Entering the next phase of mobile commerce in the travel industry

Mobile commerce continues to grow at a fast pace. According to eMarketer, mobile commerce or mCommerce constitutes $41.68 billion of the total $262.3 billion of ecommerce sales for 2013 or an increase of 68.2% from 2012 and accounts for 16% of total ecommerce sales.

One-in-six dollars purchased on a mobile device is fantastic. But, there is still a long way to go, especially when you realize that ecommerce comprises less than 10% of total retail sales. But the good news is ecommerce is growing five times faster than traditional retail channels and mobile commerce is growing three times as fast as ecommerce as a whole. Mobile commerce in the travel industry

It’s hard to find anyone in the travel sector who isn’t touting their mobile bookings growth.

According to a recent PhoCusWright report, U.S. Online Travel Overview Thirteenth Edition, mobile travel bookings will more than triple over the next two years, to reach $39.5 billion by 2015, this is about 25% of total online travel market.

As the cool kids say: “slow your roll, playa”. I’m not saying that mobile bookings aren’t growing rapidly, but don’t let high growth percentages color your judgment too much. The law of large numbers still applies. First of all, let us look at PhoCusWright’s own research. Only six months before their latest prediction, they predicted that mobile bookings were going to triple (the same number! Magic!) from 2012 to 2014. But the delta from 2014 to 2015 is “only” 50% (from $26 billion to $39 billion). It is still a fantastic growth, but much less heady than 300%. Let us look at few other data points:

• In PhoCusWright’s 2013 Traveller Technology Survey, the numbers of travellers who actually used a mobile device to book was more than 40% lower than the levels where mobile was used in other phases of the trip planning lifecycle.

• According to 2013 SITA Air Transport World Passenger IT Trends Survey among global travellers, only 5% said they were using check-in and booking services on their phones, and 78% cited usability concerns and the limitations of the device as a reason they might not use mobile for travel.

But, there are clearly segments of the travel industry where mobile is vastly more successful than others. The most obvious of which is same-day hotel bookings. Sojern’s Q4 2013 Travel Trends data indicates that 29% of hotel bookings were made the same-day of stay, down from 32% in the prior quarter (ostensibly because hotel availability during the holiday season is more challenging). This phenomenon of same-day bookings is highly correlated to mobile bookings as evidenced by the success of HotelTonight and reports from Orbitz and Expedia noting that seven-in-ten of same-day bookings are through smartphones. This trend of same-day bookings and high correlation to mobile success for hotel does not translate into all sectors of travel. For example, the same Sojern data shows almost an opposite trend for airlines bookings, with only 3% of airline bookings made the same day versus more than 50% made 31 days or more in advance. This is undoubtedly tied to the drastic differences in hotel and airline revenue management practices, occupancy/load factors and other differences in the businesses. A change in consumer behavior will enable the next phase of growth Mobile commerce is benefiting from an evolution in consumer behavior as well as improvements in technology. Increasingly consumers are shopping across multiple devices – desktops, smartphones and tablets – beginning to search on one device and continuing on another and perhaps completing the transaction on a third. Further, consumers are getting more comfortable using mobile devices for payment via everyday activities, particularly buying coffee (I love my Starbucks app). These repetitive purchases replacing top-up cards with mobile apps not only paves the way for larger transactions, but provides brands more and more information about their customers which has the potential to enable brands to generate more relevant offers and increase long-term customer value. Also, even when they’re not paying with their own mobile devices, increasingly consumers are using their credit cards with merchants who use mobile-point-of-sale solutions like Square which furthers consumer comfort with mobile payment solutions. As travel companies get smarter about what products they focus on through the mobile channel, how to present inventory and options in a way that doesn’t overwhelm the traveller with too many choices and intelligently use traveller context in the merchandizing process, we will see even better conversion results. New technologies are really exciting for mobile commerce.  One in particular is Apple’s iBeacon which uses Bluetooth LE (low energy) to let retailers sense and communicate (e.g. send offers) with compatible devices within 50 meters. All of the promise of proximity marketing may finally come to fruition. The best thing is that iBeacon devices are very inexpensive (< $50), can be loaded with all sorts of sensors, positioned almost anywhere in a store, hotel or airport and will operate for two years on a single coin battery. And, lastly they operate really well indoors where GPS signals are less successful. Besides Apple, Major League Baseball and American Eagle Outfitters are committed to using iBeacon. PayPal, already a leader in mobile commerce has also introduced their own version called PayPal Beacon. As I mentioned in my Tnooz 2014 prediction, I think that iBeacons are a terrific fit for the travel industry, hotels and airports in particular. This is definitely a technology that is worth experimenting with if you are looking to enhance your mobile marketing and mobile commerce potential. NB:Mobile image via Shutterstock.