Retail apps have fuelled mobile payments growth

The gross merchandise transaction value of mobile payments for physical goods will exceed $170 billion worldwide by 2015, according to a new report just released by Juniper Research Entitled ‘Mobile Payments for Digital & Physical Goods – Analysis, Markets & Vendor Strategies 2011-2015′, it forecasts that this will be nearly treble the $60 billion predicted for 2011. Significantly the report says that initial growth in mobile payments has been fuelled by a dramatic upsurge in retail apps in the wake of the consumer smartphone explosion. The sort of iPhone and Android apps plus mobile-friendly web sites that GoMo News has frequently covered in the past. The report cautions, however, that vendors still need to innovate unceasingly as the market develops and becomes more competitive.‘Our research for this report underlined the importance of mobile as an extra channel to market,” David Snow, a senior analyst with Juniper Research, observed.

“But Juniper believes that mobile campaigns must be tightly linked to print, online and store based campaigns to ensure consistency of customer experience.

Increasingly people will browse on one device such as a PC and then buy from another such as a smartphone,” he added.

The report found that there was an increasing awareness in the industry of the need to enable an integrated shopping experience within the wider context of a fast expanding e-commerce market.

Other key findings from the research are that the market will gain further momentum in the medium term following the increasing deployment of POS (point of sale) solutions to facilitate in-store [NFC-style] cashless transactions.

It also identified a major industry benefit – namely that retailers have discovered a marked uplift in average transaction value when cash is replaced by a mobile payment method.

In the report there are of some 17 mobile payments vendors and offers guidance for readers to pinpoint their strategies.

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Chain Reaction

A 1700 crore brand, Amway India’s direct selling business journey involves thinking and acting like an FMCG company

FOR A company that’s built on a model of minimal mass media advertising and maximum direct selling, resorting to above the line communication sure does raises eyebrows. But William S Pinckney, CEO of Amway India knows that to drive the company further into the Indian market, using advertising to increase brand awareness is important. So from a corporate ad that projected Amway more as a FMCG company and less as a direct marketing business, Pinckney says the company will now start with category advertising soon to “to educate customers about the brand as many people don’t know us.”

Pinckney’s worry may be the unfamiliarity of the brand in India, but looking at the numbers Amway has notched up, it seems to be spreading the right message. Amway will be closing the financial year with a turnover of 1700 crore, clocking a CAGR of 20%. With over a decade’s presence in India, Amway today sells around 115 SKUs — from products in beauty to home and personal care. While beauty (10%) and HPC (30%) are important categories for Amway, 60% of its sales in India come from nutrition products and its brand Nutrilite, according to Pinckney, is among the Top 5 in the world in its category. Pinckney accepts that the company‘s growth has revved up only in the past few years thanks to key changes initiated in the overall business model.

The changes however do not mean that Amway has moved from its multi level marketing model that is the USP of the company. Products are still sold through a network of Amway Business Owners (ABOs) across the country with emphasis on bottomline margins. Pinckney says one of the thrust areas has been a faster delivery of the product range to end users. Using a network of seven contract manufacturing facilities, the SKUs move to a central warehouse and from there to regional warehouses across the four main metros — Delhi, Kolkata, Mumbai and Bangalore. Amway today has a network of 130 offices, 55 warehouses that reach around 4000 cities and towns across India.

Taking a leaf out of the FMCG sector, Amway has introduced smaller SKUs like single use sachets to generate trials among customers and get them interested. Further, to get customers to ‘touch and feel’ the products, the company has ‘brand experience centres’. These centres situated within shopping malls and high streets allow customers to look at the product range. Pinckney says that the centres are manned by consultants who provide information on the products on display. However, these centres don’t sell as he is clear that selling happens through ABOs. “The retail format is not a point of sale as we don’t want it to cannibalise our core business operation.

Customers can try our products at the experience centres and we will help them get in touch with the ABO in the area they live to buy the products,” says Pinckney. However like any FMCG company, Pinckney says providing a retail experience is important even for Amway and therefore the company plans to have a footprint across the country with over 30 brand experience centres.

Amway may have notched up some serious numbers in a short span of time, but there are challenges as it looks to scale up the ladder. Foremost is the beauty and personal care category that’s witnessing an aggressive play off between established FMCG players. Market observers believe for Amway to make an impact, it will have to project each product as a brand with its own character and personality. “A lot of brands in these category are imagery driven. Any premium that a brand charges depends on the brand message it sends across,” says one market observer. That’s precisely the reason why Amway is now looking at above the line communication for individual brands. On the other side of the spectrum is the price war that one comes across in home and personal care. With well known FMCG companies playing the price card regularly, Amway for its offering has to be in sync with the market when it comes to pricing, say market observers. Pinckney knows that in terms of marketing and communication, he doesn’t have the muscle to match the FMCG behemoths in the market. But Amway’s trying to overcome the perception and familiarity issue through training. Amway provides free training to its ABOs and so far it has conducted 29,000 training sessions for more than 1.5 million people. “As this is a one-to-one marketing business, it is important that ABOs know about the product they are selling,” says Pinckney.

Amway has acquired some traction in the multi level marketing business, but to keep the chain going, the company will need to think more like a consumer goods company and less like a direct seller.

 

HMV picks new CRM system

HMV’s new rewards scheme, PureHMV, is using a customer relationship manager (CRM) system from EHS Brann Discovery.

PureHMV allows customers to collect points for transactions, then trade them in for ‘money can’t buy items or experiences such as autographed guitars or concert tickets.

EHS Brann Discovery is supporting the launch of the unique scheme, which has now gone nationwide after a six month trial across 33 stores in East Anglia and the West Midlands. The agency’s approach will utilise reward scheme data from multiple sources including HMV’s point-of-sale systems and in-store and website sign-ups, all of which will feed hourly into the CRM system.

The system will analyse sales data by customer types and spending behaviour to allow for better targeted and more relevant communications on promotions and offers. This aims to make the customer’s journey more personal, relevant and valuable and HMV’s marketing more efficient, profitable and insightful.

“The implementation of a CRM system will enable HMV to maximise the value it derives from PureHMV, and provides the tools to ensure that its approach to customer loyalty remains current and credible. Investment in customer loyalty generates a vast quantity of customer insight, and by carefully analysing this data and applying it to the interactions it has with its customers, HMV can continue to enjoy profitably and long term relationships,” says EHS Brann Discovery managing director Richard Greenhalgh.

Mobile Micropayments Roll Out In Shanghai.

According to China Mobile’s Shanghai branch, its regulations related to micropayments made with mobile phones have been completed and consumers in Shanghai will soon be able to pay with mobile phones in McDonald’s and Starbucks.

China Mobile Shanghai said with a new SIM card that integrates the payment function, people in Shanghai can pay with their original mobile phones in the stores of China Mobile’s cooperative partners, including McDonald’s and Starbucks.

The new SIM cards are expected to realize volume production within two months. At the end of April or the beginning of May 2009, China Mobile Shanghai will invite a group of users to experience this new service first.

A representative from China Mobile Shanghai told local media that users can complete the small-scale payments by placing the mobile phones near the card reader. The costs for the change of a SIM card are between CNY50 and CNY100. The accounts of these new SIM cards are bound with the bank card or credit card accounts of users. Once the money in the SIM cards is used up, they can recharge by simply sending a short message.

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