Mobile

The Downside of Mobile Commerce

Retailers love M-Commerce in all of its forms, whether it’s in-store barcode scanning, shopping while riding the subway or trying out a mobile payment methods. But an alert from Seeking Alpha points out the payments dark side of that mobile madness: the very real potential for huge margin shrinkage.

The alert specifically focused on the popular price comparison mobile apps. “The increased reliance by consumers on price-comparison apps is seen as a margin compressor that will be nearly impossible to unwind,” Seeking Alpha said.

Prompting the concern was a survey from mobile shopping vendor Retale, which “found that 73 percent of parents of school-aged children use mobile for their back-to-school shopping. Of that group, 79 percent buy items directly and 96 percent fired up mobile devices to compare prices.”

The impact is that retailers—both physical and virtual—are feeling pressured to shave off however much they can from prices, to look better to the pricing bots and slashing margins in the effort. For all chains, the hope is that the matched price acts as a loss-leader and will pull in shoppers who can then upsold with higher-margin accessories or related items.

The problem is that as more items are being aggressively price compared, the number of items that can survive with a healthy margin are dwindling. And retail was never a high-margin business to begin with.

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