Merry Mobile Christmas: MCommerce Takes Off

As shoppers hunt down bargains and gift ideas for the holidays, it will be hard for some to remember a time when they couldn’t pull out their smartphone and hunt down a store location, compare a product’s price, or scan customer reviews.

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It’s only been a short while since smartphones and tablets such as Apple’s iPad arrived on the scene in a meaningful way, but already these devices are having a profound effect on how shoppers behave and how retailers communicate with them.

Mobile shopping only makes up a tiny fraction of retail sales, but it is accelerating at a brisk pace. Last year, about 3.8 percent of all ecommerce sales were made on mobile devices, according to John Squire, chief strategy officer at IBM Coremetrics.

At the moment, mobile has grown to a 9 percent share of all online sales, but that number could rise to about 15 percent to 16 percent of all ecommerce sales over the holiday season, Squire said. The growth is even more impressive when you think that online sales are also accelerating.

It’s All About Value

According to a Deloitte study, almost half of all consumers say they will shop for holiday gifts online – a double-digit increase from last year. This makes the Internet the No. 1 shopping destination, now tied with discount stores, for the first time since Deloitte added the channel to the annual study.

One of the main reasons is that consumers say they can find more competitive prices online, and increasingly these consumers realize smartphones and tablets are another tool they can use for this research.

Within the next five years, more than half of U.S. consumers will be actively using their mobile devices regularly for shopping, according to a recent study by L.E.K. Consulting.

This activity will drive m-commerce sales to about $31 billion by 2016, estimates Forrester Research. The figure represents a compounded annual growth rate of 39 percent from 2011 to 2016.

Couch Commerce

To look only at sales receipts, however, misses the broader influence mobile is having on the retail industry.

Take Thanksgiving. Much has been made of retailers such as Toys ‘R Us and Walmart Storeskicking off their Black Friday sales on Thanksgiving evening. But many retail analysts expect the shopping will begin long before the doors open at Toys ‘R Us at 9 p.m.

Last year, the busiest days for mobile shopping was Thanksgiving, and this year the volume is only expected to increase.

So all those complaints about the millions of Thanksgiving dinners being ruined by the early start of the Black Friday madness miss the point that many Americans are already doing their holiday shopping in a tryptophan-induced haze from the comfort of Grandma’s couch.

“People aren’t really waiting anymore,” said Claudia Lombana, a shopping specialist at online payments service Paypal.

Better Experiences

Another reason why m-commerce is accelerating is retailers are simply providing consumers with better experience. Most retailers have improved their mobile sites and some have developed applications to make it easier to shop.

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There also has been a lot of attention paid to improving the way email displays on mobile phones, said Heather Blank, vice president of Strategic Services at Responsys. This includes increasing the font size of the emails to make them easier to read on smaller screens or making the call-to-action buttons bigger so they are easier to click, she said.

“The assumption is that people are going to be saving emails and referencing emails as they shop,” Blank said. Typically, about 10 percent of emails are viewed on a mobile device, but during the holidays that number could rise to 20 percent, she said.

Email remains a powerful tool for retailers, according to Blank. Last year, 89 percent of the top online retailers increased the number of promotional emails they sent during November to December compared with the earlier months.

And retailers have more tools at their disposal to make these emails more effective, according to IBM’s Squire. For example, retailers can tailor email messages to the types of products a customer is likely to be interested in, or they can send fewer emails if they detect recipients are leaving the emails unopened.

More Valuable Consumers

SMS text messaging is another area of focus, according to Blank. One reason for this is that consumers who opt in to email or to receiving texts from a retailer are likely to be a more valuable consumer.

This gives retailers permission to engage in promotional events that they might not with a broader audience. For example, Williams-Sonoma is not a retailer known for aggressive sales or deep discounting, but the company can provide special offers to their customers who opt-in for text messages. These deals help improve the relationships retailers have with these loyal consumers.

“There is tons of data that show multichannel customers (those who shop online and in brick-and-mortar stores) are more valuable,” Blank said. If you layer in that a consumer has opted to receive messages from a store and are also affluent enough to own smartphones and tablets, a portrait of an extremely valuable consumer emerges.

Look for the QR Codes

This holiday season, you’re also likely to see more store signs and mailings that incorporate QR codes, which can be scanned by a mobile phone to redirect shoppers to a website. Retailers are using these codes for special contests and to provide shoppers with more information about products. For example, a shopper at Macy’s may be able to scan a QR code near a piece of Martha Stewart cookware and see a video of Stewart demonstrating how to use the product.

JC Penney is giving its customers an opportunity to attach voice messages to their presents using QR codes.

The codes, which the retailer calls Santa Tags, take a few steps to step up, but some gift givers are likely to appreciate the ability to add an extra touch to their gifts.

At the end of the day, it all comes down to how well these products serve the consumer.

According to mobile ad network Jumptap and Comscore, nearly a third of mobile device owners have made a purchase with their device. Tablet owners are even more likely – about 63 percent of tablet owners say they have made a purchase with their device.

Gabe Donnini, a data solutions engineer at Chitika, a data analytics company for online advertisers, points out, though, that a one-time purchase is not enough to keep mobile sales growing. It has to become a “repeat, ingrained behavior,” but he sees the utility of the platform driving consumers to mobile.

“Mobile is empowering consumers to make good purchasing decisions,” Donnini said.

And at the end of the day, that’s what consumers want: the knowledge that they scored a great deal.