European retailers' hopes to sell through mobile phones, interactive TVs, and
PDAs will fall short. The inherent constraints of these devices will limit their
share of online retail to E33 billion in 2005 -- only 19% of total online retail.
In a recent report, Forrester Research B.V. (Nasdaq:FORR) outlines how retailers
must instead use devices to drive sales indirectly -- influencing purchases, not
conducting them.
"Pioneering European retailers move beyond the PC
to reach their customers, offering WAP sites and iDTV shops. But more than half
of projects fail to meet expectations," explained Carsten Schmidt,
associate analyst for Forrester Research. "Just because a retail sale is
possible on a device doesn't make it probable -- device opportunities lie beyond
transactions."
Forrester projects that mobile phones will account for
only a meager 3% of total online retail by 2005, totaling E5.2 billion. Mobile
phones only favor transactions that are timely, simple, and location-based --
low-cost items like flowers and cinema tickets. iDTV will account for 16% of
online retail by 2005, totaling E28 billion. Limited input, poor resolution, and
an entertainment bias lead iDTV viewers toward "lazy interactivity,"
not considered shopping trips. As a result, iDTV favors purchases that are
audiovisual, contextual, and entertainment-related. Finally, PDAs struggle to
connect -- the first wireless PDAs will not hit the European market until 2001.
Even in 2005, wireless PDAs will be outnumbered more than 150-to-1 by
Net-enabled mobile phones and capture less than one-tenth of 1% of online retail
sales.
"With household penetration approaching 50% in
2005, accessing the Internet from a PC at home will become as ubiquitous as
toting a mobile phone is today. PCs will capture more than 80% of online retail
sales," added Schmidt. "The PC's rich input and display, wealth of
competing sellers, and seasoned population of shoppers will not only capture the
majority of retail sales in each category, but claim the biggest share in the
biggest categories: For example, more than 97% of online grocery sales, the
single biggest online category in 2005, will move through PCs. In total,
PC-based online retail will form a E141 billion market that year."
Forrester projects that the value of retail sales
influenced, but not captured, by non-PC devices will outpace device transactions
by 8-to-1. iDTV will influence E28 billion in retail spending both on- and
offline by 2005, representing 1.1% of total retail sales. Mobile devices alone
will drive loyalty and influence E299 billion, more than eight times iDTV alone.
Finally, the combined impact of both devices in use by 7.6% of Europeans will
influence another E59 billion.
"Retailers must look beyond transactions. For
example, mobile phones reach consumers anywhere. They can cultivate loyalty
through personalized alerts, create opportunities for location-based services
that advance consumers toward purchases, and build brand awareness through
opt-in ads," added Schmidt.
In the report "Driving Retail With Devices,"
Forrester interviewed 40 executives from European retailers who support at least
one of these new interactive devices in addition to the PC. Forrester also used
results from the Technographics(R) Europe May 2000 survey of 23,000 consumers.
Forrester's Technographics Europe research program provides continuous
quantitative information about consumers' attitudes toward and adoption of
technology.
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