May 21st, 2009 | 17 MIN READ

Multichannel 2.0: Are You Ready for the Next Generation of Commerce Channels?

Written by author_profile_images Linda Bustos

Linda is an ecommerce industry analyst and consultant specializing in conversion optimization and digital transformation.

The following is a summary of Elastic Path's webinar Multichannel 2.0: Are You Ready for the Next Generation of Commerce Channels? The webinar is also available for replay or download.

What is Multichannel 2.0?

Traditional, Multichannel 1.0 includes retail, mail order, call center and online store. Emerging technologies like mobile phones, Internet protocol TV and set-boxes, store kiosks and digital signage and consumer electronics like iPod touch, gaming consoles and portable book readers like Amazon kindle -- the next generation of shopping channels is what we at Elastic Path refer to as Multichannel 2.0 -- anything that has the potential potential to access your information assets and facilitate transactions through them.


Mobile Commerce Beginnings

  • First appeared in 1997 in Finland with 2 mobile phone enabled Coca Cola machines that accepted payment by SMS (text messages)
  • The same year, Finland's Merita Bank also began accepting SMS transactions
  • In 1998, the first downloadable ringtones appeared in, again in Finland
  • In 2000 we saw mobile parking payments in Norway, mobile train tickets in Austria and mobile airline tickets in Japan

Mobile Commerce Today

  • North American mobile commerce totaled about $346 million in 2008
  • Expected to hit $577 million in 2009
  • Predicted to quadruple to over $2 Billion by 2010

Compared to all ecommerce which was a $204 billion industry last year, this doesn't seem much. But it's an area of growth and can greatly enhance the cross-channel experience. You can also use the mobile channel for marketing and loyalty programs which also add value.

Mobile Payment Methods

PSMS Transactions

Sending a premium text message (or SMS -- Short Message Service) to a short code allows customers to pay and a premium charge is added to the customer's phone bill and the goods released when the merchant receives payment.

Because the SMS doesn't include billing and shipping address detail, this is most common for digital downloads or proof of payment for tickets or physical product in which case a MMS (Multimedia Message Service) might send a barcode confirmation to the customer to present when redeeming goods/services.

SMS payments are not perfect as they can suffer from latency (time lag between “purchase” and merchant’s receipt of payment. Consumers may not get their downloads instantly, and some messages can get lost completely. There’s no guarantee.

Operators may also bill the customer for the text message and typically keep a percentage of the sale from the merchant for supporting the payment service. Other third party service vendors may also take a cut.

Amazon's Text-Buy-It

Amazon’s Text-Buy-It service allows you to send Amazon a text message with a product name, search keyword, UPC code or ISBN number to “AMAZON” (262966). Amazon sends back a list of matching products. To purchase, select the number beside the product. TextBuyIt uses your mobile phone number to find your account settings for your default shipping address and billing information. It’s free to use aside from any SMS charges from your carrier.

Bill to Phone (No SMS)

Another bill to phone option involves a PIN and OTP (one time password) that bypasses banks and credit card companies. The problem for retail is the retailer needs to offer different payment options for different carriers with carrier co-operation - which makes it just too complicated. Right now it's mostly used for digital downloads or services partnered with a Telco.

3rd Party Payments

PayPal, Amazon Payments & Google Checkout all have mobile options. You sign up on the Web, register your mobile and create a PIN to use when you want to pay with your mobile. This requires remembering your PIN which may lower conversion.

Similarly, iPhone and iPod Touch users can purchase digital content, games and applications through the iTunes Store with an iTunes account, using a password as authentication.


NFC (Near Field Communication) uses a short range to transmit information. Because it's a short range, it can only be used close to a terminal like an in-store kiosk/self checkout, a ticket machine, a bank machine etc. Many credit cards already have the chip for "contactless payment." You might have one and not even know it.

Currently this is big in Japan for mobile train tickets, you just wave your phone at the machine. NFC payments may or may not require a PIN.

M-commerce Roadblocks

Customer roadblocks:

Smartphone Penetration

Smartphones are still only 6% of the US mobile market - thought that equates to 50 million Blackberries and 37 million iPhones. A high percentage of smartphone owners use them to surf the web, but not necessarily for shopping. Most mobile purchases are for ringtones, wallpapers, games, applications and other digital content.


Some retailers have mobile specific sites optimized for mobile browsers. There’s no conventional way to name your mobile URL – some use or or even subfolders. The best practice is to use device detection and redirect any visitors to your regular site to your mobile version – but that’s not 100% foolproof, and it can be hard to guess the mobile URL or find in a search engine.


Smaller screens, slower page loads, smaller images, disabled Flash, AJAX and video hinders mobile usability. Stay tuned for a Get Elastic post on mobile website usability tips.


SMS and mobile web usage charges can deter people from mobile shopping. Think of e-stores with home, browse categories, product page, add to cart, whole checkout process – lots of time and data and battery juice.

Security Fears

Security fear is enough to deter 30 to 70% from mobile shopping. In reality, payment options available do improve security. The real threat is storage of personal information on the retailer’s end which just as much if not more of a threat in other channels. But new technology usually brings fear and misunderstanding. The industry has a lot of public education to do.

Retailer roadblocks:


Building mobile sites requires separate design, content strategy, possibly mobile platform subscription.

Lack of Standards Across Devices

You can create different style sheets for mobile, but there’s no guarantee a given device is going to pull the right stylesheet. You have to test across multiple devices - smartphone and non-smartphone. Application development is device-specific to the operating system. Building an iPhone and Blackberry app may only serve maximum 6% of customers – maybe 1% are interested in your app.

Mobile Websites

Home Pages

Notice the difference between web and mobile home pages. The mobile site uses only high level navigation – no product merchandising.

Barnes and Noble's Flash and AJAX wouldn't work on the mobile web. It's home page cuts right to the chase: search, find a store, browse the menu.

Product Pages

Target and Sephora both strip out side navigation in favor of breadcrumbs. Text is larger (no need to resize, zoom). Target uses bullet points for the description and shows large default images.

Should you have a mobile version of your site?

Despite extra cost for design and mobile platforms, there's a night and day difference in usability. If your goal is to do anything over $1 a year with m-commerce, get a mobile site and use device detection to redirect mobile visitors. Anyone who reads their email on their phone might click through to your site.

You don’t have to have a fully functioning store. If you have retail locations, store locators and inventory lookup alone might suffice – an example is Best Buy. All it has is search and a store locator. Some products have a click to call link so you can order by phone.

Think about your industry, would shopping by phone enhance the customer experience? Do your customers want it? Look at web analytics and survey customers. Then look at your store on a few devices and ask yourself if you could stand shopping through it as-is.

Mobile Applications

Not an alternative to, rather a companion to the mobile site. Works well for rentals/subscription/repeat purchase industries, like gifting. 1800flowers has apps for Blackberry and iPhone that access customer accounts and their phone's Address Books.

Amazon's app has some innovative features including "Remembers." Snap a picture of anything and it will try to locate a product you can buy through image recognition. If that fails, it will get humans involved. This shot is from a blogger who snapped a photo of his Zicam medication and 10 minutes later he had a response with links to buy more online.

Should you have a mobile application?

Again, you need to develop for different operating systems like Blackberry, iPhone and Android so you might do all this work for only a few customers. But the customers who do add your app are likely the loyal customers so giving them that extra experience can have its payoff.

The app should do something or meet a customer need that your online store doesn’t do effectively. 1800flowers works for busy people on the go, Amazon also adds value with the camera/image search. Other ideas are mobile shopping lists that you can create on the web and push to your phone or reminder to refill a prescription.

Apps don't have to be commercial as long as they're on-brand. Example: a meal planner or fitness tools if you're an enterprise diet chain like Nutrisystem or Jenny Craig. People buy a lot of food on a regular basis but also need other tools and support -- mobile can be that "pocket coach."

Oakley has a GPS Surf Report application, North Face has a Snow Report and Harndmark has a GPS enabled golf course locator for travelers. Get creative.

Whatever you do, make it useful for customers or it will get lost in the application haystack. If you have a Purple Cow of an idea for an app, do it if you are willing to throw all the money for development away if it doesn't take off or have immediate ROI. Building the app is not rocket science but you should have resources set aside to evangelize it and user test it just like a regular website.

Otherwise, you can still sell to mobile phone users without an app through the mobile web.

Mobile Marketing

Mobile marketing is gaining traction and there’s much you can do:

  • Opt-in SMS marketing (Moosejaw)
  • Text order tracking # post-sale (Moosejaw)
  • Locative coupon push (use GPS and send coupon when they're near the store)
  • QR codes (Ralph Lauren)
  • In-store iPhones for product info lookup (Moosejaw)

In-store iPhones are a good way to market your app if you have one.


Kiosks can bring all the advantages of the web right into the store: cross-sells, customer reviews, detailed product information, video content, search, inventory, checkout etc.

A perfect example of an industry that kiosks work well for is book selling. For example, Borders' inventory is 10x the size of its biggest store. Kiosks give customers access to the "long tail" of products for home delivery or in-store pickup. Borders reports 35% of customers who pick up in store purchase additional items in store.

Canada's biggest bookstore chain Chapters/Indigo surveyed over 5000 of its customers who use its store kiosks and found that 50% have used the the kiosks to make online purchases (plus kiosks support in-store sales). 37% visit Chapters/Indigo specifically to use the kiosks and 80% said they would visit the store again to use the kiosk. Their latest feature allows registered customers to swipe their loyalty card at the kiosk and instantly receive a set of personalized recommendations.

Kiosk popularity will drive the need for IT investment and commerce platforms for businesses that have managed to survive without online stores until now. Think gas stations, restaurants, grocery stores, service providers, etc. Eventually POS systems as we know it will be extinct. Kiosks also have their own design and usability guidelines, so we could see a new industry born -- Kiosk Optimization Experts. or Gurus.

Kiosks also make it possible to set up mini stores in airports, shopping malls, grocery stores, schools, stadiums, movie theaters – pretty much anywhere. In this economy, cutting out floor space, rental overhead, employees, theft problems etc makes this attractive.

Digital Signage

Digital signage can display much of the same information ask kiosks but may have a larger screen, the ability to wave a product in front to display infomation or just replace traditional signage (can be updated globally with one click). When proximal to the product it makes more sense than going to a kiosk in the middle of a store.

Right now JC Penney is testing a "smart fixture" in the Home departments of 3 pilot stores. Hold up an item and scan it to learn about its features, colors, sizes and even washing instructions, and that information can be e-mailed. Again in the future you could use the signage to checkout.

IPTV (t-commerce)

Nearly 2.5 million North American broadband households want to purchase a connected TV, willing to pay $100 more than for non-connected TVs. 33% of broadband households want on-screen widgets and 27% want to access content stored on home computers. One study found more than 66 million consumers watch television while surfing the internet (computer, phone or other device) -- so making TV interactive makes sense.

Cable companies are already shipping set-top boxes that can access the ‘Net and last October, Panasonic introduced the first true2way HDTV to the market.

true2way is another name for the Open Cable Application Platform (OCAP), a Java based software/middleware standard for developing apps and widgets for interactive TV. Advertising will become truly direct response - with a link to a local store finder, product locator and online checkout. 1800flowers actually has a fully transactional advertising widget for the internet right now, which would be easy to access through TV.

The nice thing about OCAP being an open source standard is you don't have to worry about buying licenses or developing for different platforms/formats. Really innovative retailers can find creative ways to offer shopping widgets or perhaps explore partnerships with television programs.

Leveraging existing ecommerce services for a consistent mulitchannel experience

Your existing ecommerce platform contains a wealth of data that should ideally be leveraged across all channels. The ecommerce platform is the hub for:

• Order history and shipment tracking data
• Product catalog, including full Web-ready product descriptions, rich high-resolution images, media (videos), technical meta data (e.g. feature specs for consumer electronics) and warrantee information
• Shopping carts, saved shopping lists, wishlist and gift registries
• Customer profiles including profile data, saved shipping and billing addresses and even payment methods such as stored credit cards
• Product reviews, user submitted images, video, comments
• Web analytics including product views and best sellers
• Product relationship data for accessories, cross sells, up sells, related products and dependant products
• Purchase history and profile data for personalized recommendations and promotions

Regardless of the shopping channel, all of these data assets in your ecommerce platform need to be leveraged to ensure that:

a. Customers have a holistic / consistent shopping experience, regardless of the channel
b. You can access reports and analytics at aggregate and channel level in one place for a "single view"

SOA (Service Oriented Architecture) allows any existing or future channel to consume these services, and services are exposed via simple APIs (Application Programming Interfaces) using lightweight RESTful* web services

*REST or Representational State Transfer is an approach to software architecture that leverages existing protocols of the Web including XML (Extensible Markup Language) and HTTP (Hypertext Transfer Protocol) to pull information from a Web site

Retailers like Amazon, eBay and Best Buy are examples, they provide APIs for internal IT and 3rd party developers to build shopping widgets, mobile applications etc.

Holistic experience between website and mobile application

Example: retains shopping carts, saved lists and wishlists across shopping channels. The mobile application syncs with the Web account.

This is great for shoppers who research online and purchase offline. In the future, customers may be able to locate products in store via RFID chip to the exact aisle and shelf. Big box stores could introduce in-store maps to help customers find product.

Holistic view of order history

Great for both the customer and the retailer, customers can track orders regardless of channel origin. For retailers, the single view of all orders in a single system makes financial reporting, inventory control, sales reporting considerably simpler.

Holistic customer reviews

The ability to access and contribute customer reviews in any channel is valuable for customers and retailers. Reviews can be used in mobile applications and in offline print flyers, digital signage, kiosks and shelf pricing labels.

How can you prepare for the next generation of shopping channels?

Because every business is different, there's no blanket checklist for how to prepare. We hope this webinar has got you thinking about how emerging technologies will affect your industry, company and consumers and got you excited about the possibilities. We encourage you to assess your own situation in light of the following:

Competitive analysis

Understand what your industry is doing and consider the cost of delaying investment in new channels, even in this economy. Playing catch up can be costly, as Borders demonstrated, entering ecommerce on its own (detethered from Amazon) in 2008, while its competition steadily invested in the online channel even through the dot-bomb days.

Understand your customer

What does your customer want and expect today (especially in light of what your competitors offer)? How can you support the customer experience through new channels?

For some retailers, the mobile channel is non-transactional - it's there for inventory lookup, order tracking, customer review and product information rather than selling. That's perfectly fine. And remember there are also non-commercial ways you can leerage applications through mobile and IPTV that can support loyalty, branding and awareness.

Organizational culture

Now more than ever IT deserves a seat at the big kid’s table and for many organizations this is going to mean a big shift in priorities, human resources and budgets. If your CIO is not your best friend, consider taking him golfing. IT is integral to making multichannel 2.0 happen.

Platform issues

Examine your existing ecommerce platform and evaluate its readiness to support new channels. We always recommend looking 5 to 10 years down the road when considering platforms, so you need to figure out if your existing architecture can handle Multichannel 2.0. You may need to invest in SOA and ditch your legacy spaghetti architecture, or begin to leverage commerce platforms that allow you to easily expose services to all channels without the need for bolt on third party products for integrated reporting and consistency across channels. Find out if your existing vendors' roadmaps support what you are trying to do long-term.


Is it just the user interface layer of the application that needs focus when thinking of multichannel or is there more consideration at the middle tier?

The UI is very important, creating a mobile experience that fits within the size of the mobile screen is valuable. But you definitely need to think of middle tier and back end tier as well. It's important to make sure your existing are readily accessible through an API to be consumed by other channels. But remember these all add workload to your servers, and all of that adds traffic and demand to your infrastructure. Make sure your systems and platform have the capacity to support this, and any spikes that may occur as a result of, for example, a Superbowl ad with an interactive commerce widget through Internet TV.

Do you think Mobile commerce is a real area of growth or will it just cannibalize other channels?

No, I don't believe the new channel create new demand unless it's digital content specifically for the mobile device (ringtones etc.) Real advantage in growing your own business and own revenue is being where your customers prefer to shop, and if your competitors aren't there, it's an opportunity to capture those sales. There's also opportunity to support higher sales in the retail channel by giving customers access to customer reviews, price comparison and rich product information in-store.

For companies using m-commerce, what percent of their revenue comes from this channel?

There's not a lot of companies using mobile companies using the channel with the expectation of return, it's early and very experimental right now. I don't have access to figures but if anyone wants to share their own results in the blog comments that would be fantastic. I don't expect it to be very high right now because of the roadblocks, but it's something to think about and watch.

Mobile shopping - how secure is it?

We discussed the various mobile payment options and they are all fairly secure, using PIN and one time passwords or SMS. There's always a risk someone could hack through WAP (wireless access protocol) with an unsecured network, but the bigger risk is actually on the retailer's end where customer information is stored in a database, that it could be compromised. And that is vulnerable regardless of the channel. Really the retailer should be using SSL (secure sockets layer), there's a small risk but it's nowhere near where the public thinks it is.

Can we get a copy of the Forrester Report mentioned in the Webinar?

You must be a subscriber to Forrester to read the full document but you can access an excerpt here.

Next Webinar

Requirements Diligence: The Cornerstone to Ecommerce Project Success

Tuesday, June 30, 2009 9:00 AM - 10:00 AM PDT

Whether you are building your requirements for an in-house developed project or just trying to deciding what to do, requirements are the cornerstone of success. But it's not just motherhood and apple pie. Requirements need to go beyond a wish list of needed features and capabilities.

In this one-hour webinar, ecommerce industry expert Bernardine Wu, CEO of FitForCommerce, will share key strategies and tactics to help you build the most effective, bullet-proof requirements to ensure project success.

Webinar takeaways:

• How to build a comprehensive requirements set
• How to incorporate workflow design and best practices into your requirements
• How to use benchmarking and market data to justify your requirements
• How to distinguish between a must-have vs. should-have vs. nice-to-have

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