Checkout-free shopping is coming soon to a store near you. This will be the case as more retailers are offering variations of using mobile apps to speed up customer visits to shops and cafes. The most ambitious is the highly publicized Amazon Go concept store, although as the following article describes, there are many other examples of mobile apps enhancing the customer experience.
Technology pundits had predicted that mobile payments would be the wave of the future, and will change commercial interactions forever. In reality, mobile payments have struggled to gain ground in the developed world, because it’s just as easy to pay with a card as it is to pay with a phone. (The story, of course is very different in places like China and Kenya, where using the mobile phone to pay has become ubiquitous, since alternative digital payment methods were non-existent).
It required re-thinking the merchant-customer relationship in the developed world, and removing the focus away from purely payments, and more to the other aspects of customer brand affinity and experience.
Starbucks broke new ground by bundling in-app payment together with loyalty (i.e. free drinks), which led to 15% of U.S. Starbucks sales coming in via mobile. Then in 2015, Starbucks launched the Order & Pay feature which allowed customers to place and pay for orders from their mobile devices, skipping the line when they pick up their beverages in-store. Before long, the percentage of app sales rose to 26% and the Starbucks app now processes more than 10 million transactions a month.
Mobile payments have been evolving and now they are appearing in many types of retail settings. While technology is still the critical path, as evidenced in the Amazon Go test store, shoppers still need good reasons to use it. Universal mobile payments such as Android, Apple, and Samsung, have seen sluggish adoption due to a lack of integrated features. But food and coffee shops have seen mobile order and pay take off due to ease of use, time savings, and loyalty program tie-ins. Groceries and big box stores will be the true proving grounds to see if cashier-free mobile checkout will also prove to be a winner.
Overview by Raymond Pucci, Associate Director, Research Services at Mercator Advisory Group
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