A disconnect between online retailers and their mobile strategies — or lack thereof — might hurt sales during a fast-approaching holiday shopping season.
In the 2014 Holiday Retail Audit, released Monday by eBay Enterprise, a commerce and marketing provider under the eBay umbrella that works with retailers and brands, mobile is still an Achilles heel for retailers — despite it being the fastest-growing commerce channel.
The study looked at 1,000 online retailers with revenues from $5 million to $250 million, with many participants reporting insecurity about mobile strategies. The eBay study follows similar ones in recent weeks that have shown many retailers’ mobile strategies lag — even as they admit that mobile is driving an increasing percentage of their online revenues.
Mobile commerce is forecast to hit $100 billion in sales this year, with one third of all e-commerce purchases expected to come from a smartphone or tablet.
Despite the growing importance of mobile, the eBay study found that retailers ranked it only ninth in terms of priority for holiday investments.
“Two-thirds of online retailers don’t cite mobile as a source of investment, but it’s the fastest-growing area of commerce,” Craig Peasley, head of product marketing at eBay Enterprise, told WWD, noting that 68 percent of online retailers did not express plans for either new or continued investments in mobile for the holiday season.
Price, customer service and marketing ranked as the top three areas of investment, followed by inventory, fulfillment, discount and promotions, e-commerce experience, merchandising, mobile commerce and gifting.
“Most are focusing on Web sites as primary experiences for consumers, but the reality is if you look at trends, more and more people are getting smartphones and using them 80 percent of the day,” Peasley said.
The new iPhone 6 and 6 Plus that hit stores last week — and created lines around the block of consumers desperate to get their hands on one — will likely disrupt the app and mobile commerce experience — especially the latter’s larger screen — and Peasley cautioned that retailers and brands must be ready for this.
“Brands have acknowledged that they cannot compete with Amazon in this space — it’s where they see Amazon being the most competitive with, but [they’re] also not putting the money behind it,” Peasley added.
More than half of these retailers view Amazon as a direct competitor, with 60 percent citing the e-tail giant as possessing a competitive edge in mobile commerce.
While mobile lags, retailers are confident about something as they head into the holiday season: customer service. Nearly a quarter, or 24 percent, of online retailers said customer service was the part of their infrastructure they were most confident about. Fulfillment, inventory, in-store experience and online/app experience round out the top five. Data showed that 15 percent of retailers cited mobile commerce as the area of the business they are least confident in — tied with promotion margin.
Beyond mobile, three key areas identified in the research include consumer data and privacy (this becomes more important to retailers once they cross the $50 million in revenue threshold, where 21 percent of retailers in this bracket reported having had a breach of security), local fulfillment and global expansion. Priority markets for those surveyed are Canada, the U.K., China, Australia and Mexico.
For Al Sambar, retail strategist at Kurt Salmon, the investment in mobile isn’t so black and white. There’s a spectrum: from the big-box retailers that historically relied on circulars to build traffic that have now turned to mobile to communicate promotion, to department stores and fashion brands that might use the mobile experience a bit differently.
Also, because mobile was largely thought of as a marketing vehicle early on, funding for this portion of the business was allotted by the chief marketing officer. Sambar acknowledged that mobile is still a great place for marketing, and when done right, a powerful companion to the in-store experience — but its role has evolved into one that’s increasingly transaction-based. For those winning in the space today, mobile can hardly be limited to an organization’s marketing team.
“It is a hard prioritization to make,” Sambar said. “The more you have to compete on price, [the more] mobile becomes incredibly important. That’s why you see all the mass retailers getting really sharp on mobile.”
Organizations that are less reliant on promotion and have private-label or exclusive product might have a little more protection in the mobile price race, Sambar explained, noting that could be why retailers might prioritize other initiatives — like customer service or marketing — before nailing down a solid mobile strategy.
“It can take three to five years for a company to build a fully realized omnichannel experience. Planning out multiyear upgrades for technology and mobile is definitely in there. Whether it falls in year one or two, or three or four, depends on where you compete,” Sambar said.
He cited Starbucks as best in class when it comes to mobile, but for the retail and apparel world, Wal-Mart Stores Inc. has led the charge with respect to mobile adoption. The retailer even created an entire arm of the company — @WalmartLabs — whose sole responsibility is innovation in the digital space. Nordstrom Inc. is also a leader in the space, as well as Macy’s Inc., which said last week it will embrace a slew of omnichannel and mobile initiatives. Macy’s and Bloomingdale’s will both start to use Apple Inc.’s new mobile payment system, Apple Pay, as well as roll out a new mobile wallet and test same-day deliveries.
Joe Laszlo, Interactive Advertising Bureau senior director, mobile marketing center of excellence, agreed with Sambar.
Asked how lagging mobile adoption might affect retail as a whole leading into holiday, he predicted that the bigger retail brands already well-optimized in mobile — from Wal-Mart and Amazon to department stores like Macy’s and Nordstrom — are primed for success in the channel.
“If you’re looking for something that’s only available from one digital storefront — it doesn’t matter if they are mobile or not. But for the whole range of goods you can buy from Amazon or Wal-Mart, smaller retailers risk losing sales,” he said.
EBay Enterprise’s holiday audit mirrors findings from research put out by the IAB earlier this month, which found that only four of 100 leading apparel and accessories brands studied received a perfect mobile score: Tiffany & Co., Victoria’s Secret, The North Face and Pink. Leading brands like DKNY, Versace and Reebok don’t even have mobile sites.
Laszlo said five parameters were used to measure a brand’s “M-score,” including whether or not a site had a store locator, tap-to-call phone numbers, optimized search, a link to the full desktop site and a link to the app on the Apple App Store (if applicable).
Admitting he is unsure why bolstering mobile strategies ranks so low on retailers’ to-do lists, Laszlo said one possibility is that if organizations with working e-commerce find that their sites render on a mobile device, they might not be in a rush to put mobile first.
“That ‘Oh, I’ll use my desktop site because it’s good enough’ attitude is not the right attitude to succeed in mobile,” he said.