M-Commerce This Holiday Shopping Season: Win, Place or Fail to Show
Holiday shoppers are not yet browsing and buying with their Google glasses this year, but the trend to access, engage and purchase via wireless channels is unstoppable.
The downbeat news:
- Barreling into 2013’s holiday shopping season, even the more optimistic expect traditional retail to continue to be near-stagnant. NRF expects sales in the months of November and December to marginally increase 3.9%to $602.1 billion, over 2012’s actual 3.5% holiday season sales growth. (Source: National Retail Federation)
- The forecast outcomes are hit hard by the fact that there are just 27 days between Black Friday and Christmas this year, versus 31 days in 2012. Also, this year has only four weekends to shop between Black Friday on Nov. 29 and Christmas -- not five like last year.
The upbeat news:
- Online retail sales, despite the short shopping season, are predicted to jump between 13% and 15% over last year. Web sales in November and December could reach $82 billion. (Source: Shop.org)
- 38% of shoppers will spend over half their holiday gift budget online. (Source: Deloitte)
- Age matters; 88 percent of millennial smartphone owners will use their devices for holiday shopping, compared to 76 percent of all smartphone owners. One in three millennial smartphone owners will make a holiday purchase on their phone, up 28 percent year over year. (Source: Google)
- For Black Friday e-retail sales will reach $1.60 billion, a 17.6% increase compared with $1.36 billion last year. For Cyber Monday, consumers will spend $2.27 billion online, a 15.2% increase. (Source: Adobe Digital Index 2013 Online Shopping Forecast)
- For mobile-optimized retailers, more than 20% of their sales will originate from smartphones and tablets, a 47% increase YoY. The average retailer can expect only 14% of its revenue to derive from mobile, a 40% increase YoY. (Source: Adobe Digital Index 2013 Online Shopping Forecast)
- 47% of consumers will use the Internet to make a holiday purchase and smartphones will influence $36 billion in retail store sales. (Source: Deloitte)
Many e-tailers are not partaking in the growth of mobile commerce. Though more than half of online shopping access time was via wireless, most online retailers fail to meet shoppers’ demand for pages that load in 4 seconds or less.
Google finds the frustration threshold of mobile shoppers is even more stringent, with any wait over one second “breaking the user’s flow.” Google also found that the average mobile page load time is just over 7 seconds, far past the typical user’s frustration threshold.
Here is the real pain for retailers that fail to match their technology and user experience to the new mobile shopper: damage to their relationships with these consumers won’t end with this shopping season. Competitors will capture the enduring loyalty of those potential customers, and their friends.
Having quoted all the forecasts above, we’re ready to make one of our own.
Prediction for 2013 Holidays: Win, Place or No Show
At Instart Logic, our customers’ achievements in mobile sales shows us what is working. We predict extremely contrasted results during the 2013 holiday shopping season for three separate groups of online retailers:
- No-Shows: e-commerce sites that for the most part, don’t focus on the mobile customer. If they did, we believe their revenue would jump 30% to 50%.
- Paddling Hard to Keep Up: those who are trying mobile commerce but hit internal roadblocks; change seems too risky, although their status quo avoids any risk of eye-popping success.
- Winners: those who embrace m-Commerce, study the technologies available, and then take the right steps to meet the preferences and desires of mobile users.
We watch companies not just get to the Winners group, but also hit the ranks of fastest-growing worldwide. They do not hide their formula for success; it’s there to emulate. They give close attention to the preferences of mobile consumers and learn from the successful m-Commerce websites. The high achievers are not always giants; often, a smaller company is better positioned to move quickly with new technology and anticipate new user demands. Sticking with the status quo carries no risk of great success. Most e-Commerce participants must make changes or lose out in mobile commerce.
M-Commerce Group 1: No-Shows: Not getting it, and not really trying
The m-Commerce No-Shows unfortunately choose to ignore the mobile customer. As a result, they fall far behind in building successful relationships with them. They follow some worst practices out of habit and prior investment. They track mobile developments, but their main focus is where they’ve been successful: the wired desktop or home-based laptop. They do not really connect with the rapidly changing behaviors of the mobile user and may not respond with the best technology nor create the mobile experience that users want.
They are invested in the status quo, and may be skeptical of breakout, radically different solutions, even when proven effective.
How much revenue do No-Shows leave on the table? A recent comScore analysis concluded that 35% of the Top 50 retailers’ monthly audience comes exclusively from mobile platforms. What this means is that retailers who do not (at a minimum) optimize their mobile browsing experience or introduce mobile apps are effectively turning away a third of their potential customers. No Shows set themselves up to fail at mobile for the long term, as they alienate shoppers who warn their friends away.
Adding anonymity to injury, websites in the No-Show group may literally not show up; the Google penalty in search results for slow-loading sites now applies to mobile access.
M-Commerce Group 2: Paddling Hard, Staying Afloat
Most mobile commerce operators, we believe, fall into this group. Many have had good results with desktop commerce. They have implemented responsive design and have dedicated mobile apps and sites, plus location-based micro-sites for local promotions. They are well informed, but often settle for working for incremental gains from well-known technologies and practices.
Many accept the notion that CDNs are an acceleration solution for the mobile world — but they are not (see "CDN Limitations" below).
These retailers often address the issue of load time by minimizing the appearance of a mobile page, dumbing it down and eliminating components for speed advantages. They downgrade images to reduce the data load. They may implement responsive design to adapt to mobile devices, but the page looks minimalist and sparse on all of them. They have not upgraded to the sharp photography that triggers buying emotions when it pops up on a Retina-class display. These players may not recognize the growing purchasing power of the tablet user.
CDN Limitations versus Web Application Streaming
- The trend to personalization in e-Commerce content is strong. Fully dynamic websites cannot be cached in CDNs, though and cannot be addressed effectively by other legacy web performance technologies.
- CDNs do not go end-to-end (from the server to the browser). Their impact stops at the edge of the wired Internet.
- CDNs are a dumb pipe. They have no intelligence about the content they are shipping. The Web Application Streaming Network treats each type of content optimally.
- Download versus streaming. CDNs download the page before it becomes available to use; web application streaming enables interaction before the page is fully rendered, a great time saver.
For more information on the difference between CDNs and Instart Logic's Web Application Streaming Network, see Peter Blum's blog article, "What’s the difference between a Web Application Streaming Network and a CDN?"
M-Commerce Group 3: Holiday Winners
The m-Commerce winners are still a minority, but they capture more than their share of mobile purchases. They pay close attention to mobile users, especially tablet owners, who spend 50% more than PC users, are 3x more likely to buy than smartphone visitors (Adobe), and 72% of whom make a purchase at least weekly from the tablet (Google). They ride the tsunami in mobile traffic and realize mind-blowing growth themselves. We can point to several companies that took the right measures and saw it pay off. Here is what characterizes/distinguishes them from the No-Shows and Staying Afloats:
- See and go after new opportunities, rather than focus on limitations: These website operators avoid imposing the ancient tradeoff of speed versus quality on mobile customers. Whatever it costs to deliver Retina-class photography with fast viewability, they’ll do it.
- Identify the right technologies to help them get there: These site publishers have also tested legacy technologies like CDNs, and clearly understand that CDNs stop where wireless begins. They hold an accurate view of performance technologies; they know that Performance equals profits.
- Focus on metrics that matter: They also tend to measure their progress by the metrics that really count. Instead of page download time, they measure time-to-interaction. In other words, how fast can the user stop waiting and begin the shopping process?
- Think long-term loyalty: They understand the value of winning the customer isn’t just this Thanksgiving; it’s for long-term loyalty and tribal associations; online shoppers can bring—or warn away—their tribe, family, and pack.
Shopping in Motion 2013
Mobile commerce is now multi-device, a paradoxical mix of lots of online research and spontaneous buying. It is growing at amazing rate, yet far short of its potential, due to the latency and sparse, frustrating quality of the experience. Winning at mobile commerce demands a dual focus: first, improve technology right now to catapult performance on wireless connections; then, with faster performance, you are free to cater to the desires and needs of mobile shoppers. It’s not which e-Commerce players have the most resources; it’s which pay careful attention and take action that will profit from m-Commerce.
When the dust has settled in January, we’ll revisit the holiday numbers and results. Stay tuned. Meanwhile, you can run a Free Trial to see how your website performance improves with Instart Logic’s Web Application Streaming.