- Retailers face challenges in mobile payment, checkout systems
- Study projects phones will reach 60% of traffic by end of 2017
For retailers at least, the most important screens are now the small ones.
Smartphones accounted for 45.1 percent of web-shopping traffic in the first quarter of this year, edging out computers at 45 percent, according to a study from Demandware, an e-commerce software provider. The firm, which was acquired by Salesforce.com Inc. this month, projects that number will continue to increase, with phones accounting for 60 percent of e-commerce visits by the end of next year.
While the rise of smartphone shopping provides retailers with an opportunity to reach customers any time and any place, merchants face obstacles in getting the most out of their mobile platforms. Those hurdles include lengthy checkout times and payment procedures that deter consumers from completing their orders. Demandware found that mobile-checkout completion is 11 percent lower than the combined rate from all other devices.
“If they can get it right on mobile today and tomorrow, that’s where they’re going to see a lot of value going forward,” said Rick Kenney, author of the study and head of consumer insights for Demandware.
Sales outside of brick-and-mortar stores have grown in importance for merchants of all stripes. E-commerce accounted for $92.8 billion in revenue in the first quarter of 2016, or 7.8 percent of total retail sales, according to U.S. Census Bureau figures. That’s up from 1.3 percent in at the same point in 2002.
The adoption of mobile shopping has been even more rapid, catching many retailers off guard. Sales from mobile more than doubled from 2013 to 2015, according to ComScore Inc., a research firm. Demandware projects by the end of next year, shoppers will place more orders on their phone than on any other device.
Technologies like Apple Pay, Android Pay and PayPal are offering retailers solutions to their struggles, and Kenney said larger phone screens and better mobile web-browsing capabilities will allow for an easier shopping experience.
Larger retailers are taking the development of mobile shopping into their own hands with in-house programs. Apps from retailers like Target Corp., Wal-Mart Stores Inc. and Kohl’s Corp. saw massive increases in June 2015 compared with a year earlier, according to ComScore.
Target’s Cartwheel app, which provides shoppers with discounts while they’re in the retailer’s stores, saw an 85 percent increase. The program is “one of the best” mobile approaches a retailer has taken because of its simplicity and convenience, said Poonam Goyal, a senior retail analyst with Bloomberg Intelligence
“Retailing today is more about the customer experience than it is about anything else,” she said.
Retailers can expect to see online shopping evolve into a “mobile only” space, Kenney said. By 2019, EMarketer expects 71 percent of U.S. consumers will have a smartphone, compared with today’s 59 percent, and Demandware predicts that by the fourth quarter of 2018, phones will outstrip computers for online order placements by about 13 percent.
Some retailers already are rapidly approaching a mobile-only world. Rainbow, which sells women’s and children clothing at about 1,100 stores, says mobile accounts for 70 percent of its e-commerce traffic, up from 50 percent two years ago. The brand recently introduced an app, but the majority of its mobile traffic still comes from its mobile site, said David Cost, senior vice president of digital commerce and marketing for Rainbow.
“For many of those customers, that smartphone is the only computing device they own,” he said. “The universality of the device has been a game-changer.”