A divide has opened up in the fast-growing world of mobile commerce, leaving retailers to wonder whether they should focus on smartphones that get the traffic or tablets that get the sales.
This story first appeared in the December 8, 2014 issue of WWD. Subscribe Today.
There are many more smartphones than tablets, but shoppers who use tablets convert to buyers at a greater rate. Data from IBM Digital Analytics Benchmark showed that mobile sales were up 27.2 percent for the five days from Thanksgiving to Cyber Monday and that mobile made up more than 50 percent of total online traffic. This is the first time mobile outpaced desktop traffic on a Cyber Monday.
But conversion still lags.
Smartphones yielded just 9.1 percent of online sales, even though they comprised about 29 percent of online traffic. The dynamic was different for tablets, which made up 12.9 percent of sales on 12.5 percent of traffic.
Although tablets are drawing buyers, experts urge retailers to focus on the smaller screen and adopt a stance that allows their digital offering to perform on a variety of formats.
“It’s certainly true that tablets drive more sales, but smartphone usage in customer journeys was much higher,” said Todd Huseby, partner of A.T. Kearney’s digital-business forum. “As that smartphone number grows further with penetration and new habits, and as tablet numbers decline, it will net-favor the smartphones.”
He explained that even if tablets yield stronger conversion percentages, there won’t ever be enough tablet traffic to matter, relative to smartphones. When planning mobile strategy, retailers must invest in smartphone platforms over tablet because the amount of smartphones will always trump tablets.
For Calvin Silva, a senior retail analyst at Nasdaq Advisory Services, responsive design is the best direction for retailers because it gives consumers the optimal Web experience on desktop, smartphone and tablet. The notion is hardly new, but adoption is becoming more widespread as retailers veer from native apps and focus more on improving the total mobile Web experience.
“That will be the next wave of where they will have to go to drive conversion. What it comes down to is that the viewing size on smartphones is too small,” Silva said, adding that employing digital in physical stores is the next area retailers need to focus on to both increase smartphone conversion and combat “showrooming.”
It’s vital to understand how consumers are using their various devices.
Consultant Amy ter Haar argued that conversion is not the right metric to focus on for a smartphone, especially if overall e-commerce revenues are up. Not all visits to a Web site have the potential to convert; for instance, some clicks come from people visiting a site’s careers section or searching for a store location. A non-linear path to purchase can be difficult to track: If someone abandons a shopping cart online, it will reduce the conversion rate, but if they go to the store to purchase in person, it will actually lead to an increase in sales.
The high-traffic, low-conversion mobile rates also could be attributed to a more engaging mobile Web experience or an influx of mobile traffic following an e-mail blast. If more people are visiting a site, conversion numbers will be lower off the bat, but that’s only because the site is driving more visits, ter Haar said.
She said retailers don’t need to focus on conversion at every touch-point; instead, they should work to make the mobile experience more personalized and to provide the customer with relevant information that corresponds to where they might be in their shopping journey.
“If someone is browsing or comparing products and prices, they need you to help them do that. If they are ready to buy, you need to help them do that, too,” ter Haar said. “Retailers need to be shopping engines, not just concerned with conversions. It can’t just be the same experience at every data point.”
Some retailers are already living in, or fast approaching, a majority-mobile world.
Jason Goldberger, senior vice president of target.com and mobile at Target Corp., predicted mobile sales will soon comprise half of all e-commerce sales activity during key events like Cyber Monday. Mobile accounted for 50 percent of target.com’s traffic during the holiday weekend.
At Wal-Mart, almost two-thirds of traffic to walmart.com during the period from Thanksgiving to Cyber Monday was mobile, a 40 percent increase year-over-year. On Nov. 12, walmart.com unveiled its Black Friday tab, and mobile accounted for 64 percent of total traffic to walmart.com that day. The retailer confirmed that this was twice as much as last year, when mobile accounted for 32 percent of total traffic the day the tab went live.
Wal-Mart ties larger smartphone screens to increases in mobile activity. The recently released iPhone 6 Plus from Apple is about the same size as Samsung’s Galaxy Note, which came out three years ago.
At giant beauty retailer Sephora, smartphone traffic and sales are actually larger than those driven by tablets, said Julie Bornstein, chief marketing and digital officer of Sephora Americas. Mobile traffic was up 70 percent from Thanksgiving Day to Cyber Monday, year-over-year, and led by smartphones.
About half the Web traffic to sephora.com comes from a mobile device.
Bornstein attributed a significant amount of the company’s mobile business to Sephora’s app, which has seen close to five million downloads since it launched in 2010. Conversion on the app is about double the mobile Web, due to the app having a more qualified consumer audience and a quicker end-to-end experience, she noted. The app implemented Apple Pay on Oct. 30, and Bornstein contended that, thus far, the company has seen “nice use and growth” of the payment system.
She predicted that, in three to four years, mobile will constitute half of all online sales, split between mobile Web and the app.
But plenty of retailers aren’t faring as well on mobile as Target, Wal-Mart and Sephora.
Susan Etlinger, an industry analyst at the Altimeter Group, said many retailers still have supbar mobile experiences.
Then again, the consumer might also want a richer view of the fashions they’re about to buy.
That same rationale might not hold true when buying beauty products, when experiencing the product in person doesn’t quite make or break the purchase.
“I don’t think it’s a failing of the smartphone that there isn’t more conversion. It’s a natural constraint of the device,” Etlinger said. “If someone is browsing on a smartphone and converting on a tablet, then focus on making the browsing process better. You don’t necessarily have to move them to convert on the phone. If you can, that’s great.”
Her advice is for retailers to take a careful look at how customers are using each device — they won’t ever use tablets when standing in line at the grocery store, for example — and make sure they’re delivering what they want, when they want it.