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Make Mobile Your Top Priority, Or Lose Billions?

by Katie Jansen on Oct 21, 2014

Over a year ago, Bill Gurley of Benchmark Capital wrote that “we are in the middle of a critical platform transition” when it comes to shifting retail strategy to mobile.

It’s been obvious for several years that mobile is a huge growth category.By the end of 2013, mobile accounted for almost 17% of all online shopping, up nearly 6 percentage points from the previous year, and Forrester reports that by the end of 2014, mobile will account for 29% of all online shopping. Yet for whatever reason, 21% of the top 100 retailers in the United States have yet to release a mobile app.

So we rolled up our sleeves to see what the data have to say:

  1. Retailers without apps had lower overall sales.
    From the NRF’s list of the top retailers, those that had an app brought in a median of $9.3B in sales in 2013. This same figure was $5.6B for those without an app.
  2. Retailers without apps had slower year-over-year growth in sales.
    Between 2012 and 2013, the median growth of retail sales for those with apps was 3.65% (the average skewed higher to 8.02%). For those without apps, guess what, sales growth was consistently lower (median: 2.30%; average: 4.74%).
  3. Retailers without apps had substantially lower activity in international markets.
    On average, 16.51% of total sales for retailers with apps came from outside the United States. Compare that to only 1.79% for those without apps. Why is this important? This seems like a good indicator that people aren’t always buying in-store, which means they are shopping either on their computers or on their phones.

Sure, correlation does not always imply causation. It might be true that some legacy retailers don’t have apps yet because they aren’t seeing much sales growth, or they think their businesses don’t really need apps. They might not be investing in mobile yet because they don’t think it’s a high enough priority. Obviously, stagnant sales likely mean there are other issues to fix.

But since we can see the mobile vertical is growing year over year with more and more transactions being generated, it seems likely that there could be a strong link between mobile aptitude and overall sales performance. One way to tap into the momentum around mobile and use it to grow sales is to create a robust and seamless shopping experience by developing an app. Once you have an app then you can develop a strong mobile marketing strategy to drive consumers to it and help increase sales. Together these have a lot to do with how customers are changing their shopping behavior:

  1. Apps encourage brand loyalty and customer retention.
    67% of mobile shoppers claim they only use apps from their favorite stores, and over half of those who actively use at least one of the top 50 commerce apps shop through one of these apps at least once a week, according to mobile analytics vendor Mobidia. Customers will return to your app and engage with you brand more often with a strong mobile shopping experience and “mobile centric” marketing strategy.
  1. The proof is in the revenue.

Amongst the top retailers with a strong mobile presence, mobile is already driving considerable revenue. According to Forrester, mobile payments generated $50B in revenue in 2013 and are forecasted to generate $82B in 2014.

  1. Mobile influences sales in more ways than just direct purchases.

A May 2012 report from ABI Research said that smartphone users who downloaded a retailer-branded app reported increasing visits to the brick-and-mortar store (45.8%), buying more of the store/brand’s products and services (40.4%), telling a friend about their store shopping experience (35.8%), and encouraging friends to visit the store (30.8%). These trends will only continue to grow as retailers get smarter about marketing their app and engaging consumers with their mobile offerings.

  1. Merchants can engage with their customers in other ways that drive back to increased purchases with these apps.

According to Adobe, 58%of smartphone shoppers find retail apps useful for shopping. But the ways in which mobile influences physical shopping behavior can lead to sales both online and offline: 60% of consumers use mobile as a way to find the location of the closest store. Shoppers also value mobile for different reasons than traditional online shopping, as a reported 67% of smartphone shoppers value apps most for money-saving deals.

What do the above data tell us about the state of mobile commerce? The correlation between strong sales and a strong mobile presence is undeniable, so too is that mobile is a growth vertical that cannot be ignored. Companies with flagging sales might find themselves in this position because they failed to catch the mobile wave the first time around. The clear takeaway is that it’s never too late to make mobile your top priority.

 

 

 

 

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Katie Jansen is AppLovin’s Chief Marketing Officer. In addition to her work, Katie is an advocate for women in tech and equality in the workplace.

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