The Green Sheet Online Edition
January 25, 2016 • Issue 16:01:02
The Mobile Buzz:
Mounting evidence suggests that smartphones are now the top driver of sales and traffic for retailers. According to the State of Retailing Online 2016, a joint study conducted by Shop.org, Forrester Research Inc. and Bizrate Insights, and referred to as the Shop.org study in this article, mobile devices as a percentage of both online sales and traffic are now led by smartphones.
Several studies undertaken over the past year indicated that for the first time smartphones surpassed tablet devices as the preferred technology to research and shop. The Shop.org study revealed smartphone sales accounted for 17 percent of online sales for merchants surveyed, ahead of tablets at 14 percent. And year-over-year sales generated by smartphones grew at a rate of 53 percent compared with 32 percent for tablets.
The shift to mobile for online commerce is significant. By all accounts online commerce continues to gain ground with consumers. In data collected from 1.3 million U.S. retail locations, First Data Corp. found that 20.2 percent of purchases made during the 2015 holiday season were conducted online; the average ticket size was $125.72, nearly double the average $69.64 spend at brick-and-mortar locations.
What do merchants want?
Despite the increasing usage of mobile devices online, retail investment in mobile platforms has been modest. Thirty percent of Shop.org respondents surveyed spent less than $10,000 on mobile initiatives in 2015, 17 percent budgeted $10,000 to $50,000 and 18 percent made no investment at all. These findings indicate bigger may not be better for merchants whose interests lie in finding distinct advantages with customers.
"Retailers are now recognizing that their customers may not need a bigger, more expansive shopping experience on mobile platforms – they need a consistent, relevant and user-friendly experience that will shape their online and in-store shopping behaviors," said National Retail Federation Senior Vice President and Shop.org Executive Director Vicki Cantrell.
Another reason size may not matter is that most respondents in the Shop.org study indicated they are getting maximum value from their mobile dollars. "Even with relatively small investments in their mobile initiatives, retailers are seeing tremendous growth in both sales that come from smartphones and the level of customer engagement from mobile across the brand," Cantrell said.
She believes that ISOs and merchant level salespeople now have tremendous opportunity to help merchants profit from the mobile channel by offering loyalty and engagement programs. "Retailers are building their mobile platforms with strong customer engagement strategies in mind, allowing their shoppers to easily 'click and buy' or research in-store availability," she noted.
Looking ahead, Shop.org projected that retailers will loosen their purse strings a bit. One-third of merchants surveyed were planning to increase smartphone investments by more than 20 percent in 2016.
Smartphones may be the shoppers' choice, but many in the payments industry agree that the age of tablets is far from over, because the tablet's ultimate purpose in-store beyond the POS is its utility as a customer service tool for sales associates. Having immediate answers to questions about inventory or the next sale can ultimately convert more sales in less time than was possible through traditional channels in the past.
Indeed, the Shop.org survey revealed that of the 36 percent of merchants who use mobile devices in stores, one-fourth use tablet devices. Forty-four percent said their sales associates use the tablets to show products not available on the floor, 23 percent to check inventory in warehouses, and 21 percent to check in-store inventory.
"It's essential to provide value on those devices and in those moments, which are often in stores," said Sucharita Mulpuru, Vice President and Principal Analyst at Forrester. "While mobile phones still represent promise, savvy retailers will be leveraging mobile with their customers to positively influence in-store sales as well."
Cantrell added that for today's consumers, "this is all just a part of modern-day shopping, though for retailers, it's a constant balance of where and how much to invest into the mobile experience and infrastructure."
Based on First Data's research, merchant categories that fared well over the past holiday season that are likely to benefit from continued investment in technology were building materials and garden equipment; electronics and appliances, and clothing and accessories, which saw declines, could return more favorable results with further cash infusions.
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