As consumers dump their desktops to spend more of their time on phones, they’re browsing more but spending less, presenting a real quandary for retailers. They know that mobile threatens to either bless or curse their businesses, but too few have figured out how to crack the mobile code.
In fact, according to ADI data, retailers may be on track to lose out on 11% of the revenue they could otherwise make from desktop web shopping traffic.
Measuring the pain
Adobe measures 80% of all online transactions from the top 100 US retailers, and has visibility into $7.50 of every $10.00 spent online with the top 500 US retailers. In terms of absolute numbers, this translates into an analysis of more than 290 billion visits from over 16,000 mobile sites and greater than 85 billion app launches.
In other words, it’s a pretty robust data set. Unfortunately.
I say “unfortunately” because it reveals that, as an industry, retail is simply not doing enough to manage the overwhelming consumer transition to mobile. That transition is no secret, but it’s worth digging into how it impacts the retail industry, in particular.
All the retail shopping traffic growth is going mobile’s way, according to ADI data:
The problem, however, is when consumers click “buy”… or don’t, as the case appears to be. Consumers are more than twice as likely to convert from a browser to a buyer on their desktop than on their smartphone. Tablets fare better, but tablet traffic growth is sliding fast, as seen above. In other words, 26% of desktop shopping carts result in an order, but only 16% on smartphones. (There is just a slight increase during the holiday season, with desktop climbing to 30% and smartphones to 19%.)
Not only do shoppers convert less often on their smartphones, but they also spend less money:
In summary, smartphones drive 32% of retail shopping traffic but only 16% of revenue, whereas the desktop drives 59% of traffic and 75% of revenue. In the upcoming holiday season, ADI predicts mobile to surpass desktop visits during the full holiday season (53%) but drive just 34% of online sales, a 19% gap.
Despite all this doom and gloom, smartphone traffic is growing frenetically enough that, even at poor conversion rates and order values, on current trend retailers should still see 10% revenue growth by the end of 2017, according to Adobe data. The problem is that this number would be 21% if retailers could get equivalent conversion rates and order values on smartphones as they get from desktops.
What’s a retailer to do?
What, me worry?
A year ago I called out paltry investments in mobile by retailers and across other industries, as well. In my experience, more retailers are getting serious about mobile, though the market remains highly fragmented. At one major retailer I talked to, they had 13 different SDKs they needed to install to enable disparate functionality (push notifications, customer surveys, etc.) just to deliver a mobile shopping experience.
It’s too hard.
But it’s also the case that much of that difficulty can be taken out of the process. In a survey, 60% of consumers confirmed to Adobe that smartphones are less useful for finding things efficiently and therefore switch to desktop to buy because of better ease of navigation (30%) and more screen real estate (26%). No retailer is going to be able to resolve the lack of mobile screen real estate, but they can figure out different ways to showcase their products.
What that means depends on the individual retailers. I’ve seen some, like Alex and Ani, use mobile to extend their brand experience (e.g., daily quotes sent as push notifications). Others, like Home Depot, have found ways to use mobile devices to improve the in-store experience by tying into beacons. And still others, like Kohls, have harnessed mobile apps to provide digital coupons that inspire physical shopping.
The point is that each of these retailers is not standing still. They’re experimenting. As they do, we should expect to see mobile’s superior traffic turn into superior revenue, as well.