The 2014 Ad Game Changer: Digital Maps

Gary Schwartz (16 September, 2013)

Of all the widgets and long-forgotten apps on your phone the one with most mobile mindshare is your map app. We have become a mobile society, and in the 2010s, map apps personify our wanderlust. When we open our mobile map, we have intent, direction and purpose. It is vitamin “M”: the ultimate upper and highly addictive.

And map real estate is hot: Apple buys Locationary, Embark and HopStop; Google buys Waze;  Bing is rumored to be in talks with FourSquare; Zillow, the map real estate tycoon, buys EasyStreet, and indoor mapping app company, Aisle411 raises a hefty seed round in the valley. As OEMs beef up their services, we are entering a new phase of map building. Location has always been a data grab. Now, the industry is starting to focus on monetising subway stops, street corners and highways across the world.

The principal challenge is that maps are a new and unique advertising paradigm, and the incumbent search business models, mostly designed for the web’s previous era as a stationary, desktop experience may need to be adjusted.
Galileo to Google

Google Maps, the grand daddy of digital mapping, was born in 2004 as a skunk works project by two Danish brothers in Australia.

First designed as a heavy client app, in 2004 the software came full circle as Lars Rasmussen and his brother were acquired by Google after making a web-based pitch. The same year, Google acquired Keyhole, Inc. and proceeded to use Keyhole’s mark-up language to launch Google Earth in 2005.

During the next five years, Google started to revolutionize digital maps. It is quite possibly the most exciting innovation effort by the company. Not since map mavericks Ptolomy, Copernicus and Galileo has mapping accelerated so profoundly. Within a few short years Google has redefined the way we see the world around us.

Google Maps rolled out road directions in North America in 2006 and their PC-based maps became the pre-GPS automotive assistant. However convenient and customizable, Google maps for the desktop were a print-on-demand version of London’s A-Z pocket maps. In many ways, a Google map printed out before a trip was no different from John Ogilby’s 1675 Britannia detailed strip maps that travels bought to find their way from Norfolk to Newmarket with inns, stables and other points-of-interest as well as clear directions and distances clearly marked. They balanced behind the horse on the coach seat as our laser-printed version would sit on our car dashboard.

But the small screen was the true game changer. The capacitive screen touch invented by Andrew Hsu, combined with the pinch-and-zoom mobile interface developed by Apple made complex map navigation simple, user friendly and, most importantly, mobile.

With multiscreen map adoption, Google Maps expanded. The company launched in Latin America and Asia, and started the subterranean mapping of subways in 2007. In 2008, a view from space; in 2009, a POV from the street and 3D rendering.  And more. Google mapped canals and bike paths, endangered forests and the ocean floors,  the moon and Mars and the ultimate conquest, Macy’s in-store experience.

This was phase one: Build a dominant innovative platform with simple APIs, establish market stickiness and trust by the point-A-to-point-B public.

Now add metadata

Google+ Local launched in 2012, allowing users to post reviews and images into pages hosted by third party sites. This year maps are becoming more customized, providing location-specific information on points-of-interest. While Google has maintained a focus on road navigation with its 2013 acquisition of the crowd sourcing road-warrior Waze software, the operative term on the new Google map is “explore.” Explore photos, recommendations, and restaurants.

Maps plus Google Glass makes the possibility of on-the-go exploration more immersive. Using the Google Mirror API developers can feed real-time GPS info and pre-rendered map images into the eye window of Glass wearers for “dexterous” driving, cycling or walking to the local mall. Glass becomes “a Segway for your head.” And taking maps to the edge of utility: Google Sky (which maps the stars based on your GPS location and vision angle) can be integration with Google Glass to show the outlines of constellations through a transparent filter to view the night sky.

Wow!

And then at the end of this epic journey, Google announces local advertising. Google Maps now allows short sections of advertisements to be placed directly onto the map itself. Local advertising is one of Google’s core business and Google Maps ad purchases are made through the same Google AdWords auction that buyers are already very familiar.

For Google this is simply a terrestrial version of browser-based search. When a consumer enters “Starbucks” in her browser, she finds links to buy “Starbucks Instant Coffee Bundle” on Amazon.com. When a consumer enters Starbucks in Google Maps, she finds local Starbucks to get the real deal (or if Tim Hortons is bidding, an ad for a competitively located Timmy’s coffee store.) Both these use cases involve path to purchase. One is virtual, the other is proximal.

Google hopes Map-based ads will follow the same digital success that Google has had with its search-based ads. Instead of auctioning AdWords at point-of-search, Google auctions ads at point-of-navigation.

Ptolemy what? There has to be more than just that. We’re just not fully there yet.

Don’t forget the Big Apple

Apple recognized the value of maps and knew that they had a Trojan Horse lurking in their mobile operating system in Google Maps. Google’s map app had become the dominant phonetop service with the most unique visitors of any app in-market. When Appl­e launched and preloaded its own proprietary map app in August 2012, Google’s traffic dropped making Facebook the winning app for unique impressions as well as time spend.

(After a few geographical faux pas) Apple started to establish its own relationship with the map consumer. But Google Mappers are loyal. When Google launched its new map app for iOS 6 in December there was a 30 per cent rush of Apple folk upgrading to the new operating system (MoPub.com). Affinity to a map app had influenced these consumers’ mobile behaviour. Quite remarkable.

However, Apple is committed to build a map following. While the company no longer needed to pay licensing to Google, which was good, the key reason for ousting Google Maps was that maps had become a data pillar. By replacing Google, Apple had direct access to a wealth of consumer data and potential advertising revenue.

Yahoo! Maps, Bing Maps, Nokia Maps, and MapQuest all use the NAVTEQ electronic map feed (best known for its automotive navigation services), and like Apple now, they own their own consumer data layer, which is crucial for generating advertising and marketing revenue on maps.

Bing is the major map contender.  In September, the company added 13 million square kilometers (316TB) of aircraft and satellite photography to its service. Microsoft’s large investment in Facebook in 2007 ($240 million) led to the 2013 decision adopt Bing as FaceBook’s mapping and search provider. To do this effectively, and compete with the market-leader, Google, Bing needs to beef up and differentiate its map offerings. Bing has already rolled out “Local Scout” which helps consumers find food and fun across all its screens. Rumors of a FourSquare acquisition (or possibly financing) may be part of this grand strategy.

(Microsoft acquisition of Nokia did not come with their HERE maps assets. Nokia’s HERE maps include road networks, traffic patterns and urban landscapes and as licensed by major properties such as Garmin, Oracle and Amazon.com. Will Nokia take the lead as the premier mapping and location services across different screens? Will they just sell off the asset to Apple after the Microsoft acquisition is complete?)

And the open-source mapping movement is also growing. Washington D.C.-based startup, MapBox, provides more custom navigation and interesting APIs built on top of Open Street Maps. Open is good and allows developers greater flexibility and affordability; Foursquare uses MapBox’s services to display its users’ check-in histories. However MapBox is not preloaded on your Android or Apple phone and while they have an iOS mapping SDK they have no Android footprint. MapBox will certainly play a roll as an embedded technology in sites all over the web; however, it is unlikely that they will be a standalone consumer utility on top of your phone and tablet.

With the proliferation of WiFi networks in retail, vendors such as Cisco drive mobile mapping solutions for shoppers that join the free network. The maps allows for hyper-local, custom mapping that includes restroom as well as promotional information on retail stores.

All of these digital map offerings are entering the mainstream at a time when advertisers are questioning consumer engagement on mobile, and trying to understand how best to follow their consumer in a contextual and relevant manner. Brands and retailers are re-evaluating the way we sell and, more importantly, engage across multiple screens. Their assumptions on path-to-purchase, built during the era of the desktop web, are no longer fully valid and reliable. The classic consumer narrative of home-to-store has changed and retailers and brand can no longer simply hire a Director of Shopper Insights and hope for the best.

Advertising and marketing is about providing a consistent message at aisle, and checkout, wherever the shopper finds the retailer. If the advertisers wants to get back in the game, possibly the most exciting place to be right now is on the map. When the consumer and shopper opens their map app when they have intent to meet someone, go somewhere or buy something. All this drives commerce. Maps provide unadulterated path-to-purchase.

Narrative: Going beyond advertising

So what is the new advertising paradigm for maps? Maps have layered functionality: terrain, roads, satellite, traffic, public transport and images. Then there is the exploration layer: recommendations and general points-of-interest. And now Google has provided an additional local advertising layer.

However, the adding an advertising layer may not prove to be effective in a map environment. There is more value to the exploration layer. Yes, maps help us move in a utilitarian fashion from Point-A to Point-B and that is why Waze and other transit acquisitions have been so important.  But maps also have a very non-utilitarian function.

Maps help the consumer simply “explore” and is what will ultimately connect map users to brands and content owners. Maps tell stories because precisely they have a beginning and an end, and are defined by intent and clear purpose.

Instagram, Twitter, and Facebook already situate the user’s photos and comments at a latitude and longitude: a country, a city, a bar. However these social graphs are not map applications and location is an important but secondary metatag.

The opportunity is to build a new bespoke map layer for brands and content owners. Think map first.

Startups such as Findery and CityMaps have map based UGC (user-generated content) engines. Where is the content input engine for brands? How can brands visualize content and actively map this data across all their customers’ screens?

One company called Mapiary, based out of Singapore, is developing the tools to allow brands and retailers to layer rich navigation onto the map. How can Unilever’s Becel margarine be more relevant to power walkers globally? Or how can Heineken weave narrative into a city pub crawl? Diageo, can map a DJ tour for Smirnoff. The NYTimes can map their 36-Hour travel series in a rich contextual manner. This is new digital cartouche and as important as the underlying map.

Where is the new vision of brand advertising? After all the innovation that Lars Rasmussen (Google Maps) and John Hanke (Google Earth) brought to maps we surely need to go beyond paid search models and allow owned content to become a rich and valuable layer in the 2014 map.

BNN Interview on the “Battle to Monetize Maps” discussing the positioning of Apple, Google & Microsoft. http://t.co/M1Pa0Qcijd 

Gary Schwartz is the CEO of Impact Mobile. Having been at the frontlines of the mobile industry for over a decade, Gary is the author of two books, “The Impulse Economy: Understanding Mobile Shoppers” and “Fast Shopper. Slow Store: A Guide to Courting and Capturing the Mobile Consumers,” both of which highlight the current state of the mobile commerce space and chronicle the significant impact that mobile is having on consumers, retailers and brands. Gary is also a chair emeritus for the Interactive Advertising Bureau and the Mobile Entertainment Forum NA and global director of the Location Based Marketing Association.

Mall Busting with Wal-Mart, Facebook & Zappos

Samsung strikes a deal with the beleaguered Best Buy to subsidize their rent with a store-in-a-store initiative. Borders exits the mall and last-man-standing Barnes & Noble seems to becoming a living room chachka vendor with more book browsers than book buyers. Zappos Labs runs field research in malls and Facebook launches a commerce strategy (again).

Is a retail dust bowl about to blow through the mall nationally? Or is this a digital tempest in a tea cup?

We know that online commerce is booming but it still accounts for a small slice of America’s mall business. Undeniably, this $200 billion digital business (ComScore) is expanding scope daily.

If there was ever a digital demarcator, it is the soap business. When Unilever and P&G, the markets main consumer package goods companies, begin to sell soap on Amazon, and when Wal-Mart begins to ramp up its online business, leveraging its 4,000 stories and 158 warehouses as an online distribution network, then mall property owners possibly need to rethink their role in bricks and mortar.

Inertia as a strategy

Malls are entertainment destinations. Always have been. We go to the mall for a movie or latte just as we bundled the family into the Buick 60 years ago to go shopping. But if Best Buy and Barnes & Noble leave the mall, what is left to attract the consumer? Hours of gizmo browsing and cook-book thumbing gone.

Browse-verse-buy business has whittled way the margins of many stores making Blockbuster and Gamestop digital road kill. It forced Target Chief Executive Gregg Steinhafel and Kathee Tesija, Target’s executive vice president of merchandising to cry uncle on “showrooming” in a memo to its suppliers in 2012.

However, muscling your supplier’s prices down is a pharic victory. Even with the volume sales of Target and Wal-Mart know that they need to move some of their business into the cloud. During Wal-Mart’s August 2013 earnings call it announced that eCommerce sales rose by 30 percent in two trailing quarters. Neil Ashe, Wal-Mart’s CEO indicated its total online sales could pass $10 billion in fiscal year 2014.  This is only two percent of the stores earning and only 12 percent of Amazon which sales totaled $61 billion in 2012 but it is a marked trend and a harbinger of the exodus of earns from the mall.

What incumbent stores presently have in their favor is inertia.  The cloud and the mall are still not fluidly connected. Although each shopper is armed with a mobile computer which has the capability of scanning, sourcing and saving the consumer in every aisle, there are too many hurdles and friction between the idea of digital buying and the products within arms reach.

The mandate of any red blooded digital retailers is to eliminate this inertia.

No-click Cloud Checkout

Apple’s iTunes, Amazon and Paypal built their business on simplifying checkout: making sure that the act of buying does not get in the way of intent to buy.

One-click checkout or combining stored customer credentials with a simple password is the sole reason that these companies continue to grow their market share. Their UX team would tell you that every informational and graphic design is based on optimizing clicks to checkout. Each click makes a precipitous drop off and abandoned shopping carts litter the web.

But digital checkout demands trust and mindshare. Even online real estate barons such as Facebook have been unable to enter this market.  Although “Social” and “commerce” seems natural allies, Facebook has not been able to delivered on its promise to leverage its millions of customers to shop cross-channel.  The company launched Facebook Credits in 2009 and phased them out last year. “F-commerce” experiments abound. Remember Facebook + Amazon + P&G partnering in 2010 to change the world. Unilever followed suit launching a storefront on Facebook for its Dove brand. Retailers including JCPenney and Gamestop have attempted to monetize their Facebook community by opening stores inside the Facebook network. After underwhelming results they shut their virtual doors.

Apple and Amazon have proven that community plus one-click checkout works. These digital wallet holders started their business explicitly to sell stuff. And they are poised to remove the inertia from online shopping and with it the last refuge of the mall owner. Online shopping provides advantages with an endless aisle allowing for access to more sizes and categories. According to Nielson the average basket size is much larger for consumer package goods ($80 online to $30 offline) and beauty purchase ($30 online to $10 offline).

The question is that when the households put soap and diapers on their shopping list will they log into Amazon to buy Dove Body Wash 24 Ounce Bottles (Pack of 4) and Pampers Sensitive Wipes 7x Box?

Baked Beans & Apple Pie

The last refuge of the American mall maybe a can of baked beans and fresh produce. If the household shopper wants to grabs a can for dinner tonight or smell the oranges and squeeze the melons before buying, then off to the store they will go. Grocery stores are big box convenience stores.

However, should mall owners that are grocery-anchored feel safe? Their clientele should come from a weekly shopping list.

Well, hold your Kraft peanut butter!

The traditional grocery retailers are faced with increased competition. In March, Wal-Mart opened grocery concept stores about a tenth of the size of their supercenters. With big box and online retailers entering the grocery space, specialty grocers capturing the “foodie culture” consumer and brands creating direct relationship with the consumer, perhaps this is not a safe bet for mall owners.

Google Wallet, ISIS and other phone wallets promise to make in-store shopping more digitally fluid, but what is the digital wallet never makes it to the mall.  Online grocery shopping has grown five fold over the past eight years to $25 billion. Tablets devices have made shopping more leisurely and couch commerce has accelerated.  With CPGs moving their diaper and detergent business into the mainstream online stores like Amazon, the inertia may soon come from the home.

Poaching People

Since Tesco opened their virtual grocery store on the subway in Seoul, Korea two years ago, scan and shop on-the-go signage has become more common. While it is still a media gimmick, it has the potential of becoming a way of luring the shopper online. In every mall or transit hub America at least one brand has attempted to use the in-mall media to engage with the shopper and move them into their cloud store.

In CNET interviews with Zappos Labs’ (an Amazon-owned online retailer) the Director, Will Young, confesses that his team sits around malls stalking shoppers. Their goal is to emulate these shoppers’ behavior online. Young is asking “How can you make the digital experience feel like the in-store experience?”

Whether they succeed or not, there is no question that malls need to re-evaluate their passive media deals. When a brand buys signage on an ad impression basis but uses this media to poach customers then this signage perhaps should not be sold as an impression but as a “mini-storefront”.

Mall owners nationally are holding strategy sessions to evaluate how technology is affecting their business. These stakeholders need to re-evaluate their real estate assets and start to see media as leasable square footage.

Part Two: Mapping the Mall (to be continued)

MultiScreen not Omniscreens or Second-Screen

I strongly believe that the space between the screens that allows the brand to connect their consumer experience is critical. I call this “digital Velcro”.  Connecting your consumer screens seamlessly throughout their day is one of the most important challenges we face.

Additionally, one media experience plus other media screen experience equals a multiple of value to the brand: “1+1=3”  This is not a second screen debate. It is a consumer journey challenge that impacts all brands and retailers in their media buying and engaging. That is why we focus on the MultiScreen not the Omniscreens or Second-Screen discussion.

Next week on Tuesday and Wednesday in NYC I will be hosting the MultiScreen Summit. We incubated this event concept in Los Angeles, last year and have expanded the MultiScreen Summit to include Abu Dhabi and Berlin (which will be held in October). Our goal is to establish a global platform to address the growing needs of business to create a seamless digital experiences across their customers, fans, audiences, shoppers . . . screens.

So who owns this? CIO, CMO and CDO? CIO needs to get together with the CMO and the Chief Digital Officer (CDO) needs to become the Chief Disruptive Office (CDO) making backend process screens work with marketing engagement on the consumer screens.

Data has always been important. In a connect device world with location and behavioral
MultiScreen economy and media strategy will become the most important element tying a brands strategy in place.

The question is: How can buyers think horizontally across their consumer screens and add value to their vertical investments? We need to buy media both vertically and horizontally. Small screen buys need to have native mobile strategy attached that go beyond CPMs and drive mobile conversion goal into the cloud and into the mall.data, this consumer journey is more complex than we had assumed. We now know that we need to work harder to drive real shopper insights and shopper marketing goals. Data tools we can use now include location, screen insights and digital relationship building.

As the MultiScreen Summit Chair, I am so grateful to have such an remarkable group of media thought leaders onstage next week at the MultiScreen Summit, June 11th and 12th.  www.thescreensummit.com.

SCREEN WARS (Digital Media Forum Keynote 2013)

In Dubai talking to agencies and brands about “digital velcro”. How linking content seamlessly between one screen plus other consumer screen equals a multiple of value for a brand.  20  mins – view here.

The Incredible Shrinking Barnes & Noble

“The Incredible Shrinking Barnes & Noble.” This was the LA Times‘ blog post yesterday. I like it and I have stolen it. It speaks volumes to the future of the mall. Entertainment centers for browsing shoppers are shutting down.

Barnes & Noble sees 30% fewer stores in the next decade. The bookseller had 726 stores in 2008, 689 stores in 2012 and in 10 years this will drop to 450? Perhaps this is optimistic? The certainty is that there will be much shuttering.

Barnes & Noble’s projected closings and Target’s  new price-matching policy are all signs of retail in distress. The trend toward mobile shopping is likely to have a lasting impact on the retail landscape.

The physical bookstore could become a thing of the past.

With the mobile consumer in mind, a yoga studio could sell books about spirituality and enable customers to tap their phones to order a physical or digital book in a context-rich environment. The same is true for a doctor’s office, a movie theatre and other locations.

Barnes & Noble executives are undoubtedly aware – as Borders executives before them – that the 2010s are eerily reminiscent of the music industry in the 2000s. Books, reading, and commerce behaviour has changed.

The relationship between shopper and store has changed.

Does this mean good riddance to bookstores, publishers, agents? Perhaps there is a new, more efficient order in town? Perhaps a new, streamlined business model would be both good for consumers and good for the industry long term?

Unquestionably the market and mall is primed for new disruptive models. Amazon coming in with Apple-like book genius bars? New purchase, delivery and consumption models that live between the store and the Amazon cloud?

Stay tuned!

 

What Store Closings Mean to Mall & Mobile?

Today Blockbuster announced that it was shutting the doors on 300 big boxes in U.S. That’s a further 35% of its footprint.

This is the inevitable and slippery slope of incumbent retail stores that cannot support business-as-usual.

The opportunity is tremendous for a company that can enter the mall with a pure showrooming business model. A company that can curate purchase into the cloud and capitalize on co-opt budgets.

Blockbuster, Barnes & Noble, Best Buy and other mall staples find it hard to innovate-from-within for two fundamental reasons:

  1. It has to continue to support its existing infrastructure to the bitter end and this is a costly distraction.
  2. It cannot effectively connect and curate its legacy cloud store and bricks store and make the two a seamless experience for the shopper.

Showrooming is shutting these leviathans down.

The new mall is going to be a challenging space for mall owners. Stores like Blockbuster, Best Buy and Barnes & Noble represent a mall entertainment experience. Now that shoppers browse but do not buy, these stores can not support their weight. The stores exiting will leave the mall a lonelier place.

Mall owners need to be a proactive. They need to innovate with their retail footprint. They need to look to partners that have a vested interest in the future of the mall and can provide new technology (such as Samsung). They need to innovate and fundamentally remodel the way consumers shop and more importantly “engage” in the mall.

Read full article at: Mobile Commerce Daily

RFID & Mobile Retail: Moving From Efficiency To Engagement

 

 

 

 

 

 

 

 

By Gary Schwartz

National Retail Federation Show, New York City: This week the old Javits Center in the New York hosted retail folk from across the U.S. and shed some light on a technology play that may define a new industry I call Retail 2.0.

Indeed, the reality of a connected shopping experience with smartphones at the center may not be far off. However, this show was proof to me that we have to get past our focus on technology (and B2B) and walk in the shoes of our customers (understanding that it’s B2C that is really at the core). And, since it is about the shopper experience, it’s clear that winning Retail 2.0 strategies will be the ones that bring CIOs and CMOs to the table.

FULL ARTICLE

Black Friday Mobile “Mall Buster”

By Gary Schwartz

As I sit thoughtfully, wedged between Black Friday and Cyber Monday, I have a mobile premonition that times are a’changing.

Black Friday may be becoming Cyber Friday – which would mean a dark Monday for many retailers and malls in North America.

On November 28, 2005, Shop.org started discussing an online shopping phenomenon following the Thanksgiving weekend that it coined Cyber Monday. After fighting for sale items in the aisles, shoppers starting surfing the web for remnant deals.

However over the past year, Matt Shay and his team at the National Retail Federation should realizing that the online shopping cloud (that was politely situated on a separate day with separate deals for online shoppers) is now disruptively moving into our primetime shopping calendar.

While most mobile shopping on Black Friday still tends to be mobile marketing focused: Price comparison hunting with Amazon PriceCheck, ShopSavvy or eBay’s Redlazer App; Mobile couponing clipping for show-to-save deals that drive impulse door swing into the mall and retail store.

These shopping APPs and mobile web services are great for hardcore price hunters but the small-screen experience is not optimal. The mobile phone may help the shopper better navigate high value items such as shoes or electronics in their local mall. The mobile phone may steer the shopper to a purchase or may rudely interrupt an in-aisle purchase.

But what is beyond price hunting? If a PriceCheck shows a better deal online, many folk are likely to close their phone and choose to buy the item that evening on the web on a large screen in the comfort of their home.

This is about to change.  There is a new breed of shopping disruption entering the market.  Apple’s iPad has hybridized:

  • mobile & fixed internet
  • small screen & large screen
  • impulse & thoughtful shopping

Kindle Fire: The Mall Buster

The new commerce-tablet is a portable mall buster. The iPad allows for an elegant portable internet experience, Apple focus continued to be the APP economy and digital checkout on iTunes.

Other tablets have entered the market on Apple’s terms and had mix results  . . . until the Amazon’s new tablet Kindle Fire. The Kindle Fire is all about one-click commerce. The device is optimized for in-store, in-mall deal hunting, price comparison and most importantly one-click checkout.

Amazon has always been a commerce disrupter. They battled and beat the book store. Now they are taking on the entire mall.

Amazon reinvented book browsing. In 2007, we saw the first Kindle, the harbinger of a new power game and more importantly a new relationship with the mobile consumer. In order to promote its Kindle device, Amazon sold electronic books below wholesale prices.  A tactical loss. Owning the commerce platform was the ultimate reward for Amazon.

Amazon won the book battle: Borders bookstore went out of business and Barnes & Noble opened coffee shops and began selling household furniture.

The Kindle Fire (which combines book commerce with the immersive Kindle experience) is the final commerce frontier.  Amazon is so confident in the commerce that they will generate in the mall that they are selling the unit at a loss ($199 while the unit cost is $210).

Amazon’s One-Click commerce along with VISA’s V.me service, Billing Revolution’s Single-Click and a flood of cloud commerce options will enter the market this year.

What does this mean to the great American Black Friday tradition?

It means that shoppers on Friday, November 30th, 2012 may move from comparison price hunting in the mall to disruptive purchasing in the cloud. No longer are Cyber Monday and Black Friday neatly separated: the cloud is in the mall . . .  to stay.

Dark Clouds

We anticipate over 5000 store closings in 2012 – nearly 40% up from 2011. Many of these closings will be due to continuing shopper malaise; however, as in-mall cloud shopping accelerates, stores particularly in the apparel, shoe and electronics vertical will need to reinvent themselves. They will need to focus on breaking down the channel barriers between their online presents and the physical store. Tackling “cross-channel disconnect” will be key to survival.

Stores will need to focus on the non-Black-Friday days – all 364 of them and work to build a loyalty, one-to-one relationship with the shopper using their phones to bridge the store experience with the store’s cloud experience.

Content curation, sensory experience, customer service and love are all the store has. It will not win on price alone.

Amazon T-Commerce: Cloud Meet Mall!

For all the science of shopping, even Paco Underhill, the retail guru, would tell you that designing an optimal commerce experience is a fairly simple proposition. Words like frictionless, seamless, impulse, uninterrupted, and accessible come to mind: One-Click Cha’Ching?

But between the idea and the reality falls an unwieldy shadow. With the launch of Amazon’s new Android tablet, reportedly this October, will Amazon’s signature one-click checkout meet portable desire and allow for an optimal commerce experience for the impulse shopper on the go?

In a world where Amazon has go far beyond the book, is this the new Kindle for the shopper? Will a low price point unit of $199 (sold under the manufacturing cost of $210) bundled with commerce wallet toolkit including reviews, consumer recommendations, shopping comparison and a fairly simple checkout bring the cloud down to the shopping mall?

Shopping Disruption

But all these shopping innovations, tools and shortcuts beg the question of what is the ideal and optimized mobile checkout? VISA “Square” has democratized point of sale of plumbers and pool cleaners across America. It works because it offers a simple, cost-effective solution that is riding the existing commerce rails. “Square” allows for a plastic card swipe and serves up a merchant account through the audio jack on the phone. Everyone is now a store.

VISA and PayPal continue to work to create similar quick-checkout for the small screen, eliminating the clumsy data form fields needs to check out on the large screen desktop that make for abandoned m-shopping carts all over cyber space. VISA’s purchase of PlaySpan is a perfect example of frictionless commerce engineering. PlaySpan (before it was acquired by VISA) allows gamers to buy virtual swords and pumpkin seeds for their virtual battle grounds and farms without leaving the game. VISA is using this same technology to launch a quick check for all those folk for whom real-world shopping is a “game”. We should see this roll out in 2012.

Google’s M-Wallet promises TAP and exit shopping at your local store. The problem here is that for all the hype, NFC-phones are only entering the market now and few retailers (outside of McDs) has contactless POS. I love the bricks and mortar dream-scenario of TAP purchase using your phone for payment, loyalty, affinity and marketing. However, I will remind the reader that self-checkout was a sexy idea twenty years ago and took two decades to start to appear in supermarkets in the US. The retailers are unlikely to pay soon to retrofit their existing DOS-like POS when the “reward” of quick-flowing aisle and proximity marketing is yet to be proven. Until the ROI calculator can be taken out, Google maybe waiting at self-check out.

VeriFone is answering the call by designing Swiss army knife units like PAYware that allow for mobile point-of-sale (mPOS) in store and can accept magnetic swipe, CHIP&PIN, NFC; it can scan bar codes and enter promotional PINs. Companies like GlobalBay have integrated to all major POS vendors (SAP, Epicor, Oracle, etc.) to allow this unit to mobilize the existing cash register without retrofitting it.

Apple has yet to show its NFC card. When they do, look for NFC to meet iTunes checkout. There is a tremendous opportunity for Apple to take over the traditional media space with TAP2SHOP service riding on it iTunes’s quick checkout. Until then . . . we have Amazon’s Tablet.

Amazon T-Commerce

Tom Daly, head of mobile globally at Coca Cola is focused on making their products “within arm’s reach of desire”. If Amazon can allow their customers to have a commerce tablet that enables them to shop where they want, they will succeed. By Q4 next year, look for Amazon consumers all over America, side-saddled in the waiting area of the mall after comparison shopping in their favorite store (showroom) checking out in the cloud.

Will VISA and PayPal design more optimized digital checkout? Yes. Will Google’s Wallet continue to expand retail doors and eventually become part of our shopping experience? Yes. But until then, Amazon will disrupt the mall and dominate the cloud shopper.

(If this all seems a little depressing for the store owner. Here is some advice. While Amazon focused on T-Commerce on a portable screen you need to focus on M-CRM on the small screen. You need to start owning the mobile two-way relationship on your shopper’s “handheld” and use the handheld in-aisle to drive tonnage.)