This sponsored post is produced by Neumob.
“If there’s an underlying take-away from (the 2015) holiday season, I think it will be remembered as the one where mobile ate brick-and-mortar” — ComScore chairman emeritus Gian Fulgoni
“On the desktop, the browser was king. Not so in mobile. We’re already seeing that. You win in mobile apps, you win everything.” — Flipkart co-founder and CEO Sachin Bansai
The movement from “e-commerce” to “m-commerce”, and then from shopping in mobile browsers to shopping in mobile apps, happened so abruptly that many retailers are still coming to terms with the new normal. Pundits have been pontificating for at least a decade about what form the inevitable surge in mobile-based retail commerce would take, and it turns out that it wasn’t that location-based “coupon from Starbucks” that we were promised for so many years.
Rather, a synergistic combination of well-designed mobile apps, advanced smartphone capabilities, push notifications, and mobile payment solutions finally fueled an unprecedented explosion of mobile shopping behavior this past holiday season — and marked a new phase in retailer strategies for keeping customers engaged and coming back for more.
By the end of 2015, U.S. mobile commerce sales totaled approximately $104.05 billion for the year, up nearly 40 percent from 2014. With mobile commerce growth outpacing total ecommerce growth by 2.58 times in 2015, mobile commerce sales nearly reached 30 percent of total US ecommerce sales. Most mobile commerce advances in 2015 were driven by the retail market (think Amazon, eBay and Walmart), so it’s no wonder retail-driven mobile commerce accounted for roughly 75 percent of all mobile commerce revenue in the US last year.
More importantly — and an exceptionally good sign for retailers — very little of that growth is attributable to downloaded items, such as games, in-game app purchases, and software. Instead, the majority of the growth is driven by shoppers purchasing traditional goods (i.e. clothing and electronics) from retailers via mobile apps. 2015 holiday season sales on mobile devices accounted for $12.65 billion. This represented a massive 58.5 percent increase in mobile sales over the 2014 holiday season, according to comScore.
We’re shopping in apps — not in browsers
The real knockout stat, however, is just how important apps — as opposed to mobile browsers — have become for retailers. Flurry Analytics found that mobile users spend 86 percent of their time on mobile apps, versus just 14 percent on the mobile web.
Consumers who use apps are proving to be retailers’ most valuable customers, too. Customer spend per transaction via mobile app has risen to $116 for every $100 spent on desktop. Who would have thought this several years ago? That outpaces per-transaction spend via desktop and mobile browser, by 16 percent and 27 percent, respectively.
Not only are mobile app transaction values higher, their conversion rates are strong as well. A recent study by Vizury found that 25 percent of mobile commerce app users who add products to their carts will go on to buy them, versus just 14 percent on the mobile web. That conversion gap soars even higher in retail, says a 2015 Criteo survey, which found that retail mobile app shoppers convert at 3.7 times the rate of mobile web shoppers.
It’s easy to see why. Mobile apps are flat-out better than browser-based shopping experiences for both retailers and their consumers. For consumers, apps make the shopping experience more enjoyable. Flipping through in-app clothing or sporting goods or book displays, rather than having to wait for a browser to resolve each item, is undeniably more smooth & streamlined. Even when users are offline or have phones that have lost a signal, apps can continue to provide product-viewing capabilities.
Ignoring the back-end: the real danger to mobile app retailers
That said, the consumer’s relationship with the mobile shopping apps that sit on their phone is extremely tenuous. 68 percent of UK consumers recently stated that the performance of a mobile app impacts their perception of a retailer. A 2015 study from HP found that 69 percent of consumers said that mobile app performance issues cause them to have a lower opinion of the company that created the poor-performing app. We know what happens next — one-finger deletion of the app, potentially followed by a poor review with the App Store or Google Play.
A mobile app needs to initially load onto user devices in 4 seconds or less, and provide continuous response times of 1-3 seconds, to satisfy the vast majority of users. Most retailers are not measuring up to this standard in an increased era of cutthroat, mobile-based competition. To address mobile app performance, retailers need to focus on the mobile first-world in which today’s shoppers live, beyond the confines of the legacy PC Internet. Reaching them requires the use of mobile-first infrastructure.
Retailers are often tempted to focus their efforts on the UI/UX of their apps — the “fashion” — over the app’s actual performance in real life, or “the function”. Alas, the more features and functionality an app offers, the higher the risk of slow app performance. Not only must the app’s origin servers deliver high performance, so too must the wide array of third-party calls to obtain data relevant to the entire shopping experience.
Mobile commerce app developers have come too far in recent years to see their hard-won gains and soaring user bases lost due to substandard speed and performance issues. The next battleground within the mobile commerce app ecosystem won’t be app vs. app, although there’s no question competition for share of wallet will certainly remain fierce.
Rather, app developers will be looking to back-end solutions, from analytics to video tools to mobile app acceleration tools, as they seek to differentiate from their growing number of competitors. All numbers point to app-driven mobile commerce being a healthy and robust sector of the global economy for years to come, and the winners will clearly be those who anticipate rising consumer expectations for speed and performance, and deliver to those expectations accordingly.
Jeff Kim is CEO of Neumob.
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