The smallest screen is shaping up to be the most important one.
And on that screen it’s the app that offers brands the most effective way to cater to their best customers. Consumers are doing nearly everything on their mobile devices — from managing the minutia of their daily lives to browsing, comparing prices and buying. Mobile sales grew 36 percent last year to about $49 billion, according to Adobe Digital Index, which found that more than half of mobile transactions took place on tablets, although smartphones are catching up and are expected to eclipse tablets this year.
“Smartphones already drive a higher share of visits to U.S. retailers compared to tablets, and with larger screen phones becoming more mainstream, we expect that more consumers will shop rather than just browse on their smartphones,” said Tamara Gaffney, principal analyst at Adobe.
Apps occupy prime real estate on smartphone screens and offer an increasingly critical opportunity for brands to insert themselves into their customer’s routine.
Even though apps largely support existing Web experiences with some overlap in content, they are different from a brand’s digital flagship in important ways. They aren’t confined to the design limitations of mobile Web sites and can offer users highly personalized tools such as chatting with sales associates and loyalty-based promotions. They can send push notifications, reaching shoppers on their lock screens.
Apps are the likely mobile destination for a brand’s highest-spending customers and so should provide an optimal, seamless shopping experience.
“An app is for your most loyal customer — it’s not for everyone,” said Maya Mikhailov, cofounder of mobile firm GPShopper. “It’s maybe for 20 percent of your customers — but it’s those 20 to 30 percent that are driving 80 percent of sales.”
When done right, an app reinforces the brand’s lifestyle proposition and gives users incentives to purchase and connect on a more personal level. Mikhailov cited internal data that found the average app customer has a 15 to 20 percent higher average cart value than the mobile Web user. They have engagement rates 10 times greater than the Web user and spend about 20 minutes per month on an app, versus a couple of minutes per month on a mobile Web site.
“It’s surprising that brands like Diane von Furstenberg or Michael Kors don’t have apps — because they are so lifestyle driven,” she said, noting that avid fans of Gilt and Tory Burch interact with those apps constantly.
But von Furstenberg and Kors are not alone; most brands don’t have an app.
In December only one-third of the 90 brands in L2 Inc.’s Digital IQ Index for fashion had an iOS app on the Apple store and 25 percent, or 22 out of 90, had an app on the Android store.
Michael Mente, co-chief executive officer of Revolve and Forward by Elyse Walker, said: “Our iPhone app is mainly used by our top customers who are familiar with our brand and who know exactly what they are looking for. These are the girls that are checking out our new arrivals at 8 a.m. every day and are shopping multiple times a week.”
Forty percent of the brands’ combined Web traffic comes from mobile. Revolve’s app is expanding even faster, with year-over-year growth of more than 70 percent.
Although the company’s apps have the smallest user base of its e-commerce channels, they yield the highest conversion and engagement rates.
In addition to apps, fashion brands have also developed mobile optimized Web sites — similar aesthetically to desktop sites but adapted for smartphone use — and Web sites that use responsive design, a one-size-fits-all approach that lets companies build one site that adapts to every screen size.
Many brands are still trying to find just the right balance.
“It remains to be seen how people want to interact,” said Jim Mollica, vice president of digital marketing at Under Armour Inc. “We’re all trying to figure out the long-term interaction and what people would prefer — a mobile commerce experience in the browser or mobile commerce that’s only brand specific in an app format. We still are tinkering with the approach on how we use consumer interaction and feedback and which one to put more muscle behind.”
Mobile gets about 40 percent of Under Armour’s Web traffic and about 17 percent of its e-commerce sales.
Whatever brands decide to do, they have to do it well since mobile is an increasingly important touch point for consumers.
“A Web presence that is also great on mobile is almost [like online] hygiene,” said Bryan Kirschner, director of the Apigee Institute, the research arm of digital firm Apigee. “Consumer preference is pretty clear. Ninety percent of smartphone owners expect department stores to have an app now or within the next two years.”
People are connected at all times. Kirschner cited data that found 98 percent of people use their mobile phones any time they have to wait in line and 96 percent have used phones while in a store.
Apigee, which builds platforms for digital businesses and works with brands such as Burberry and Walgreens, found that two out of three people say mobile phones and tablets have changed the way they shop. Seventy-four percent are more likely to shop at a store that has an app and 18 percent said they started shopping at a new store just because of its mobile app.
Alex and Ani, which saw more than $300 million in sales in 2014, has a responsive Web site and an iOS app in private beta testing that it plans to release later this year. Ryan Bonifacino, senior vice president of digital at Alex and Ani, said that nearly 60 percent of e-commerce traffic to alexandani.com came from a mobile device last year (most of the site’s mobile traffic comes from smartphones, which made up 44 percent of all e-commerce traffic). Upward of 20 percent of total sales came from e-commerce and close to 50 percent of the direct-to-consumer portion of the business, which contains alexandani.com and 40 freestanding doors.
“Experiencing the brand through a mobile browser is simply an extension of the desktop experience with usability adjustments,” said Bonifacino, adding that an app can’t be the same as the desktop and mobile Web experiences.
Bonifacino noted that “nine times out of 10” the decades-old brands that release apps for the first time fail to make this differentiation — and the result is an app that mirrors the site, essentially serving as another online product catalogue.
Data could lead the industry to a more highly personalized app.
“Every time your consumer opens an e-mail, it tells you something,” Bonifacino said. “You look at the open rate, what content they click and connect it to Web activity. They start to automatically get classified into segments — and an app can reference those analytics when determining which content to display and when to what consumer.”
To improve its app experience, Alex and Ani measures the response rate to campaigns such as e-mail marketing, uses Web analytics to track activity on its digital flagship, and analyzes the customer information it captures.
Like Alex and Ani, Coach is looking to deliver a differentiated experience by online channel.
A mobile-optimized site and an app are central to the company’s digital strategy, according to David Duplantis, president of global digital and customer experience, but the two play different roles. The brand’s three-month-old app is more of a social and marketing tool while the mobile Web site serves as an enhancement to the customer experience.
“You can buy from it, but it’s not the whole product catalogue,” Duplantis said. “You can go to the Web site to see that.”
A responsive Web site also rolled out last month — and Duplantis detailed critical differences between the mobile and the desktop site. The two might look very similar, but mobile is built for a quicker path to purchase, and browser and search functionalities are optimized for mobile.
“While this is important for desktop, it [browsing and search functionality] is more important for mobile. Optimized checkout is equally important in speeding up the path to commerce,” Duplantis said. He added that beyond making the sale, mobile must cater to those seeking a location-based experience. Features like a store locator and geo-detection are becoming increasingly important when thinking about mobile.
It’s easy to see why mobile has come into such sharp focus around the world.
Chinese e-commerce giant Alibaba ended 2014 with 265 million mobile monthly active users, an increase of 95 percent from a year earlier. While that’s somewhat concerning for Alibaba’s Taobao marketplace, which makes its money on advertising and charges less for mobile ads, the dramatic growth illustrates the importance of shopping on the go.
Mobile is the fastest-growing commerce channel worldwide, a position that was solidified over the holiday season.
An e-commerce recap by Custora Pulse revealed that one in four online purchases in the U.S. occurred on a mobile device this past holiday season. The recap referred to Black Friday as “Mobile Friday, ” with nearly a third of sales completed on phones and tablets — Apple iPhones and iPads making up about 80 percent of these orders.
Last week, Apple said it shipped its one-billionth mobile device in November. The company sold 74.5 million iPhones in the fourth quarter alone.
Jason Goldberger, president of target.com and mobile at Target Corp., said during the holiday season that mobile would soon drive half of all e-commerce sales during events like Cyber Monday. When Wal-Mart launched a Black Friday tab on its Web site on Nov. 12, mobile comprised nearly two-thirds of all traffic to walmart.com that day, twice as much as the year prior. Mobile traffic also dominated from Thanksgiving to Cyber Monday, again making up almost two-thirds of all e-commerce traffic.
Other companies are finding trends that are similar.
Sephora sees 50 percent of its e-commerce traffic coming from a smartphone, with mobile sales clocking in at about 20 percent of sales. Julie Bornstein, chief marketing and digital officer of Sephora Americas, predicts that mobile will drive half of all online sales within the next three to five years. Sephora’s app, which has 4.8 million downloads since it launched in 2010, represents 40 percent of mobile sales and the retailer’s most loyal customers.
About 37 percent of Lululemon’s traffic and 21 percent of its sales come from a mobile device — with the company projecting that sales from smartphones will soon comprise a quarter of all e-commerce activity, currently 17 percent of the overall business.
At pure play e-tailer Asos, mobile visits increased from 34 percent to 42 percent during peak holiday season with sales from mobile getting a boost from 18 percent to 29 percent. In Asos’ native U.K., mobile traffic makes up half of all traffic to asos.com.
Boohoo ceo Carol Kane said that in the U.S. last year, almost 55 percent of traffic and 35 percent of sales to boohoo.com came from a mobile device. Globally, the U.K.-based e-tailer has seen mobile visits grow by 70 percent and a doubling of sales on the channel year-over-year.