Mobility

Why your company should start thinking about mobile commerce right now

Mobile commerce is the biggest segment of the mobile market, yet it has the fewest developers focusing on it. Find out why Matt Asay thinks this needs to change.

Mobility

Companies still struggling to figure out how to make their billions from mobile apps probably need to pivot. Sure, you could strike it rich with the next Candy Crush—but you almost certainly won't.

And that's likely not your core business, anyway. However, selling things probably is.

As highlighted in a new report from Criteo, which analyzed data from over 3,000 online retail and travel businesses globally (to the tune of 1.4 billion transactions), mobile apps now drive over 50% of e-commerce transactions for retailers that make apps a priority. These apps outperform every other channel, including the desktop.

But not just any apps. As Criteo's research suggests, the difference between the mobile commerce Haves and Have-nots comes down to how much they invest in optimizing the mobile experience.

Commerce goes mobile, and fast

Mobile commerce is on a tear. I wrote about this shift to mobile commerce in late 2014, but things have accelerated since then.

Even just seven months ago, Goldman Sachs was pointing to 2018 as the year that mobile commerce would consume half of all e-commerce sales—but as Criteo's analysis suggests, we're veering toward that tipping point even sooner, with mobile dominating 40% of commerce sales for top-quartile retailers (Figure A):

Figure A

Figure A
Image: Criteo

Mobile dominates commerce sales.

Among these transactions, Android has maintained its share of total spend (5.5% and 5.6% over the last two quarters, according to Criteo), but Apple dominates US mobile commerce: 66% of smartphone transactions, up from 61% over the last two quarters.

With 800,000 new mobile developers minted each year, according to VisionMobile research, the biggest money in mobile's very big jackpot is e-commerce (Figure B):

Figure B

Figure B

The biggest money in mobile is e-commerce.

Right now, it's a small minority of developers that are focused on mobile commerce. Given the potential payout, more should be.

Collecting on that cash prize, however, isn't as easy as building a mobile app and watching the money pour in.

The secret to mobile success

Not surprisingly, the secret to making the mobile cash register ring is optimization. That is, a mobile-optimized experience. (And, as I've noted, while apps need to be considered, an app is not the right approach for every company.)

This seems intuitive, but given that many companies didn't bother to optimize their mobile sites despite Google's warning (and saw their page ranks take a hit as a result), clearly not everyone has read the memo.

As Criteo details, a little optimization goes a long way. For mobile sites (not apps), the conversion rate more than doubles from 1.6% on a non-optimized site to 3.4% for optimized mobile sites. This optimization improves performance across the buying experience, with number of products viewed, add-to-basket rate, and purchase rate all higher on optimized sites.

As good as this is for optimized mobile websites, it's even better with apps (Figure C):

Figure C

Figure C

Apps have a better conversion rate of sales.

As noted in Criteo's deck, this improved conversion rate partly derives from the experience and partly from committed users. Most apps don't command much of our time. But for those loyal to a particular brand, an optimized app experience will drive far more significant transactional volume.

Not noted in the report, however, is the fact that a better mobile app experience also helps to generate that user loyalty in the first place.

Such optimization needs to reach beyond just the mobile app, despite its importance. We're not a single channel people anymore, as Criteo finds: in 40% of purchases, consumers use multiple devices to visit the same retailer prior to purchase. And while it's harder to track offline purchases, it's certain that many so-called offline purchases are heavily influenced by online behavior.

What to do now

Maybe this isn't you. Maybe your business isn't selling things.

But whatever your business, it most definitely involves mobile... even when it doesn't.

Because, as Andreesen Horowitz's Benedict Evans postulates, mobile's scale is allowing entrepreneurs to quickly dismantle entire industries, as Uber and AirBnB are showing (Figure D):

Figure D

Figure D
Image: Benedict Evans

Mobile increases businesses at scale.

The taxi industry wasn't a mobile business and certainly not a mobile commerce business, but Uber made it so.

The hotel industry wasn't a mobile business and definitely not a mobile commerce business, but AirBnB insisted otherwise.

And so it will continue. For mobile developers looking for the next big thing, look no further. It's mobile, and it's commerce. It's almost certainly not building a game.

Also see

About Matt Asay

Matt Asay is a veteran technology columnist who has written for CNET, ReadWrite, and other tech media. Asay has also held a variety of executive roles with leading mobile and big data software companies.

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