE DEVICE

Source: Morgan Stanley, GigaOM, Yudu Media