Mobile Commerce Applications as a New Distribution Channel

1. Introduction

2010 was the year of the mobile internet usage and 2011 the year of Tablet-PCs. But no matter which motto is set for 2012, the digital revolution goes on.

The mobile phone is one of a handful of consumer products to have gained global acceptance within a relatively short period of time (Barnes & Scornavacca, 2004). Today, the mobile phone is central to the lives of most consumers, including the lives of young teens. It is a device many consumers cannot seem to do without; they always have it on and check it almost everywhere they go. For these consumers, the mobile phone is not only a personal device used to stay connected with friends and family, but also an extension of their personality and individuality (Grant & O'Donohoe, 2007; Sultan & Rohm, 2005). For marketers, the widespread adoption of mobile phones represents a huge marketing opportunity to reach and serve consumers anytime, anywhere (Grant & O'Donohoe, 2007; Roach, 2009; Barut u, 2007). Paradoxically, while consumers adopt mobile phones to enhance their private and social lives, marketers see mobile phones as a marketing channel.

Mobile commerce is still in its early stages, and mobile commerce practices will likely go through fundamental changes as the technology continues to evolve (Karjaluoto et al., 2008).

The smartphone has the capability to transform consumers' shopping experiences and the value of marketing: Consumers can now easily and quickly shop across multiple channels (physical store, web-based, and mobile) with substantially greater level of convenience, flexibility, efficiency, and personalisation. However, this technology also has the potential to be intrusive and annoying. Further research is needed to gain clearer insights into how consumers will react to this type of marketing given the many technological and marketing capabilities that smartphones offer over the traditional mobile phone.

1.1 Sephora

Sephora is a visionary beauty-retail concept founded in France. Today, Sephora is not only the leading chain of perfume and cosmetics stores in France, but also a powerful beauty presence in countries around the world. The company is owned by Louis Vuitton Moet Hennessy (LVMH), the world's leading luxury goods group. (sephora.com)

Sephora.com - Launched in the U.S. in 1999 and Canada in 2003, the foremost beauty site on the Internet is also Sephora's largest North American store in terms of sales and selection of products and brands.

Sephora Mobile - Sephora has also been recognized as a leading digital brand and continues to advance this arena through mobile and social media initiatives including an active Facebook page, BeautyTalk (its online beauty community), its mobile site, and iPhone App.

"Our new online and mobile strategy lets us connect customers with products they want, and helps them to discover new one, too," she said.

2. Importance to Business and Society

Society

The act of shopping once meant going to a mall or a store and making a purchase from a physical location. Today, shopping is not tied to a location, it is rather tied to a device. Geographic borders and limitations are melting away, allowing greater access to goods and information. Consumers want to be able to have the same or better shopping experience across all channels, devices and screens, and they are purchasing across all of them.

Business

According to comScore in September 2011, digital purchases (music, eBooks, TV episodes,

movies) were the most popular mobile purchases at 47%, followed by sales in clothing and

accessories purchased directly from retailer at 37%, beauty and cosmetic items were fifth.

It is a strong indicator that fashion brands and beauty and cosmetic brands should

absolutely provide their customers with mobile shopping options.

According to Google Insights four out of five smartphone owners use phone to help with shopping. More than one in three shoppers made at least one purchase with their mobile devices during the past six months.

Fig. 1:

According to Mobile Commerce Daily, Mobile commerce showed 86% year-over-year growth from 2010 to 2011. Nearly 50% of smartphone owners use (or plan to use) their phones for mobile shopping.

Annother importen Fact is that Exicon's review of 1,200 branded apps shows that by the end of last year, just 12% of top 500 retailers had mobile sites, and only 7% had apps.

So there is a high potential for the fashion industry to create useful and seamless apps in order to maintain customer satisfaction and loyalty.

Fig. 2: Global Smartphone Ownership (of total Cell Phone Users)

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3. Background Theory

3.1 Mobile Commerce

Mobile commerce, often referred to as m-commerce, typically designates the use of

wireless devices (particularly mobile phones) to conduct electronic business

transactions, such as product ordering, fund transfer, and stock trading (Kalakota

and Robinson, 2002). According to Tarasewich (2002, p. 42) mobile commerce

"is defined as all activities related to a (potential) commercial transaction conducted through communications networks that interface with wireless (or mobile) devices".

M-commerce was initially expected to experience a substantial growth for several reasons, such as the rapid proliferation of mobile device adoption (over 1.52 billion global mobile users according to one source[1]) and the obvious advantages of anytime-anywhere connectivity. However, most m-commerce applications, except for a very few personal applications like ringtone downloads, have failed to meet expectations (Anil et al., 2003; Liang and Wei, 2004). It is therefore also important to shed light on the technological characteristics affecting the adoption of m-commerce. For this reason I have integrated the technology acceptance model (TAM) (Davis, 1989) in this research to explain the adoption of m-commerce.