Retail stores will see a big increase in mobile purchases in the next few years. Mobile retail purchases will have a growing impact on the retail sector for several reasons. That means an opportunity for mobile developers, and room for innovation in a new market space.
An App-Friendly World
More and more US consumers own internet-capable phones; US smartphone penetration hit 57% in February, and is rising steadily. Our population is increasingly connected, and mobile purchasing habits have started to catch up.
Consumers are spending more time in retail apps. According to a Flurry Report on app usage, consumers spent 132% more time using apps in 2012 compared to the year before. What’s more, time spent in shopping apps went up by 247%, the third largest increase by category (behind social and media/entertainment apps). 67.5% of iPhone owners and 43.9% of Android owners use mobile commerce apps. While more users access mobile web domains than mobile retail apps, retail apps account for more time spent and more monthly sessions, on average.
Young people are leading the mobile revolution. According to Pew Researchers, one in four teens are “cell-mostly” Internet users, who go online using their phone and not a desktop or laptop computer. As this demographic gets older and has more purchasing power, mobile commerce will take off. Developers agree- 93% of mobile developers anticipate that it is “likely to very likely” that most retail companies will have enabled mobile commerce by the end of 2013.
In-App Retail Purchasing
20% of all ecommerce traffic in 2012 took place on mobile devices. Thats an impressive statistic, but it doesn’t directly translate to sales; mobile revenue is still catching up. Researchers indicate that many users are more likely to use their mobile devices to compare prices while actually making purchases in physical or online retail stores. Purchases on phones only accounted for 7% of total ecommerce revenue last year. Forrester Researchers’ report indicates that this will increase to 9% by 2016. Retail shopping on on smartphones is in its infancy, and the growth in the mobile commerce sector represents a major opportunity for mobile developers on all platforms. While some retail stores have pushed native app stores, most mobile purchases are made through mobile webpages. Some stand-alone apps have already seen success- eBay and Amazon in particular. Deal apps like Groupon and Living Social have been very successful as well, but are trending down.
Passbook and Google Wallet
When Apple announced iOS 6 with Passbook last year, many (us included) were surprised that they left out Near Field Communication (NFC) payments.(For more on that, read Why Apple is Trying to Kill NFC). While Passbook allows you to keep rewards cards, tickets and boarding passes in a neat little app, the viability of Passbook as a purchasing tool is limited. Instead of NFC, Apple decided to use ungainly QR codes to redeem gift cards in-store. Google, on the other hand, integrated NFC, allowing users to sync their credit cards with the app and pay at any store with a NFC terminal. Most new Android devices are NFC-capable. Once the app is unlocked, Android users with Google Wallet just have to tap their phone on the payment terminal. However, the technology is still catching on, and Google Wallet users have complained that not enough stores are NFC compatible.
Mobile Retail Advertising and Revenue
Developers should expect to see strong growth in ads from mobile search and retail through 2013. Click share in mobile retail increased 80% year-over-year (YoY), and clicks on product listing ads increased 100% across mobile devices. Tablets have seen a strong increase in ad revenue; consumers prefer to shop on devices with larger screens.
In the mobile retail space, monetization is not a huge concern. All of these apps are free-to-download, and in-app consumables don’t apply. Instead, these apps make money off of strong ad use. If you think about it, ads make perfect sense for this space. A user in a mobile retail app is already interested in making a purchase. Their credit card information is probably already linked to app in some way. Mobile retail apps are the perfect environment for strong ad conversion.
All of these factors indicate that mobile retail is a promising sector for app developers. If mobile retail interests you, be sure to take a look at the offerings on our listings page, like Smart Aisles, a Black Friday In-Store Shopping aid, or DealBuzz, a geo-aware deals listing app.