The worldwide eCommerce opportunity is huge: more than 1 billion people globally have already bought online. In 2016 only, global sales are expected to reach USD 2 Trillion, a figure which however still only represents below 10% of the total global retail market.
In a world that has already become mobile first, the smartphone will become the key channel for retailers to sell their products. However, the opportunity on mobile is currently under-leveraged in comparison with desktop Internet, as, from a usage perspective, mobile commerce is outpacing desktop commerce by a factor of 3x.
Although overall mobile usage took over desktop in 2014 already, only 70% of Internet users have at some point conducted a purchase through their mobile device. Furthermore, looking at the overall transaction volume, mobile only represents half of what is being spent on desktop Internet at the moment.
The above graph is a good representation of the mCommerce gap. For the same level of usage between desktop eCommerce websites and mobile mCommerce apps and websites, the amount of mobile purchases only makes up 70% of those on desktop. If you look at the overall transaction volume, mobile only amounts to 30% of the desktop level.
There are three main main reasons behind this gap:
1. Customer Acquisition
- There is faster growth in overall mobile usage than in retailer app adoption rate, and the adaptation of retail channels to the specifics of mobile (UI, UX, payment, etc.) is falling behind as well.
- Retailers have not yet developed as sophisticated customers acquisition strategies on mobile as they have on desktop.
2. Engagement
- Mobile channels have higher bounce rates compared to desktop websites. Users visit significantly fewer pages in apps than on desktop websites.
- Users spend less time overall in individual apps than on desktop websites. Whereas usage levels are on par between mobile and desktop, the 50 minutes spent on mobile every day are highly fragmented, with people checking their phones more than 45 times a day, if not many more for Generation Z!
3. Retention
- Users are less likely to return to a mobile page or an app after being on a product site than is the case on desktop.
- Retargeting is still less developed on mobile than on desktop.
The mCommerce gap is therefore located at two levels:
- Relatively lower levels of mobile usage compared to desktop for retail purchases.
- A broken funnel conversion once users have reached the mobile website or the app.
Interestingly, according to the experience of many of our eCommerce clients, once users have proceeded to the check-out page, order values are comparable on mobile and on desktop.
One of the key questions for retailers, then, is how to improve funnel metrics both into and within their mobile site or app.
Here are just a few ideas as to what can be done in order to improve the situation:
1. Efficient Attribution Measurement
There are now sophisticated attribution providers in the market who deliver the tools for tracking on mobile. The purchase funnel needs to be meticulously measured and constantly optimized with the same effort as for desktop Internet
2. Improved Mobile Performance Marketing
Aside from search, retargeting is a key channel for retailers to drive transactions. Similar to desktop, mobile retargeting needs to be set up based on CRM data and product feeds to drive up conversion rates for users who visited the site. Today, focus on mobile is still mostly set on acquiring new customers. In order to maximize the value of the customer base, optimizing beyond the install is key to trigger a purchasing decision.
3. Cross-Device Measurement
Correct cross-device attribution is still in its infancy. The transaction volume triggered by or through mobile is significant and closer to what it should be in regards to usage. However encouraging, in order to maximize return on investment, advertisers need to understand the relationship between channels to efficiently allocate their valuable (and sometimes scarce) customer acquisition budgets.
In soccer, a goal is the result of much more than the last kick. Attributing the success of a mobile marketing campaign to the last click only, with the latter still often taking place on desktop, distorts results and leads to suboptimal budget allocation.
With the emergence of more sophisticated data measuring and and performance advertising solutions, there is no reason not to assume mobile spend will grow to its fair share. Retailers who play it smart and fast on mobile and make their transaction funnel fully mobile ready will likely benefit the most and win the crucial market share that will allow them to succeed in tomorrow’s retail environment.