For sure, mobile commerce is the “brass ring” that everyone in payments is chasing right now. And, for sure, it is incredibly complicated since it mashes up a whole set of things that influence commerce. But when you think about it, mobile commerce is actually an ecosystem of ecosystems – seven ecosystems in fact, that are each complex organisms in their own right. That insight alone is why it is so complex to describe, so easy to confuse and, if you are one of the many companies operating at the intersection of these very dynamic ecosystems, rife with opportunities to transform the way that consumers and merchants exchange value. Looking at mobile commerce this way also helps to get some sense of the pressure points as these various ecosystems move together in synch, overlap, and in some cases butt heads.
Here’s a high level walk around the seven ecosystem layers that we think puts the commerce in mobile:
- The traditional mobile ecosystem is comprised of mobile device manufacturers, mobile operating system providers, and mobile network operators. This ecosystem is important for the obvious reason – it is the device, operating system and the network that provide the form factor and connectivity that literally make it possible conduct commerce via the mobile device.
- The applications layer is connected to the mobile operating system and, through it, to the device, and is the gateway to the 6 different ecosystems of ecosystems that individually and collectively enable commerce and the activities that support it. Before there was an apps layer, commerce or commerce related activities of any kind, was clunky and painful. Here are the various commerce-related ecosystems that the applications layer enables:
- The connect ecosystem consists of social networks and affinity groups. This ecosystem is a relatively new but increasingly important aspect of mobile commerce. It enables the easy viral sharing of the activities that trigger or stimulate commerce, e.g. recommendations, referrals and the word of mouth marketing activities that social networks and affinity groups enable, formalize and offer the opportunity to monetize.
- The discover ecosystem consists of active (search-engine) and location-based (GPS) enabled discovery. These ecosystems connect to the traditional online search platforms such as Google and those that are emerging via the connect ecosystem (e.g. social search) and the variety of location based services that are enabled by mobile devices.
- The incent ecosystem consists of the deals and a giveaways ecosystem. This has become quite a disruptive commerce ecosystem in many ways since it has actually reframed the expectations of consumers and their interactions with merchants. This ecosystem is connected to a massively fragmented set of deals and promotions players that range from the “daily deals” players to coupon providers whose goal is to stimulate trial and repeat usage of a product or service.
- The pay ecosystem consists of the tender type used to conduct payment and the technology that enables it, including processing and merchant acquiring. Its ecosystem is probably the most mature of all (now moving into its 7th decade), the largest with hundreds of players orchestrating more than $4.3 trillion of commerce annually in the US alone, and the most complex. It is also, hands down, the most critical ecosystem to connect to and from if, mobile commerce is your ambition. Aside from being incredibly complicated on its own, the pay ecosystem is also undergoing its own disruption thanks to the many emerging players and alternative payments networks that are leveraging new technologies to enable payment via the mobile at breakneck speed. The pay ecosystem is also at the core of the “mobile wallet” wars that are being fought for both merchant acceptance and consumer adoption.
- The reward ecosystem consists of both the offer and redemption dimensions of rewarding consumers for their commerce behavior. This ecosystem is also undergoing disruption as the “incent” and even the “pay” ecosystems look to displace the traditional points-based cornerstone of card-based rewards programs, new players create their own rewards and loyalty programs and merchants increasingly look for schemes that drive behavior directly back to their storefronts. At the root of this disruption is the consumer’s desire for instant gratification rather than the “earn and burn” programs tied to points that no longer deliver the same consumer appeal.
- The manage ecosystem consists of the banking and budgeting ecosystems that bring the management of financial services to the small screen. This ecosystem connects to the traditional banking ecosystem and can be thought of as an extension of online banking capabilities. This ecosystem may not be commonly thought of as part of the mobile commerce ecosystem but its functionality is valued by many consumers who increasingly rely on mobile devices to manage financial activities across all transaction types, including payment transactions. It is also a familiar utility that gets consumers into the habit of relying on their mobile devices to manage financial activities.
A final word on mobile commerce.
If you accept that this concept and illustrating infographics defines mobile commerce, now you can perhaps more fully understand why devising a wallet to enable all or most of these functions is so challenging. Our view is that what differentiates a mobile wallet from a mobile payments app is that a wallet enables, in large measure, this bundle of activities that these seven different ecosystems support today individually.
*This infographic is part of the ebook “How To Make It In Mobile Commerce,” by MPD’s Karen Webster and Will Graylin, Founder and CEO of ROAM Data.