Retail mcommerce today and tomorrow

M -Commerce I TODAY & TOMORROW

6


This year, retail sales generated by mobile devices are projected to account for
15% of total retail e-commerce sales in the US, representing 38.4 billion dollars Nearly 70% of moms shop on their mobile
in consumer spending – a 55.7% increase over just last year. By 2016, m-

Mobile Today
commerce spend will reach $86.9 billion,1 creating a mushrooming opportunity
devices2
for retailers. Much of this growth can be attributed to rising numbers of
smartphone and tablet owners , in addition to a rapidly growing appreciation of
the immediacy of shopping via mobile . Almost 25% of site visits originate from a
mobile or tablet device3
But retailers must look at this growth in context. Today, all e-commerce
comprises just 7% of total retail sales, and revenues from m-commerce, which
include sales from smartphones and tablets, represent less than 1% of this 75% of non-daily deal retail mobile
total.1 Still, mobile presents retailers with a much larger opportunity than just
sales. The mobile influence is an underestimated power that can be used to
transactions are come from the media and
create strong connections and unparalleled engagement between consumers consumer electronics categories alone4
and brands.

Mobile Tomorrow
50% of all sales traced to a non-PC device will
occur on a tablet by 20155

M-commerce will grow at a compounded
annual rate of 39% through 20164

U.S. mobile users will surpass PC users by
20151

1
1
Source: eMarketer

Read more: Read more at

Location services are on
the rise and are being
driven by consumer
Over the past two years, mobile traffic has quadrupled.2 But the $8 million in 72% of incentives to check in.
retail sales generated from smartphones accounted represents just 3% of total consumers aged Younger demographics
e-commerce sales in 2012.4 The gap between this low percentage and the 15% 20-40 in the US are more likely to check in
share claimed by all m-commerce sales last year was made up mostly by and the UK use
tablets, which not only drove more traffic to online retailers than did
Ownership is equally (35%) versus senior at
mobile devices distributed between 18%7
smartphones, but more completed purchases as well. (Note: A small portion of while in-store to
m-commerce sales are also attributed to e-readers and other mobile devices.) males and females
compare prices8 across mobile
M-commerce will continue escalating at an aggressive pace, with the largest platforms (Android
part of that growth expected to come from tablet users. Consumers in the US
versus Apple)7
are projected to shop to the tune of $24 billion on their tablets in 2013, and this
number will almost double by 2015. Retail sales on smartphones will rise at a
slightly slower pace, generating over $13 billion this year to over $20 billion in
20151. The average affluence of tablet owners is higher than that of tablet
owners, and tablet consumers spend even more than PC-based shoppers5.

So Do Tablets Trump Smartphones?
US Retail M-Commerce Sales, by Device, 2011-2016
Not necessarily. While it’s true that retail conversions on tablets were almost (in billions)
three times higher than on smartphones in 2012 6, consumers use tablets and
$100.00
smartphones differently, and both play unique roles in the buying cycle.
180.0%

160.0%

Research from Nielsen revealed that consumers turn to tablets more frequently $80.00 140.0%

for browsing, video viewing, and long-form content, as well as usage during $60.00
120.0%

evenings. But the mobility of smartphones offers advantages of its own. Users
100.0%

80.0%

check e-mails more frequently from smartphones, providing ripe opportunities $40.00 60.0%

for e-mail and SMS promotions. Smartphones are also better suited for popular $20.00
40.0%

emerging technologies such as location-based targeting, QR code scanning, 20.0%

$- 0.0%

and in-store usage of mobile devices, which is becoming increasingly popular
2011 2012 2013 2014 2015 2016
for activities like comparison shopping and accessing product reviews. Perhaps
most compelling is this: For consumers who own both a smartphone and tablet, Tablet Smartphone Other Mobile Devices Total % change
the primary device is the smartphone (88%).7
2


Growth in Time Spent per Shopping Apps
Mobile Apps Today Shopping App Category
Today’s mobile experience has become almost synonymous with the usage of Shopping activities are gaining
apps. App usage dominates total consumer time spent on both tablets and All Apps momentum on mobile devices, and
132%
smartphones, and more than doubled between 2011 and 2012, as available time spent on shopping apps
apps and smartphone owners have both skyrocketed1. But the rampant growth All Shopping Apps 274% increased six-fold between December
of app usage also presents retailers with technical and strategic challenges. 2011 and December 2012. Among the
Daily Deals 126%
Creating loyal app users isn’t easy; once downloaded, 69% of mobile users various types of shopping related
open an app10 or fewer times, and more than a quarter of them open the app Online Marketplace 178% apps, retailer apps saw the highest lift.
just once.9 Another big barrier to app development is cost. While it’s eBay, Amazon, Target, and Walgreens
Purchase Assistant 228%
challenging enough to create a popular app for a single device, developing were among the top 10 shopping apps
them for multiple devices is abundantly harder. With market share and demand Price Comparison 247% in 201210, however, not a single retail
for various mobile devices constantly shifting, how can retailers prioritize which app made the total top 10 list of apps
Retailer Apps 525%
one to develop an app for? downloaded on any device.11
Source: Flurry — The Rise of the App & Mortar Economy
Mobile Apps Tomorrow
Over the next 5 years, increasing numbers of buyers will become multiple
mobile device owners, using both tablets and one or more smartphones. But as Device Popularity Varies by Segment, Currently Led by Android and Apple
Google, Apple, and others continue producing new operating systems and
devices, developing native apps for all of them is a costly ambition. Retail
executives have voiced concerns about unclear ROI on retail apps, and are
confounded by which devices to target for app development.4 A promising
alternative is investing in web apps, which use the emerging HTML5
technology. Cheaper and faster to develop, a single web app will function on all
devices (mobile and PC), and can be maintained and updated more easily than
their native counterparts. Although web app capabilities are not quite on par
with native apps yet, the technology is quickly advancing, and there is a real
possibility that they may completely replace native app development in the
foreseeable future.

Source: Adobe Systems – Adobe 2012 Mobile Survey Results 3


The earliest adopters of emerging mobile technologies are often the biggest online spenders.7
Retailers can capture these valuable customers by innovating with emerging mobile
technologies.

QR Codes Location based personalization: Second Screen Engagement
While QR codes have been accused of being This emerging technology offers retailers a With consumer multi-tasking on the rise,
“overhyped”, they continue to gain traction big opportunity to engage with a younger second (and third!) screen usage is
with mobile users, and these early adopters demographic. With the rise in consumer becoming increasingly common. While
represent a valuable customer segment. “check-ins” through services including watching television, shopping is the fourth
38% of young and 40% of middle age groups Facebook, Foursquare and Yelp, retailers most popular second screen activity, (behind
report scanning QR codes in the last three have the ability to target customers precisely checking e-mail, surfing the web, and using
months. Of these, 31% spent over $500 over when and where a purchase transaction is an app), and more than doubled between
the past year on consumer products using most probable to take place. Retailers can 2011 and 2012. This is a key opportunity for
mobile devices, compared with only 16.5% of then deliver personalized mobile interactions retailers to integrate expensive television
those that hadn’t used QR codes.7 in real time, including promotions, discounts, advertising with much more cost-effective
and personalized product recommendations. mobile initiatives. According to Nielsen
With the ability to be used just about Media, 26% of surveyed viewers used their
anywhere—from TV commercials to in-store second mobile screen to look up product
displays to magazine ads, QR codes offer information about an ad they saw on TV, and
retailers the opportunity to explore innovative 22% used it to look up deals and coupons
new ways of engaging consumers pre and related to a TV ad.12
post sales.

4


The mobile market has unlocked a vast new 33% of smartphone owners and 20% of Consumer Trust for Mobile Ads is Low
advertising channel for retailers. Worldwide ad spend tablet owners think advertising is
for mobile search and display ads is anticipated to see acceptable on their mobile device12
a compound annual growth rate of over 50% from
2010 to 2015, representing display and search ads
alone14. From SMS promotions to display ads to
advertising built into apps, mobile advertising presents Almost 70% of women redeem grocery
retailers with unprecedented opportunities for and consumer retail goods based
customer targeting, and personalization. But retailers coupons1
must engage customers without being disruptive or
too invasive.

Mobile ads have shown the highest click through rates 20% of mobile ad spending now goes to
of any digital channel. A large percentage of
Facebook ads15
consumers report clicking mobile ads presented in
both mobile websites and apps, with 42% click
through ads on mobile websites, and 37% on mobile
apps8. On the other hand, mobile ads garner the
lowest consumer trust ratings compared with other Mobile users are more than 2x as likely to
forms of advertising. Just 27% claim to trust mobile click on an interactive ad than a static
display ads, compared to figures close to 50% one16
television, magazine, and newspaper advertising12.
One explanation for this is that users often click on
mobile ads unintentionally, due to smaller screens and
touchscreen features. This makes sense, given that 42% of men and 32% of women are likely Source: Nielsen Media Research — Courting Today’s Mobile Customer
the percentage of users that has actually made a to click through on mobile ads presented
purchase using a mobile device remains quite low6. within mobile apps8
5


Despite flourishing projections for the mobile channel,
retailers remain highly conservative with their investments Mobile-Influenced store sales vs. mCommerce and eCommerce sales
as they grapple with questions about ROI. According to
Forrester Research, key concerns cited by retail
executives were low direct conversion rates on mobile
sites, single-digit percentages of overall sales, and that
“consumers actually prefer experiences that are similar to
those they experienced on desktop devices”.4

The problem with this view is that it approaches mobile as
a direct sales channel rather than a robust marketing tool,
and using traditional metrics doesn’t tell the whole
picture. For example, smartphone users are 14% more
likely to convert in-store than non-smartphone
shoppers.17 In a another survey conducted by Accenture
Interactive, 60% of respondents reported using mobile
devices to research online prices and were enticed into
stores, but, 48% still went home to purchase the products
from that retailer via PC.8 A conventional approach to
ROI measurement would fail to account for these results,
which do have a significant impact on overall sales.

6


Mobile gives retailers the opportunity to influence consumers throughout their buying journey.
To realize the full value of mobile, retailers must evolve from focusing only on sales
conversions to providing value through mobile throughout the customer lifecycle.

The key to maximizing returns on m-
commerce isn’t about identifying and isolating
the most effective mobile activities – it’s about Engaging Mobile Consumers Across the Buying Journey
using them together. Even for brands with the
most successful retail apps, the mobile web Knowledge & Loyalty &
Awareness Selection Satisfaction Advocacy
remains a more effective channel to reach Consideration Engagement
device owners. According to a new study from
Nielsen, the mobile websites of Amazon,  Mobile SEO  Product info &  SMS promos  Mobile support  Loyalty program  Social Media
Best Buy, eBay, Target, and Wal-Mart  Mobile Ads reviews  Couponing  Apps  Couponing  Texting/Sharing
consistently had nearly double the reach as  Social Media  Social Media  Mobile Wallet  Feedback  Personalized
their apps. But the combined reach of both  Geo-targeting  Shopping apps  Data Security Content
was always highest, underscoring the  QR codes  Landing pages  Showrooming  Gaming
importance of an integrated approach. 21  QR codes
 Second screen
Mobile campaigns should be mapped against strategies
each phase of the customer lifecycle,  Mobile
deploying mobile initiatives where they most catalogue
intuitively fit buyer needs. The focus in this Mobile site optimization
consumer-centric approach is increasing the
lifetime value of customers via an end-to-end
mobile experience, not just POS conversions.

7


Sephora, Benefit Cosmetics and Gilt Groupe are three mobile retailers that represent how
inventive mobile strategies can transform the consumer’s brand experience and power real
business impact.

Sephora generates a third of its e-commerce traffic Debuting its m-commerce presence just this year, With more than four million downloads and
from mobile devices. With more than half of its Benefit Cosmetics is a shining glimpse into the counting, Gilt Groupe has applications for iPhone,
emails being opened on smartphones and tablets, future of web apps. It’s mobile website functions iPad, and Blackberry devices. The luxury retailer is
Sephora improved its mobile offerings to generate like a native app, where users can swipe through known for offering mobile-only deals such as flash
a 167% increase in mobile orders between products, navigate through an expandable sidebar, sales access to pre-sale events. According to Hilt,
December 2011 and December 2012. Sephora’s and watch videos and makeup tutorials.19 roughly 30% of its revenues now come from
mobile strategy includes smartphone and tablet mobile, and allows the company to “witness
apps, Passbook integration with its loyalty program engagement metrics over and above our
and gift cards, and an interactive mobile site with website”. 20
easy navigation and checkout.18

8


Lack of experience in
other areas, e.g., design
for a smartphone versus
Some of the roadblocks in today’s mobile user experience, such as
a tablet format
speed and performance, transaction processes, and ability to load
websites will clear as technology races forward. Others, such as user
tracking and consumer privacy, device-specific optimization, and
consumer trust, will require careful consideration on the part of retailers
as they interlock with these advancing technologies. But the biggest
Working with third parties
mobile challenges—and opportunities—faced by today’s retailers may
on mobile initiatives is
actually lie within themselves. difficult

According to Forrester Research’s 2012 report on the State of Retailing
Online,4 executives are struggling with a “rapidly evolving mobile
landscape that is challenging in terms of knowing which platforms and Staying up to date on
mobile offerings to invest in — and in what order of priority”, The report mobile development
found lack of clear ownership, concerns about security, and insufficient innovations
collaboration between internal teams and third party agencies as key
Staying up to date on
contributors to this confusion, As consumers become increasingly irate
market/customer needs
with irrelevant, disruptive ads and inoperative mobile sites, brand
and uses for mobile
perceptions are heavily impacted by mobile experience. Thus, retailers
must have a sense of urgency about tackling organizational issues and
defining an internal vision are prerequisites for mobile success. Today’s
Business objectives for
leading m-commerce retailers, including Amazon, Groupon, eBay and
mobile initiatives are
the Gilt Groupe, have all made mobile a core part of their overall unclear Obtaining adequate
business strategies.
budget for mobile
initiatives, including staff,

9


Mobile offers retailers the unprecedented opportunity to reach consumers during every step of
the buying cycle – and even engage them afterward to create loyalty and advocacy. As the
channel continues to skyrocket, the key to retailer success is making mobile part of a holistic
cross-channel strategy that recognizes and responds to buyer needs.
Mobile Success Comes From the Inside Out. Invest in Web Apps Be Disruptive
Mobile commerce may be an emerging technology, but While device market share will continue to change at Leading retailers in the mobile space , like Sephora,
its success still relies on a familiar mantra: the 360° view unpredictable rates, investing in quality web apps will Benefit Cosmetics, and the Gilt Groupe, have paved
of the customer. With an ever-growing base of circumvent this challenge, yield time and cost their paths to success by melding technology with a
connected consumers using multiple devices—often at effectiveness, and fit into the app landscape of the deep understanding of customer needs. But a common
the same time—creating a seamless experience across future. thread to all of their success stories has been
customer touchpoints has become more important than willingness to experiment, finding fresh new ways to
ever. Mobile campaigns should always be part of an Consider Emerging Markets reach their customers and keep them engaged.
integrated , customer-focused multi-channel strategy. As of this year, China has overtaken the U.S. as the
Retail executives must learn to redefine the way they world’s top country for active Android and iOS
evaluate mobile success, attack the organizational smartphones and tablets. Mozilla has inked deals with
hurdles that are keeping them chained to outmoded multiple mobile carriers and plans to release the first
technologies marketing tactics, and innovate with mobile OS built entirely with HTML5 technology later this
emerging technologies to capture high-spending early year. The new smartphones will cost roughly a fifth of the
adopters. iPhone, and will be target customers in Brazil, India,
China, and southeast Asia. Apple has also hinted at
Start with Site Optimization creating a lower cost iPhone to expand its global reach.
Optimizing websites mobile devices must be every Smartphone penetration in these massive, unsaturated
retailer’s topmost mobile priority. It may seem like a no- markets presents a huge opportunity for international m-
brainer, but several companies have launched mobile commerce.
ads or SMS promos, only to lead the user back to a site
that isn’t mobile-optimized. Big mistake. Mobile web is
the most effective way to reach mobile shoppers.
10


1. “Record Retail Sales on Smartphones, Tablets Take Great Ecommerce Share,” eMarketer, January 20,
2013.
2. “Mobile Traffic Has Quadrupled in Last Two Years,” Heather Leonard, Business Insider, January 10, 2013.
3. RKG, Digital Marketing Report: Q4 2012, Rimm-Kaufman Group, January 2013.
4. Mobile Commerce Forecast: 2011 to 2016, Forrester Research. June 17, 2011.
5. “BI Report: Why Mobile Commerce is Set to Explode,” January 30, 2013.
6. How Tablets are Catalyzing Brand and Website Engagement, Adobe Systems, 2012.
7. Adobe 2012 Mobile Consumer Survey Results. Adobe Systems, 2012.
8. Today’s Shopper Preferences: Channels, Social Media, Privacy and the Personalized Experience,
Accenture Interactive, November 2012.
9. “A Look at How People Use Mobile Apps,” Joseph Walker, Wall Street Journal, June 26, 2013.
10. “Which Smartphone Apps do Savvy Shoppers Use Most,” Nielsenwire, August 6, 2012.
11. “Nielsen Tops of Digital: 2012,”Neilsenwire, December 20, 2012.
12. Courting Today’s Mobile Customer, Dan Lee, Nielsen Media Research. July 18, 2012.
13. “Improving the Business of Mobile Coupons,” Josh Constine, TechCrunch, May 11, 2012.
14. “Worldwide, More Money Goes Mobile,” eMarketer, January 4, 2013.
15. “Study: 20% Of Ad Spend On Facebook Now Goes To Mobile Ads,” Josh Constine, TechCrunch, January 7,
2013.
16. Acquity Group: Enriching the Mobile Customer Experience. Peppers and Rogers Group. 2013.
17. The Dawn of Mobile Influence: Discovering the value of mobile in retail, Deloitte Digital, 2013.
18. “Sephora Sees 167% Boost In Mobile Orders During 2012,” Alicia Fiorletta, Retail Touchpoints, January 25,
2013.
19. “Gilt Groupe Reveals its Success with Mobile and Social,” Brandon Gutman, Forbes, May 27, 2011.
20. Mobile 2013 Intelligence Report, L2, Scott Galloway, February 2013.
21. “A Store in Your Pocket: Retailer Mobile Websites Beat Apps among US Smartphone
Owners,” Nielsenwire, March 12, 2012.

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