Since the Apple iPhone made the mobile internet usable, retailers have been struggling to figure out how to gain a direct revenue advantage from mobile. If you then throw mobile billing into the mix you can come up with some compelling propositions.
Earlier this week, amongst the hype-fest that is WWDC 14, Apple announced Apple Pay.
Apple Pay brings together NFC, digital wallet and your credit cards. Apple apply a fee on every transaction.
In theory the credit card networks pick-up the transaction charge, however, it’s likely that they will pass it onto the merchants. Not exactly great news for the merchant.
Apple Pay reminds me of one of the most bizarre decisions taken by Vodafone. Who were offered something similar back in 2009.
24G Media (marketing agency) and Freedom Devices (my software company) approached Vodafone with a fast food delivery concept. We wanted to show that a mobile advert could be directly related to an increase in revenue for a fast food establishment. During this time, mobile adverts were either text messages or really annoying rotating banners; a classic example of trying to repeat the desktop web on the mobile screen.
To succeed in mobile, your service must be at least two of the following: personal, immediate, important or fun. We demonstrated a mobile advert that appeared just before the normal UK office lunch time. The advert offered a pre-defined Pizza, soft drink and side dish. When you clicked on the advert, you went straight into a mobile web app (there’s a lot of people who do not have iPhones). The app asked you to confirm your delivery location and checked you could get the meal deal. At this point we put in another clever idea; we used the mobile operators billing system to pay for the meal. This is sometimes incorrectly described as mobile payment, it is in fact mobile billing or direct-to-bill. At this stage the customer would go through the regulated (unlike credit cards) payment confirmation screens. The cost of the meal would be added to the customers mobile bill. The meal is delivered to the customers home as normal.
The concept blossomed into a full trial with Vodafone and Pizza Hut. The pilot was a success, as the mobile web app quickly gained customers and a 65% repeat usage.
We did uncover a number of commercial and marketing based issues:
- as the app took off, we broke Pizza Huts transaction handling system. We never envisaged the repeat usage rate would be so high. We also did not realise how slow some of Pizza Huts systems were.
- Pizza Hut diluted the pre-packaged meal deal (i.e. the immediate aspect) and required a full menu to be offered. This was based on their web experience and not based on any mobile usage patterns. This led to fewer completed orders going through the system.
- Vodafone refused to obtain a group wide E-Money license that would cover the use of mobile payment for physical goods beyond the trial. It’s still unclear why this decision was made. A remarkable piece of corporate thinking.
As far as I know, this was the first end to end example of mobile advertising and mobile billing to be used for physical goods. It appears obvious that this approach works. As it is easy for the customer and safer than typing in credit card details.
It will be interesting to see if Apple’s venture into this area will make the CEO of Vodafone wonder why they failed to seize the opportunity.
Image courtesy of Photo Pin.