TrustArc Blog

Forming a Mobile Commerce Plan that Addresses Consumer Privacy Concerns

September 09, 2010

By Janet Jaiswal
Director of Enterprise BU & Mobile Aficionado
TRUSTe

smartphones

Mobile commerce is growing and growing fast

More consumers are warming up to the idea of using their mobile device to purchase items. A recent survey by Pew reveals that 11% of mobile phone owners now make purchases through their phones and among young adults ages 18-29, some 20% have made a mobile purchase.

Additionally, recent findings from ABI Research indicate that mobile shopping in the US grew from $396 million in 2008 to $1.2 billion in 2009 and is projected to grow 100% in 2010 to $2.4 billion. ABI predicts that mobile transactions will total $119 billion globally in 2015. The growth in mobile ecommerce is due in part to improved phone usability, faster mobile network speeds and improved screen resolutions.

What does mobile commerce mean?

Mobile commerce can mean anything from selling physical goods to consumers over the mobile web to buying and downloading mobile applications and content (such as ringtones) to using a mobile device as a form of credit at a retail counter (like Bling Nation).

The sale of physical goods via mobile devices is booming. eBay generated $60 million in wireless revenue last year on more than 1.5 million items and is projecting $1.5 billion in mobile sales this year. Amazon is estimated to have 3.5 billion unique visitors in the first three quarters of 2009 according to Nielsen. Other major retailers have been successful in the mobile commerce space, including Best Buy, Target, Tommy Hilfiger and American Eagle Outfitters.

How are consumers & retailers leveraging the mobile phone?

Consumers also use their mobile device to perform price comparisons, receive alerts about special shopping deals, receive mobile coupons and read user reviews to help make purchasing decisions.

A retail chain store, Meijer, has a mobile application that provides shoppers with the nearest location of any of the more than 100,000 items sold by the company. It’s mobile application also displays current sales and promotions and customers can even mark their parking location with the application before entering the store and once inside, use the app to locate rest rooms and customer service centers.

Neiman Marcus recently launched a mobile commerce site that enables shoppers to browse, search and buy items. They’ve designed it such that the mobile site has the same web site address as the traditional ecommerce site, and on-the-go shoppers are automatically redirected to the mobile-optimized version.

Consumer privacy concern hinders mobile ecommerce adoption

A 2009 study of more than 4,000 mobile device users by KPMG found that 87% were ‘somewhat’ or ‘very concerned’ about their privacy on mobile devices and the same percentage were also concerned about security.

When using a mobile device, which of the following concerns do you have about data privacy/security?

chart-1

A recent study by Sterling Commerce and Demandware Inc. found that most consumers’ mobile security and privacy concerns are related to providing personally identifiable information and the financial transaction itself. To maximize success, companies need to address these concerns on the mobile platform. Some best practices to address these concerns include: avoid storing credit card information when a purchase is made, display only a truncated credit card number using the last four digits, encrypt sensitive information prior to transmission and ask users to enter their 3-digit credit card security numbers. In addition, a company should have a transparent privacy policy that’s readable (optimized for the smaller mobile screen size) and that accurately describes what is done with the information a user provides. Companies should also have the privacy practices of their mobile application or mobile web site certified by an independent third party (like TRUSTe) to further ease user concerns.

A 2009 Yankee Group study found that 71% of consumers look for trust seals before doing business online. Displaying trust seals from a credible provider will help assure users that their information is secure, allowing consumers to make purchases confidently and with greater ease, thereby accelerating mobile ecommerce.

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My next blog will focus on addressing privacy concerns related to the delivery of advertising on mobile devices.

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