Closing the sale in a digital world – smart retailers embrace mobile commerce

Sometimes reality is perfectly reflected by research. This happened to me last week. My daughter tried jeans at the local Westfield. On the bus coming home, 15 minutes of surfing on her mobile and she’d found them cheaper on the net… delivered that day. All she needed was my credit card with the ‘promise’ of paying me back.

That $90 transaction (plus an extra $9.95 for three-hour delivery) was a very personal example of what Havas Worldwide’s latest ‘Prosumer’ research has identified: the seemingly unstoppable rise of ecommerce, in particular mobile commerce.

Firstly, who are Prosumers? They are members of a group of consumers we’ve identified who are important because they are proactive, informed influencers who are growing even more powerful thanks to their skillful embrace of emerging technologies and, especially, social media. Where Prosumers lead, mainstream consumers follow.

Our latest Global Prosumer research report polled 10,000 adults in 31 countries, and shows that Prosumers are leading the charge in mobile commerce.

Not only are they more likely to be purchasing online and across a broader range of product categories, they’re more likely to be doing it on a mobile device. More than one in five (22%) of our mainstream research respondents have used a smartphone or other mobile device (tablet) to shop online but this pales in comparison with the 38% of Prosumers who have done so.

For the first time ever, 2012 saw global consumer sales break $1 trillion. Given where Prosumers are going you can be sure more and more of the $1 trillion-plus will be bought and sold over mobile devices.

We took a look at what our research tells us about their purchase process. 78% of Prosumers use the internet as their first stop for any major purchase and 68% of them claim to go to a store to inspect goods before buying online.

And in the middle sit the physical retailers. Their stores are being used as showrooms: places to experience the goods they’ve found on the net and will buy on the net after feeling the quality courtesy of the shopping centre retailers (this is known as ‘showrooming’).

And if I were a bricks-and-mortar retailer I’d be very, very worried about the financial consequences of these digital shopping habits.

How best can retailers deal with this? How can they become more than just a showroom for their online competitors – avoid being the showroom meat in a digital research and purchase sandwich?

Well, certainly not like the Brisbane speciality food store that attempted to charge people $5 (refundable on purchase) to browse. Thankfully we’re seeing more innovative and practical ways of turning in-store browsers into in-store purchasers.

Take Winning Appliances, the white-goods retailer. A colleague was in one of their stores ‘testing the metal’ on a shortlist of internet researched fridges. With the help of a knowledgeable salesman he’d decided on the one. But before he could show his ingratitude by escaping to purchase on the net, the savvy Winning Appliances offer was made: You can buy this fridge here in-store but at our best online price.

The salesman was closing the sale, face-to-face (still the best way and what the net can’t do) but he was able to do so using one of online’s key advantages (perceived) lower price. My colleague bought there and then, a sale made possible by Winning Appliances acknowledging the showroom appeal of their physical store with the price advantage of their online channel. Evolutionary thinking in terms of their business model.

And here’s another example that uses customers’ mobiles to interrupt their ‘showrooming’ activities and bring the sale in-store. MeatPack is a trendy, irreverent Guatemalan shoe-store. Through their phone-based app they could tell when a person was entering a competitive shoe store in the same shopping mall, either to buy in there or to do their offline product inspection. That person was sent a discount offer for MeatPack… the discount started at 99% and would decrease by 1% per second as the customer raced through the mall to the MeatPack store as quickly as they could. One fleet-of-foot customer, out of over 600 sales generated, was able to claim an 89% discount.

MeatPack used customers’ mobiles to interrupt their browsing and pulled the sale away from their competition whether that competition was other stores or online sellers.

Winning Appliances have changed their business model by melding the respective advantages of their offline and online channels.

In their different ways both these retailers are doing something about the threatening growth of ecommerce and within that mobile commerce. And they’re right to do so because with 38% of Prosumers and 22% of mainstream consumers using their mobile device to shop today, mobile commerce figures are only going one way.

And on a personal note, I know with absolute certainty that reality is truly being reflected by research. It cost me $99.95.

 

App-and-mortar economy: Retail apps usage surges 525%

Forget bricks and clicks, as the world becomes more mobile retailers are looking at the reality of an app-and-mortar economy, according to app services firm Flurry.

The US based measurement specialist found time spent in retailer apps grew by 525% during December 2011 and December 2012, in a study of more than 1,800 iOS and Android shopping apps.

Retailer apps indexed well above the general shopping category, which was broken down into five sub-categories: retailer apps, price comparison, purchase assistant, online marketplace and daily deals. Together, these five categories experienced 274% growth throughout the year.

The opportunity for retailers to extend their relationship with consumers outside the store has never been greater, Simon Khalaf of Flurry writes. “In the new mobile app economy, devices are always with you, always on and always connected… In the new app-and-mortar economy, they serve as virtual, portable show rooms that consumers can use to shop anytime, anywhere.”

This growth in retail apps exceeds overall app growth, which came in at 132% over the course of 2012, showing the uptake of retail outpacing general app growth. Time spent in price comparison and purchase assistant apps has grown significantly, up by 247% and 228% respectively. However online marketplace and daily deals apps did not grow as quickly, with 178% and 126% increases respectively.

Retailers saw the greatest increase in share of time spent, which grew from 15% of time spent by consumers in shopping apps in 2011 to 27% by the end of 2012. The enormous growth in retailer app share has come largely at the expense of daily deals, down in share from 20% to 13%, and online marketplace apps, which contracted from 25% to 20%.

This suggests that retailers are beginning to better respond to the tectonic shift created by the collision of online- meeting offline-shopping through mobile apps, Khalaf says

Retailers need to re-examine the consumer relationship from the ground up and through the lens of mobile-first, Khalaf concludes.

Mobile shoppers burn midnight oil, make post-store-visit buys

Mobile shoppers are burning the midnight oil in the lead up to Christmas, making most of their purchases late at night, suggesting many shop from bed or after a trip to a physical store.

In the lead up to Christmas, PayPal Australia reports significant day-on-day increases in mobile transactions, with peak hour coming on Thursday nights between 10pm and 11pm, mirroring the traditional retail late-night shopping evening.

Compared with 2011, mobile purchases are tracking substantially higher so far during the Christmas shopping period. This growth is aligned with Nielsen research predicting consumer purchases on mobile devices will total $5.6 billion in 2012, up from $155 million in 2010. The research also indicates one in three (31%) Australians have transacted on mobile devices, with 22% using a mobile device for a retail purchase over the lead up to Christmas.

PayPal Australia managing director, Jeff Clementz says the rate of growth is far exceeding expectations for the holiday season, marking a huge shift in shopping behaviour as more and more shoppers are using their mobile devices to make purchases.

PayPal’s data shows in the last five weeks, transactions via mobile immediately after stores close are up, with 30% of transactions occurring between 8pm and midnight. The heaviest spend levels over this period have been on a Thursday night, suggesting that many shoppers search for deals on products they may have seen during late-night hours.

“Our data demonstrates that for consumers, there is residual ‘shopping time’ continuing on from the ‘in-store’ experience after they leave the shopping centre, on their mobile devices,” Clementz adds. “Additionally we are seeing consumers shop in short, mission-focused bursts on mobile devices as they knock items off their Christmas list while commuting or relaxing at home.

“Our data illustrates how mobile and traditional retail are complementing each other and quickly changing social habits.  We expect mobile shopping to continue increasing up until a few days before Christmas, where it will drop off as last minute Christmas shopper head in-store.”

 

Mobile will take 50% of budget in 2017, but held back by skills gap: study

Marketers will spend 50% of their budgets on mobile by 2017, but for the moment are hampered by their lack of understanding of the medium and difficulties in quantifying return on investment, according to Experian Marketing Services.

Only 4% of the 320 marketers involved in Experian’s mobile marketing study are regularly implementing mobile marketing activities, despite a widespread belief it will be one of the most important ways to communicate with customers in the future.

Head of research and consulting at Experian, Dave Audley, puts the slow uptake of mobile down to three key reasons: a skills gap in the industry, difficulty in demonstrating ROI and the tug of war for budgets between traditional and new channels.

“There’s some confusion and difficulty when it comes to budget allocation,” Audley says. “Marketers are finding its quite difficult to quantify return on investment by channel. Organisations are reluctant or not committing to investing in the [mobile] channel just yet until they fell confident that they can measure the return that they get.”

Mobile has also added another layer of the complexity to the tug of war for budget between traditional channels and new, Audley adds. “Rather than out with the old in and with the new, organisations are looking at retaining old channels; traditional offline channels are also becoming increasingly important.

“Finding the priority to put the focus that’s needed into making a successful mobile strategy come to life is quite a challenge.”

As a result, almost six in 10 are yet to test the waters with mobile, while 41% have created a strategy but haven’t started implementing it.

When asked to rate the importance of marketing channels, 53% of marketers said face-to-face communication was one of the top three most important channels. Email was rated by 50% of marketers as a top-three channel, and social media mentioned by 42% of marketers as a top three channel.

Early adopters of mobile report good results, the study found. The vast majority of respondents believed the various mobile techniques asked in the study to be effective, with mobile-optimised websites, m-commerce and MMS emerging as the most likely to be perceived as ‘highly effective’.

Email ranked down the list slightly, while custom apps were the most likely to be perceived as ineffective.

Search, display and video pre-roll were not asked as part of the study.

Perceived effectiveness of mobile techniques among marketers

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“In the next five years Experian predicts more than 50% of marketing budgets will be associated with mobile, particularly as traditional, above the line channels, such as TV and billboards become more interactive and entwined with mobile,” Audley predicts.

“Clever companies will integrate mobile with existing channels, without compromising other activity. Because mobile is cost effective, easy to implement and is nimble, it creates a dynamic platform where brands can create a two-way dialogue.”

 

Retail future “overwhelmingly mobile” as m-commerce hits $5bn in Aus

M-commerce sales are on track to surpass $5 billion in Australia this year, with one in three now transacting via mobile devices and even more using them as product-discovery tools.

The findings from online retail portal eBay and payments service PayPal forecast spend through mobile channels to hit $5.6 billion in 2012, compared with just $155 million in 2010. But the value of mobile devices to retail doesn’t stop there, according to Melani Ingrey of Nielsen, with new screens growing the role of online media during the purchase cycle.

Based on research conducted by Nielsen among 3200 people in October, the proportion of Australians transacting on mobile devices has seen strong growth over the past 18 months, up from 12% of online Australians in January 2011 to 32% today. Looking at smartphones and tablets in isolation, the smartphone is used more commonly with 25% of the population engaging in this activity compared to 16% who transact via tablets.

Similarly, the use of smartphones as a discovery device is more widespread at 47% than the use of tablets at 25%.

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The increase in access of mobile content is a valuable proposition for retailers as mobile devices provide a range of opportunities to support consumers’ discovery of what to buy and where to buy it from, not to mention facilitating purchases, Ingrey says: “Much of this growth has been driven by the ever increasing penetration of mobile devices across all demographics as well as strong attitudinal shifts.”

The study forecasts smartphone penetration to close the year at 64% of online Australians, up from 51% in 2011, and points to an increased appreciation of the convenience mcommerce provides.

Among those involved in shopping behaviour on their mobile devices, search remains the most common starting point of the discovery process. Two in three start the journey at this point, eclipsing emailers, a starting point for 29%, apps, for 26%, links on Facebook, for 24% and online ads, for 19%, as a trigger.

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All up, across both mobile devices and PCs, 95% of online Australians now use online media for their research or discovery, the study found. Those engaged in such behaviour are almost as likely to have completed the purchase in-store purchase (75% have done so), than online (71%).

The findings are contained in eBay-PayPal’s joint ‘Secure Insight’ report, which calls the last two years a turning point for Australian retail thanks to a trifecta of pressures: the strong Australian dollar, mobile phones and heightened competition from offshore.

It likens the change in the retail landscape currently occurring at the hands of technology to the birth of the shopping mall in the country – at Roselands in Sydney in 1964. However, rather than taking 50 years to develop, vice president of eBay Australia, Deborah Sharkey, predicts the industry will consolidate under a new omni-channel model within five years.

The future is “overwhelmingly mobile, and it’s increasingly multichannel, on any connected screen” Sharkey predicts.

 

Mobile shopping becomes weekly habit for consumers

Shopping is the third most popular activity conducted on smartphones and most mobile shoppers use their phone for shopping on at least a weekly basis, a study has found.

The research, conducted on a sample of 1860 online shoppers by price comparison site Getprice, found that online shopping trumps search engines for frequency of use and places behind only reading news and social networking in the popularity stakes.

Director of product and marketing at Getprice David Whiteman said the findings were reflective of the battles retailers were facing in connecting with audiences.

“Globally and locally, the past year has been a challenging one for retail. Retail has been experiencing its own ‘two speed economy’ with traditional retailers being forced to re-think their marketing strategies,” Whiteman says.

“This new world presents challenges but also many opportunities for retailers. It is now a ‘consumer’s market’ where retailers need to adapt to suit ever-changing consumption behaviours.”

The study confirmed some widely held views on the drivers behind online shopping, namely that price comparison still remains the single top objective for online shoppers while physically seeing a product is the top reason for purchasing offline, although its importance has declined by 15% since 2010.

Shopping online from overseas retailers is driven predominantly by more competitive prices and the availability of products not found in Australia attracting shoppers, with 75% and 51% respectively nominating these reasons as factors.

It also found that immediacy, or instant gratification and avoiding shipping costs have become even more important in the minds of shoppers, increasing in importance since the survey was last conducted.

 

Results from the survey were released on 30 August 2012, but fieldwork was conducted between December 2011 and February 2012.

Mobile commerce taking off among smartphone owners

Google has release data on mobile commerce behaviour as well as other aspects of mobile phone usage, in a study that focusses solely on smartphones.

Our Mobile Planet’, conducted in quarter one of 2012, discovered that 28% of smartphone owners have purchased a product or service on their device, of which 60% had made a recent purchase.

Among mobile shoppers there exists a hard-core group of users who purchase from their mobile frequently: 8% do so daily and a further 10% on a weekly basis. Mixed payment methods are used, with 60% using PayPal, but 48% also using credit or debit cards. A select few opt for an invoice or to complete the transaction using a gift card or web payment.

The barriers to making a purchase were investigated among those that were yet to do so, revealing that 68% simply prefer their PC or laptop to buy online, 36% don’t feel secure making the purchase on their device, 11% found it too complicated and 6% found the payment process specifically too complex.

Why have you not made a purchase using your smartphone?

Our Mobile Planet chart

Looking forward, 28% expect to make more purchases via their smartphone in the next twelve months, 45% do not expect to start accessing mobile stores, and a further 27% were unsure how their mobile commerce behaviour would evolve.

The study was commissioned by Google and conducted by Ipsos MediaCT in partnership with the Mobile Marketing Association and the Interactive Advertising Bureau.

 

Mobile commerce underutilised says report

Despite rapid growth among mobile internet users and demand for mobile commerce (mcommerce) sites, the majority of retailers around the world don’t have an mcommerce strategy in place, a report from SLI Systems has revealed.

More than 400 online retailers from Australia, US, Europe, Asia and New Zealand took part in SLI Systems’ survey, which indicated that up to 80% of ecommerce companies are yet to adopt a strategy to support the needs of mobile shoppers.

“What’s most interesting about the findings is that 56% of the businesses we surveyed believe that a mobile commerce strategy is very important or important to their overall business success, and yet there’s that large percentage that are yet to implement a mobile marketing strategy to support this belief.” Shaun Ryan, CEO of SLI Systems, explains.

However, 83% of ecommerce organisations say up to 10% of visitors access their sites from mobile browsers, while 12% cite that they get to their sites through the mobile web.

These numbers are expected to grow, with 85% of new mobile handsets equipped to browse the internet according to Gartner research.

Other findings from the report also include:

  • 56% believe a mobile commerce strategy is very important or important to their overall business
  • 38% agree that mcommerce compatibility is important for driving sales
  • 70% plan to embark on an m-commerce strategy within the next two years
  • 51% of ecommerce companies do not consider the iPad to be a mobile device (they say iPad users can utilise their current website); but 31% will direct iPad to their mobile site
  • 79% say site search is important to a mobile website strategy and 61% are confident site search capabilities on a mobile site will generate additional conversions
  • The top four features online retailers cite as the most important to enhancing the mcommerce experience are navigation, site search, product pages and product reviews, and
  • For companies looking to build their mcommerce sites, 31% will utilise in-house resources, 28% will outsource the work to a third party developer, 36% will use a combination of both in-house and outsourced resources and the remainder are unsure.