14 Insights - static.shopgate.comstatic.shopgate.com/files/Shopgate_vs_Responsive-Design_EN.pdfIn reality, native apps, mobile websites, mobile templates and responsive web design

© 2013, Whitepaper by Shopgate Inc. - Questions? Call Us at +1-800-490-2467 1

14 InsightsWhy the Shopgate Mobile Commerce

Solution Beats Responsive Web Design


EXECUTIVE SUMMARY:400-900% BETTER RESULTS!

Mobile commerce is booming. Most industry experts be-lieve that by 2015, 30% of all e-commerce sales will occur on smartphones and tablets. The next three years present a $200 bn revenue opportunity; when the first iPhone was released in 2007, this number was essentially zero.

Many online merchants talk about the growing number of mobile visitors they must serve for their businesses to sustain growth. However, a great deal of confusion sur-rounds taking the right steps to “go mobile”. “Are native apps important? Should I use a standard mobile template or responsive design? What is the most profitable mobi-le commerce strategy for my company?” At Shopgate, we hear these questions everyday. The topic of responsive web design (RWD) is confusing to many merchants. The concept sounds tempting: just build a single website which uses design techniques to adapt the website to all screen sizes on all devices. In theory, this should allow the merchant to confront the challenge of differing screen sizes and technologies with one simple innovation. For all merchants, increasing sales revenue and profit pre-sents a unifying goal. Mobile commerce is no exception to this principle. At Shopgate, we have the very same goal as our merchants. Thus, our business model is transaction-based. The higher that sales are on mobile devices using our platform, the more Shopgate can provide to mer-chants as the direct result of organic growth. For this rea-son, we’ve adopted a mix of technology that lends itself to maximizing mobile sales revenues.

In 2015 30% of online sales will occur on mobile devices.

This is a $200 bn revenue opportunity for e-tailers.


Shopgate has performed several hundred A/B tests which confirm that a responsive web design is not the best solution for eCommerce retailers. Our SaaS-based mobile commerce solution provides both customized mobile websites and native apps to online merchants. Together, these provide up to 400% better sales results than RWD, and mobile sales that are up to 900% higher when compared to non-optimized desktop sites. We give merchants the advantage of using sophisticated mobile commerce technology that performs much like that of the largest e-commerce players of the world (think: Ama-zon or Ebay) for a fraction of the cost. Here is our most important finding: Dynamically evolving device sizes, their underlying technologies and user preferences provide new oppor-tunities for commerce, but also require a new mindset among technology providers. Customer expectations regarding the speed, ease of use and specific personal character of mobile change almost everything.

This white paper lists our most important findings, which we have collected with the help of thousands of mer-chants since Shopgate’s inception. It provides a compre-hensive guide that explains why a dedicated SaaS-based mobile commerce platform, such as Shopgate, outper-forms any alternative mobile concepts, including mobile templates and RWD.

Shopgate performs up to 400% better than responsive design.

3© 2013, Whitepaper by Shopgate Inc. - Questions? Call Us at +1-800-490-2467


TABLE OF CONTENTS

Executive Summary: 400-900% better results!

Definitions

#1 – Design or Revenue: We Want Both!

#2 – The Myth of Expensive Native Apps

#3 – Don’t Mess Up Payment when It Gets Serious

#4 – File Size Matters Because Speed Matters

#5 – Navigation: Why Not Keep it?

#6 – Less Information Is More

#7 – Putting the Customer First: Full-Site Optional

#8 – Don’t Harm Your Core Business!

#9 – Native Apps: The Ultimate Customer Retention Tool

#10 – Out-Innovate the Competition

#11 – eCommerce Revolution: Transform Every Ad into a P.O.S.

#12 – Different Use Cases: Mobile Touch Points

#13 – Why Google Will Become Neutral

#14 – Online & Offline Commerce Connected by Mobile Technology

Editorial, Sign-Up & Free Consultation


DEFINITIONS

In reality, native apps, mobile websites, mobile templates and responsive web design are not so different. Most de-velopers ultimately take a hybrid approach and combine them. The most common example is the use of HTML5 elements within native iOS or Android apps. A dedicated mobile website may also use responsive design elements such as font sizes or image sizes to adapt to mobile screens of varying sizes. For the sake of our argument, we will take a less sophisti-cated approach to the terms. We define the terms used in this white paper as follows:

NATIVE APPAn application that is specifically programmed for a mo-bile operating system in its native language. The most im-portant mobile operating systems today are: iOS for iPod Touch, iPhone and iPad devices, and Android by Google. Native apps are deeply connected to the operating system of mobile devices and are made available in the iPhone or iPad App Store, the Google Playstore or other similar app marketplaces.

DEDICATED SAAS MOBILE WEBSITEA dedicated mobile website is a site specifically designed and maintained for the needs of users navigating the web through mobile web browsers. The mobile website opera-tes under a separate URL such as m.mystore.com. A mobi-le website by Shopgate is specifically fragmented, adapted, and maintained for all versions of the iPhone, most Andro-id Smartphones, and specifically adapted and maintained for iPads and Android Tablets.


MOBILE TEMPLATEA Mobile template is a mobile version of the desktop site normally offered by e-commerce platforms. Typically, it operates under a separate domain like a mobile websi-te. It is most often programmed once and is not specially developed and maintained separately for iOS or Android devices.

RESPONSIVE WEB DESIGN (RWD) Responsive web design means the general idea of a web-site not offering alternative URLs for mobile visitors but is based on the flexible design of page sizes, images, and fonts through the use of JavaScript.

DEDICATED MOBILE COMMERCE STRATEGY (DMCS)A mobile commerce strategy where merchants offer a de-dicated mobile website combined with native apps.

SOFTWARE AS A SERVICE (SAAS)SaaS is a very popular technology approach in many areas due to the huge success of the internet. It provides users access to software hosted by the SaaS provider in a cloud. SaaS is becoming very powerful in mobile commerce, be-cause it allows merchants to avoid high maintenance costs due to fragmented, dynamic mobile technologies, and may provide access to the latest mobile commerce features. Shopgate is the world’s leading SaaS mobile commerce platform.


#1 – DESIGN OR REVENUE:WE WANT BOTH!

Responsive web design (RWD), as the name already states, is only a design approach. The design “responds” to the highly fragmented, dynamic market of mobile devices, in-cluding smartphones and tablets. But how does RWD per-form in terms of sales? Ultimately, mobile commerce, like any other channel, is driven by sales and profit.. At Shopgate, we constantly perform A/B tests with a num-ber of merchants. We invest heavily in A/B testing for one simple reason: a merchant’s conversion rate is our primary KPI. The conversion rate measures the percentage of or-ders in reference to the total number of mobile visitors. The conversion rate directly influences our merchants’ mo-bile sales and thus our transaction-based business.

In terms of the conversion rate, our findings correspond to n=1,147 merchants of all branches, including low-perfor-mance online industries, researched within a period of 6-8 months. On average, conversion rates using the Shopgate platform were as follows:

Non-optimized, full website: 0.1% Mobile templates: 0.4%Responsive web design (RWD): 0.3%Dedicated mobile strategy (DMCS): 1.5%

Simply put, 1 out of every 1000 visitors buys something on a non-optimized website. On RWD sites, 1 out of every 250 visitors may order a product. A dedicated mobile strategy can bring this figure up to 1 in 60 – 4 times better than RWD and a staggering 15x better than non-optimized websites. A dedicated mobile commerce strategy does 200-300% better than the averages from RWD or mobile templates while additionally offering a superior design.


#2 – THE MYTH OF EXPENSIVE NATIVE APPS

Many merchants believe that a dedicated mobile strategy entails a fittingly high investment, mainly because native apps need special programming languages (Objective C and Java), and thus the skills of expensive IT engineers to be programmed. Furthermore, maintaining the apps and ensuring their compatibility with iOS releases, the Andro-id OS and with new devices requires a great deal of time and money, they claim. These arguments ring very true whenever a merchant decides to program native apps himself and even more so when a merchant hires an agency to manage the soft-ware development on his behalf. Shopgate has completely undermined the cost argument, however. Development for the entire merchant network is achieved via a centralized, dynamic SaaS platform. Whenever new iOS or Android versions are released, Shopgate adapts the centralized native app framework and updates all apps from all merchants simultaneously. The SaaS approach allows Shopgate to offer native app development and maintenance for a fraction of the cost paid elsewhere.

A dedicated mobile strategy increases your conversion rate by 1.5% to 4x more than a Responsive Web Design!



Consider the potential loss from customers who feel un-comfortable buying from a RWD site, or from a site with a poor mobile template! Given the differences in conver-sion rates (see the previous chapter) an RWD site or mo-bile template may cost tens of thousands of dollars more than Shopgate. These are hidden costs that merchants are usually unaware of. These merchants are losing mo-ney by forgoing these revenue streams. To their defense, many do not know that a better solution exists.

RWD online shops usually cost several thousand dollars when done well, and entail even higher maintenance costs. A dedicated, SaaS-based mobile strategy, on the other hand, will always be less expensive, especially when prices start at less than $100 per month.



#3 – DON’T MESS UP PAYMENT WHENIT GETS SERIOUS

Fully optimized checkout pages are key to increasing conversion rates and thus mobile sales. On mobile sites, an optimized checkout process is even more important than on desktop e-Commerce sites because customers are much less willing to accept slow payment procedures or to enter an excessive amount of data.

Payment occurs when a visitor is ready to become a cus-tomer. Providing the best possible user experience on a mobile checkout page is therefore mandatory, as this is the page with the highest abandonment in e-commerce. Yet RWD and most mobile templates ignore this, and payment becomes a huge hassle for consumers. It’s not a matter of design. It’s about offering a selection of pay-ment methods specifically designed for mobile usage. For instance, while many merchants offer PayPal on their websites, PayPal Express is a more efficient payment me-thod for mobile commerce. It allows PayPal users to or-der a product without entering their shipping, invoice and billing addresses. It’s similar to a one-click checkout even for new customers. Payment methods such as Google Wallet, Amazon Payments, Masterpass or one-click cre-dit card payments are trying to simplify this even further. Eventually, this will lead to a payment process that is free from laborious data entry, save for the input of very basic authentication data or passwords.

* Source: Shopgate A/B tests 2011-2013.

Payment is the No. 1 conversion driver. In mobile you need to rethink payment and provide the best user experience.


#4 – FILE SIZE MATTERSBECAUSE SPEED MATTERS

Speed is decisive in mobile commerce. According to a Kissmetrics study:

• 47% of all customers expect loading times of less than 2 seconds.

• 40% abandon a website that takes more than 3 seconds to load.

• 79% of shoppers who are dissatisfied with website performance are less likely to buy from the same site again.

Speed is another KPI for merchants that take mobile commerce seriously. While a pure RWD approach may fit well from a design perspective, the file sizes themselves may still be the same as on the original desktop website. This, combined with reduced speeds due to low mobile connectivity may result in a significant loss for the mer-chant. Shopgate’s technology downsizes images in terms of de-sign and file size. Our sites are the fastest on the market.


#5 – NAVIGATION: WHY NOT KEEP IT?

Many RWD sites face another serious problem: they don’t provide a satisfying solution for site navigation. In fact, many RWD sites simply hide the navigation bar comple-tely. This occurs because navigational elements respond to the limited amount of space, which may look terrible on mobile devices. However, navigation is important. It helps customers un-derstand which product categories are offered in a store. They make shopping suggestions, therefore leading to further purchases and cross-selling opportunities. A dedicated mobile commerce strategy does not adapt the horizontal fit of existing menus. Instead, it creates a new layout and prioritizes menu items according to the preferences of mobile customers. This ultimately increa-ses sales and provides the potential customer with a stel-lar user experience.

#6 – LESS INFORMATION IS MORE

While using your smartphone, you may ask yourself “How much information am I willing to read on a small display?” Most consumers agree that the answer is “Less than on large size screens.” RWD sites and mobile templates commonly offer the very same amount of information as on the desktop sites. As a result, customers may be forced to scroll for ages to find the right information. This has an adverse effect on the user experience, the time it takes to complete a purchase and mobile sales as a result.

An e-commerce site with different product categories needs a navigation bar to help customers find their way through your site and to the right products.

Don‘t lose your site navigation because of restrictive design!

When it comes to mo-bile, less information is more!



Think about product descriptions and reviews: both are extremely important to customers. Now, what if the de-scriptions are so extensive that product reviews may only be available at the very end of a page? Here, reviews will lose their impact on mobile sales. A dedicated mobile commerce strategy is selective in terms of product information. It makes information available at your fingertips without the need of scrolling for ages and it’s prioritizing what mobile customers really need. When it comes to mobile, less is more !

#7 – PUTTING THE CUSTOMER FIRST: FULL-SITE OPTIONAL

Sometimes, customers may need the desktop website but are on-the-go, using a mobile device. Customers will search for specific information which is only available there. Or they may still prefer to pinch, zoom, or navigate through the site they are used to shopping on. RWD sites do not offer this alternative very often. The customer has no choice but to accommodate himself to the RWD look. This may reduce merchant sales because they will most likely leave the site again. In fact, if custo-mers are not able to find the option they were looking for, they might leave the website after less than 5 se-conds to search for a competitor that provides a better mobile shopping experience. A dedicated mobile commerce strategy does not limit its-elf to only one technology. It places primary focus on the needs of the customer, not the technology itself.


#8 – DON’T HARM YOUR CORE BUSINESS!

Some people believe that RWD is interesting because everything is done under a single URL. However, they often forget that RWD may entail adapting the normal desktop website, making it less user friendly.

For instance, Flash or animated product movies may still be an important part of the customer experience. Think of fashion brands. Many have worked with animated websites to generate special awareness for the brand within its target market. A clean RWD does not allow flash animations like this, because some browsers, such as the mobile Safari (iOS), do not support flash. The same argument goes for cer-tain JavaScript elements used for menus, images, or na-vigation. Nonetheless, these elements may be great for desktop websites and increase sales there.

Why lose sales opportunities from 15-25% of mobile cus-tomers visiting your site? A dedicated mobile commer-ce strategy provides the benefits, expectations and best practices of desktop websites and lets merchants get the most out of every platform. It also does not affect sales on your desktop website.

A clean RWD does not allow flash animations or some JavaScript for images, menus or navigation, which may result in a poor user experience.


#9 – NATIVE APP: THE ULTIMATECUSTOMER RETENTION TOOL

Native Apps are widely underestimated. Some mer-chants still believe that native apps aren’t important or that they only make sense for well-known brands. So why has Apple successfully encouraged developers to create an astonishing 800,000 apps leading to more than 50 billion downloads in just 5 years? Why are the true leaders in mobile commerce, such as Ebay or Ama-zon, investing so much money into native apps?

The truth is, many IT departments, agencies and e-Commerce companies are simply not willing or able to invest large amounts of money into the development of native apps. Native app development requires hiring specialized and thus expensive IT engineers with a deep knowledge of Objective C and Java. They are also a li-mited bunch, as HTML/PHP has been dominating the e-Commerce industry for years. In short, merchants and agencies have to hire new people and spend lots of money. At Shopgate, our main goal is to maximize merchants’ mobile sales. We don’t compromise when it comes to reaching this goal. Therefore, we also offer native apps. We’ve determined that native apps do not compete against mobile websites.


They are in fact a great extension and ultimately a key success factor of a sound mobile commerce strategy. Native apps provide five fundamental benefits:

CUSTOMER LOYALTY: Native apps increase customer loyalty, because once an app is installed, people are more likely to visit a mobile store frequently. In fact, native apps increase sales by up to 50% per individual customer.*

CUSTOMER PREFERENCES: At least 22% of smartpho-ne user prefer shopping on apps rather than on mobile websites. 40% prefer mobile websites, 32% don’t care, and 6% still don’t know the difference.** This means that a native app is potentially valuable to almost 50% of all customers.

VISIBILITY IN THE APP STORE: Native apps provide vi-sibility in app stores. Younger individuals are especially familiar with the Apple slogan “There’s an app for eve-rything”. Many browse for apps in app store. Apple is aware of the trend, and has recently begun hiring mar-keting experts to develop ASO (Apple Store Optimiza-tion). The app store has clearly evolved into a search engine for mobile tools.

STRONG EFFECT ON RECURRING SALES: Native apps enable a customer to save his personal data in a mo-bile store and add products to a wish list. This has a tremendous impact on all businesses in consumer markets with recurring customer interaction (e.g. food, pharmacies, office or pet supply). Customers can order products with only two clicks when they want or need to buy again. Some will grow so comfortable doing this that competitors will have an increasingly difficult time winning them back to use less user-friendly technology.

RWD does not allow your business to fully leverage the capabili-ties of smartphones.


BREAKTHROUGH INNOVATIONS: Only native apps pro-vide access to push marketing, the device’s camera and thus to integrated QR-, barcode or image scanning and local storage of personal shopping data.

A RWD or mobile template approach does not cover these important mobile revenue drivers. Therefore, merchants that decide against native apps are forgoing huge sales potential, particularly that stemming from customer retention and mobile marketing.

* Source: Rakuten, 2012 ** Source: ECC, 2012


#10 – OUT-INNOVATE THE COMPETITION

A dedicated mobile commerce strategy provides much better access to innovative mobile technologies than a RWD or a mobile template. Breakthrough technologies provide great value and can be a huge competitive ad-vantage. A number of features offered by Shopgate are only technically possible through the use of native apps, and thus secure an exceptional value for the merchant.

PUSH NOTIFICATIONS: Native apps allow you to ins-tantly send direct, personal messages and highlight your very best offers to thousands of customers. It’s the most direct and personal way to communicate your brand’s message. In fact, it’s so direct that merchants should actually be cautious about how often they con-tact their customers.

QR CODE SHOPPING: Unlike mobile sites, native apps are able to access the device’s camera. This allows merchants to offer their own, integrated barcode and QR code scanner. QR codes do make sense when offe-ring real customer value, such as helping customers to quickly redeem a coupon or to find essential informati-on.

DAILY DEALS: Daily deals are limited-time offers on special promotions and products and are a very popu-lar feature. Customers love to use their cell phones to get up-to-date information about new offers. This fea-ture, along with a dedicated mobile commerce strategy, is a must to increase sales and customer loyalty.


ONE-CLICK CHECKOUT: With native apps, recurring customers only need to enter their data once at their first purchase. We believe this has a huge impact on retailers that sell products that are frequently re-purchased such as office supplies, pet food, food & be-verages, cosmetics and more.

Instead of just responding to device sizes, a dedicated mobile commerce strategy allows merchants to proac-tively take full advantage of mobile device’s capabili-ties.

#11 – ECOMMERCE REVOLUTION: TRANSFORM EVERY AD INTO A POINT OF SALE

Shopgate has developed an innovative feature for na-tive apps. The combination of cutting-edge image re-cognition (without QR codes) and mobile shopping. We call this feature the “ad scanner”. The ad scanner allows customers to scan a printed ad, catalog page, billboard or even individual products which are then opened in the app where the customer can complete a purchase in only two clicks.

This technology connects print marketing to a mobile point of sale via the merchant’s app.


Customers can buy the very same product they see in an ad within seconds. This technology will change the entire print industry, because print ads become measurable and thus more profitable. It is simply re-volutionary!

Watch this movie on YouTube to see it live: http://youtu.be/qzB_cYX-0oE Watch this movie on

YouTube to see it live:http://www.youtube.com/

watch?v=qzB_cYX-0oE


#12 – DIFFERENT USE CASES:MOBILE AS TOUCHPOINT

When we started Shopgate, we were wrong about one interesting aspect. We thought that products requiring a significant amount of research and information in or-der to be purchased, such as expensive IT items, jewelry or washing machines, would not be bought on mobile devices. While we were right about boiling down product infor-mation to the essentials, we underestimated the mobi-le channel as a touch point within a customer’s wider journey. Today, consumers inform themselves about products via several different channels (so called “touch points”) such as online shops, brick & mortar stores, catalogs or mobile devices. As soon as they gather all the informa-tion they need to make a purchasing decision, they se-lect the next available channel. Using a mobile device is probably the closest and most personal next available channel for most individuals. In this case, customers usually do not want the same amount of information as RWD sites provide. They want to order and pay as quickly as possible. The fewer steps there are, and the easier it is, the more likely it is that they will use a mobile store to buy a product. A dedicated mobile commerce strategy takes advantage of this special user context, provides a quick search me-thod, and offers the fastest order processes and mobile payment methods.

Mobile is becoming the most important touch point!


#13 – WHY GOOGLE WILLBECOME NEUTRAL

In June 2013, a Google blog post announced that on-line stores without a mobile view or version will face a lower ranking on their mobile search. This was a very important announcement due to the fact that most on-line shops rely on SEO and SEM as key online marketing investments. However, a year before, in June 2012, Google officially recommended RWD for websites. Their main argument is simple: it helps reduce the Googlebot’s work. Dedica-ted mobile websites that do not follow Google’s rules may also be flagged for duplicate content, which may be considered as a black hat SEO method. However, Google ultimately has a strong interest in of-fering mobile websites due to its very important mobile search volume (more than 30% of the total search volu-me). Therefore, Google offers comprehensive rules for dedicated mobile websites as well. At Shopgate, we believe that Google will ultimately de-velop an even more neutral position. Quite simply, if a customer prefers a dedicated mobile commerce ap-proach, and merchants ultimately make more mobile sales, the case for mobile advertising, Google‘s main strategic business in mobile, gets better. Therefore, Google’s “Mobile First” initiative is not a long term strategy, but will eventually change to “User First”. Shopgate has been listed as a recommended mobile services company under the Startmobile.de initiative powered by Google Germany.

Google is still neutral, but their preference will eventually shift in favor of the best-per-forming solution!


#14 – ONLINE AND OFFLINE COMMERCE CONNECTED BY MOBILE TECHNOLOGY

Merchants limiting their mobile initiative to RWD sites or mobile templates mostly ignore the unique role and huge potential of mobile commerce, such as connecting online businesses with offline brick & mortar stores or print marketing.

THREE EXAMPLES:Image Recognition & Augmented Reality Combined with Print Ads: A native app can offer an image recog-nition software which enables customers to scan a print advertisement and buy the products with a few clicks directly through the app. This is only possibly via a nati-ve app that has access to the device‘s camera.

Push Notifications Combined with Geofencing and Daily Deals: Geolocation allows retailers to instantly connect with customers by sending them push notifica-tions when they move close to a retail store. This is only possible with native apps.

Store Finder: Sometimes the most important informa-tion a customer needs can only be obtained via a store finder, or by using a direct call option. Though this is also possible on mobile websites, the user experience on native apps is much more natural because people can use native apps to navigate to a specific place.


EDITORIAL, SIGN UP, & FREE CONSULTATION

Shopgate Inc.2225 E. Bayshore RoadSuite 200Palo Alto, CA 94303

Website: www.shopgate.com Facebook: www.facebook.com/shopgatecom Twitter: twitter.com/Shopgate_com LinkedIn: www.linkedin.com/company/shopgate-gmbh

AUTHORAndrea AnderheggenFounder & CEO Shopgate Inc.Email: [email protected]

LINKEDIN: http://www.linkedin.com/in/andreaanderheggen

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© 2013, Whitepaper by Shopgate Inc. - Questions? Call Us at +1-800-490-2467

Documents

14 Insights - static.shopgate.comstatic.shopgate.com/files/Shopgate_vs_Responsive-Design_EN.pdfIn reality, native apps, mobile websites, mobile templates and responsive web design