Is mobile over-hyped?
Through a special arrangement, presented here for discussion is an excerpt of a current article from Commerce Anywhere Blog.
Don’t get me wrong — I think mobile has and will continue to have a huge impact on the retail industry. It’s just that sometimes we get swept up by the shiny new object and neglect the basics. Less than two years ago Marc Andreessen, Netscape co-founder and famed tech investor, declared that stores were dead, yet they still typically represent more than 90 percent of a retailer’s revenue. Investments may not track contributions exactly, and that’s understandable. We just can’t let the ratio get too out-of-sync. Put another way, a meal consists of main dishes and side dishes. If the chef neglects the side dishes, the meal won’t be ruined, but the converse is not true.
After the holidays, I kept seeing stories about mobile traffic doubling or tripling, so retailers were upping their investments. But we need to put that in perspective. Even with huge growth, mobile is still not as big as PC traffic. MarketLive estimates PCs account for 56 percent of website traffic, and more importantly, 75 percent of the revenue. Average order value from PCs is higher too, according to the data.
I trust actual metrics much more than the surveys that ask questions like, "Have you purchased something from your smartphone in the last six months?" Few have not, but often they’re small, infrequent purchases so it tends to overweight the results.
And there’s a big difference between browsing and buying. Shoppers often are doing research on their mobile devices then completing the purchase on their PC. (According to a recent Monetate study, conversion rates of online shoppers using a PC are 3.41 percent vs. 2.86 percent when using a tablet and 0.92 percent when using a smartphone.) The PC has a definite advantage when it comes to conversion. From my own experience, I rarely buy on my mobile phone but split purchases between my tablet and PC. After all, today’s tablet is basically as powerful as our PCs.
So back to the original question, is mobile over-hyped? No, it’s hugely important to the retail business, and customers have come to expect top-notch experiences on their mobile devices. But don’t get distracted to the extent that the basics get underfunded. The "main dishes" of retail are what continue to bring in the majority of sales.
Discussion Questions
Is the mobile opportunity overhyped? Do you share the author’s concerns that aggressive investments in mobile may take away from those needed for core operations?
The answer to the question lies in the definition of mobile. If it’s only purchases, then mobile is overhyped. If it’s research, purchases and payment, then mobile is extremely valuable and growing. Retailers need to be thinking mobile. Whether it’s optimizing websites for devices, promotions or payments, mobile is valuable and retailers need to adjust accordingly.
Yes. As I wrote in this post Hey Retailers! Nordstrom’s Customer Service Problems Are Yours Too, if you don’t pay attention to the actual customer experience in your brick-and-mortar stores, there will be no golden goose to fund the omni-channel experience.
I was shopping on Michigan Ave. last week in Chicago and the total lack of customer engagement from some of the biggest names in retail still shocks me. The low-hanging fruit are shoppers who go out of their way on a snowy, rainy, hectic day and actually visit your stores. And there were plenty of them having to listen to the personal conversations of employees behind their counters who turned a blind eye to most anyone who wasn’t working there.
The party is in the aisles folks, not behind the counter, and the more heads-down technology is rolled out to stores the less likely customers will be to make the trek into a store.
We’re out there looking to buy but unless you’re willing to acknowledge, respect and service us, we’ll move on to someone else while you blame us for not buying.
I think the most valuable point David makes is the importance of mobile as a browsing and research tool. While retail should continue to invest in mobile—it is important that it is invested appropriately so that we are improving the shopper experience that most users are seeking out and not building a costly app that will be rarely used.
First, let’s be sure to note that Marc is way off mark. Techy people like Marc would be destroyed if they were to shift their bits and beans careers and become retailers. Mobile is soon to be a cause of a surge in the chiropractic marketplace. It is a channel in retail and only ONE channel. It does not own retail and is living off over-hype. Core retail operations are the focus area that retailers need to keep their eyes on as retail changes. There are your hype marketing stuff—omni this and omni that—but it is all core retail that satisfies the channels. This is from product creation to planning and allocation to distro to store or other channel functions and the shopper buying!
Some retailers are addressing this the right way, and lifting their core, making it stronger while at the same time supporting mobile and other channel demands.
Any readers in the Marc camp—you are dead wrong.
I think mobile COMMERCE is overhyped. Mobile as part of the shopping experience, though, not so much. What’s interesting to me is how many retailers—and marketers (especially agencies)—don’t seem to understand the difference.
For the same reasons David cites, mobile, especially mobile phones, are not going to achieve the same kind of conversion rates as desktops or even tablets. But when I hear people disparage mobile as a waste of money, whether mobile app or mobile web, more often than not it’s because they expected to be able to recreate the desktop experience on mobile and achieve the same sales results. That’s just not going to happen.
What will happen, though, in my humble opinion, is that a successful mobile strategy will turn out to be an integrative one, one that helps connect digital content to the physical parts of the shopping process. When you consider that some 90 percent of shopping still involves a physical store, that’s a lot of shopping you have the opportunity to influence if you get it right.
So I actually think it’s the other way around: Too many retailers have already spent money that did nothing in mobile because they expected it to be “mini me” when it came to their desktop experience, and now, when the opportunity is clearly evolving to something integrative with the store experience—which needs a LOT of help—they are saying “Why should I waste my money on some kind of mobile 2.0 when it doesn’t convert?” And I think that’s a very shortsighted way of looking at things.
After citing considerable statistics that mobile is overhyped, the author concludes that it is not. This reasoning has led to many hundreds of millions (made up statistic) on developing mobile “apps” for retail. I myself was a strong supporter of mobile, up until a few years ago when I saw this kind of tech bias toward never-never land.
First, the positive. Yes, for the tiny fraction of shoppers that use mobile as a shopping assistant, it can have a huge positive impact. Personally, I have looked at raw Tlog data showing a doubling of sales with the device. The problem is that it is unnatural for anyone but a techie to use such a device in actual practice. (You can see my description of “interstitial sales,” and their significance here: “Googling” the Store.) Efforts to misrepresent the impact of mobile are not helpful, and are more based on whiz-bang technology than actual shopper behavior.
Even poorly executed BOPIS (buy-online-pickup-in-store) can outpace mobile devices — allowing that some mobile will be done instead of desktop/laptop ordering.
Given the massive inefficiencies of bricks stores, they make an obvious target for technological solutions to those problems. Unfortunately, mobile is simply putting lipstick on the pig, not solving the real problems. See: The Problem: “Parked” Capital. The level of adoption of mobile in-store of something like about 5-10% sounds about right for an in-store GPS — occasionally helpful, but mostly an interference when navigating familiar terrain.
The mobile device user perspective is how we need to address the question. The majority of software developers are staying with the company internet site to allow for mobile access and point-of-sale interface. Smartphones do not have the memory, speed or view for success in this environment. Companies with the necessary software are seeing better results than the ones without. Another reason for poor enrollment from smartphone users is public awareness and feedback. Smartphone users spend a fair amount of time qualifying the products and the retailer before committing their dollars.
The bulk of competitor visits are tasked with smartphones for many investigative reasons which makes abandoned carts an almost worthless parameter. A closer standalone look at mobile device successes and failures on a test that looks at with and without mobile software availability will show how much this venue has in terms of potential and could have in terms of opportunity for return on development dollars.
Let’s be sure to differentiate mobile and mobile commerce. The former is clearly an important influencer of sales in both physical and online channels. Smartphones are the ultimate shopping companion, and retailers need to acknowledge their role throughout the path to purchase.
Mobile commerce, on the other hand, still has a ways to go before becoming a true channel in its own right. With few exceptions and for most categories, the mobile commerce experience can’t come close to replicating either the desktop (or even tablet) or the in-store experience. And retail is still (or at least should be) about the experience.
Thank you Bob Phibbs for saying exactly what I have been writing for years. Technology including mobile is only a part of what we need to do in order to take care of our customers. If we don’t get it right inside the store, it doesn’t matter one bit how good your mobile platform is, period. Customer service is number one, and always will be, which is why I am a nut job for outstanding service in my store, and everyone else out there better understand this.
Technology does great things, but will never replace the human experience for the many who enjoy shopping in stores. Amazon understands this with online service, but the in-store experience will be around forever, and we all need to up our game in order to satisfy the customer or risk losing them somewhere else.
Physical stores will be relevant and actually vibrant if they begin making the necessary changes to engage the mobile customer. Some are, while others appear to be laggards. I see the growth in mobile and physical store traffic as synergistic, not mutually exclusive.
Mobile usage numbers are improving albeit from a relatively small base of retail activity. As technology and broad band access continue to improve, brick-and-mortar retailers must acknowledge and embrace mobile connectivity to their shoppers in-store as the next logical step of relevance.
As long as the recent FCC intrusion into the internet does not slow down the progress of pervasive broad band access, good things can continue to happen in-store with the mobile shopper being connected while they navigate the physical store.
Mobile is not as much overhyped as it is often mis-hyped as the end game in retailing instead of a means to the “end” of efficient customer engagement.
In short, no. Mobile is growing globally, especially in emerging markets where consumers are skipping the PC phase. Shoppers are using mobile while in stores, however that doesn’t mean that physical stores will disappear anytime soon. Shoppers will want to touch, smell and see real products and also enjoy the pastime of shopping in stores. Nevertheless, many studies show that mobile is here to stay.
Smartphone mobile has been overhyped for some time. The smartphone is more to find the store and maybe compare prices. The screen is too small and the speed too slow for in-depth research. Smartphones are replacing watches and trying to replace the wallet. Security issues will delay payment by smartphone for some time. Any investment needs to support the retailer’s target customers. If the customer is a Millennial then investment may make sense. If the customer is a senior it will be years until sufficient use will provide a payback.
I am in complete agreement with the author! It is not too hard to show double and triple digit growth when starting out, but the overall revenue dollars might not provide a reasonable ROI.
One can follow the growth of online purchasing to see the trend lines. Not too sure that mobile is not mostly cannibalization of laptop and tablet.
Mobile is more popular with certain retailers than others. And more popular with certain demographics than others. It’s still an emerging technology that has more opportunity to grow to prove benefit to both the retailer and the customer.
I searched for the stores were dead quote, found the interview, pulled some quotes, and took what he said to mean that retail as we know it is dead and that it will be replaced by ecommerce. I didn’t see anything about mobile.
Look, Marc is a guy and that’s a guy’s perspective. We all know that stores will not die, but they need to adapt and as far as the mix in investments between mobile and core, I think that question creates the divide—it’s all integrated. Store are dead. Long live stores.
I think retailers may be shifting more of their spend to mobile and some incumbents could be feeling it. Shift happens. Some of the passengers on the platform may have boarded the train.
“Retail guys are going to go out of business and ecommerce will become the place everyone buys. You are not going to have a choice. We’re still pre-death of retail, and we’re already seeing a huge wave of growth. The best in class are going to get better and better. We view this as a long term opportunity.”
“…Retail chains are a fundamentally implausible economic structure if there’s a viable alternative. You combine the fixed cost of real estate with inventory, and it puts every retailer in a highly leveraged position. Few can survive a decline of 20 to 30 percent in revenues. It just doesn’t make any sense for all this stuff to sit on shelves. There is fundamentally a better model.”
“…I’d bet on the pure plays in ecommerce. Software eats retail.”
Read more here.
There are many reasons for the focus and investment in mobile. The first is growth. While mobile commerce remains small, by some estimates, it’s growing 3 times faster than the rest of eCommerce. Most rational companies invest in the channels with the highest growth and growth potential.
A second and perhaps more important reason is the crucial role that mobile has assumed in the customer experience. Mobile is the key enabler of most customer experience innovations that retailers are putting in the market from in-store wayfinding to endless aisle shopping. Mobile gives retailers the ability to stay connected to the consumer through all points on the customer journey: discovery, choosing, buying, using.
Every indicator in the numbers shown identifies what mobile is—an entry portal. Sales on laptop and desktop still lead. In particular consider the bounce rate and abandoned cart rates. However, don’t be misled; this is the entry point. If they don’t like it there they won’t transfer to their main portal of purchase—laptop or desktop. It’s the fastest growing segment in electronic devices to the extent that the numbers with a smartphone are growing exponentially.
That doesn’t mean ignore the “main dish,” what it means is get the entry portal right so they move on to the “main dish.”
Mobile development is much faster and much quicker. It’s not going to spoil your dinner!
Mobile is not overhyped. It’s in a nascent stage and as retailers and consumers learn the benefits and convenience, it will only grow exponentially. Of course it also depends on the consumer target and the category, and that will sort itself out—if it hasn’t begun to already.
Mobile is not about buying on mobile (granted I have used the Amazon app to make my share of purchases), but part of creating that connection with the shopper. Today’s shoppers are wedded to their mobile device: Apple iPhone, Apple Watch), I expect Apple wedding band next 🙂 and the ability of retailers to connect with their customers on the move will be critical.
The truth is, every new technology and other significant development is over-hyped. Way over-hyped. And the more people talk and start to spend, the bigger the hype gets. It is just a fact of life in marketing and driving sales. Not bad. Just a fact. You cannot get caught up in pilots portrayed as major successful rollouts or potential new products as game changers that have or will overnight change the entire landscape.
But mobile is a huge game changer. And while seriously over-hyped in many, many ways, mobile has changed how people explore, compare, learn about things, buy and more. In that scenario, I am not sure there is over investment, period. But there is, absolutely, smart and right investment.
It is hard for each retailer to know how much and where and when to invest. And it is not just about mobile as a technology. What is the internal culture ready for—staff, existing infrastructure, vision, board management understanding and support? What are the goals vis-a-vis your customer base? And what can you execute well enough that it drives more business? Those are the questions to ask and to be answered wisely so as to determine right investment in mobile. (And all other major technology investments, for that matter.)
I said last week that I thought Target’s $1 billion commitment to digital was wise and the right thing to do. But that assumed they have game plan and a well thought out idea of what they are planning to achieve—how and why. In concept, it makes sense to me and does not seem out of line for a company with their sales and needs to invest heavily in mobile. But the devil is in the details, the game plan, the execution, and the bottom-line ability to drive profits.
Definitely not. Whilst I notice that the vast majority of our customers buy on a computer, around two thirds visit us, browse our website and read our newsletters on their email.
Mobile may be overrated in terms of a direct sales channel, but as an entry point to your brand and store it is incredibly important. Having a mobile optimised website is—I would say—a MUST.
As a consumer, I spend most my working day in front of a computer. I rarely sit down in front of it in my free time; I use my smartphone instead. If a site doesn’t work in mobile, is hard to navigate, slow or fails to give me the information I need about the products, I am much less likely to continue browsing the brand (unless, of course, the product is hard to get anywhere else) and will likely try somewhere else.