eMarketer Webinar: Mcommerce Trends for 2016—Behind the Rapid Growth

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Mcommerce Trends—Behind the

Rapid Growth

Yory Wurmser

Retail Analyst

June 16, 2016


How quickly are mobile

commerce sales growing?


Mobile influences

45%of all US shopping journeys

(Source: Facebook IQ, Feb 2016)


Context: Mcommerce will account for 2.7% of

total US retail sales in 2016


This year, mcommerce’s share of total retail

sales will be more than double 2014’s figure

Mcommerce will

account for a third

of US retail

ecommerce sales


Mcommerce’s increasing share is being driven by

its rapid sales growth

46.8%

Mcommerce

15.7%

2.6%

Ecommerce Total Retail

US Retail Sales Growth, 2016


Smartphone mcommerce will grow even faster

46.8%

Mcommerce

15.7%

2.6%

74.2%

Ecommerce Total RetailSmartphone mcommerce

US Retail Sales Growth, 2016


Growth in US

smartphone

mcommerce

accelerated in

2015 and will

continue to

expand

rapidly

through 2020


Why is smartphone commerce

growing so quickly?


1. More buyers: The number of smartphone

buyers continues to grow


2. Higher

conversion rates:

Smartphone

conversion rates

improved 33.4% in

2015

Conversion rates on

smartphones were one-third what

they were on desktops, but that

was up from one-quarter in 2014


3. Conversion rates on apps outperform desktop

Mobile web drove more than twice (2.1 times) the

number of visits as apps in 2015 (Source: Morgan Stanley, September 2015)

BUT apps drove 54% of mobile transactions in Q4 2015

(Source: Criteo, February, 2016)

AND apps had conversion rates 20% higher than

desktops in Q4 2015 (Source: Criteo, Feburary 2016)


Tablets vs. Smartphones


Smartphone shoppers will outnumber tablet

shoppers in the US by nearly 35 million in 2016

165.8 million(up 16.5m YoY)



Tablet buyers will still outnumber smartphone

buyers, but the gap is closing rapidly




Tablet

shoppers

have become

slightly less

likely to buy on

tablets—the

opposite of

smartphones


Starting this

year, tablets

will no longer

by responsible

for a majority

of US retail

mcommerce

But retail mcommerce

sales on tablets are still

growing by double digits


iPads absolutely dominate in tablet commerce

More than four

in five retail

orders on

tablets came

from iPads, and

this percentage

is increasing


iOS vs. Android


The majority of US smartphones are Android

Both Android and

iOS are increasing

share at the

expense of

Blackberry and

Windows Phone


But a majority of mobile traffic and sales come

from iOS devices


Most iPhones have the latest OS, but Android

phones are more fragmented

43% of

smartphone visits

to retailer sites

came from iPhones

running iOS 9 in Q4

2015

More than

two-thirds of

iPhone visits came

from latest version


The gap in conversion gap by OS is narrowing on

mobile web, but remains as large as ever on apps

“If you look at behavior

on high-end devices

on Android, it is very

similar to iOS [on the

web].”

—Michael Langguth,

Co-Founder, Poq

“At the app level, it hasn’t

tightened up. Even with a

high-end Android … the

participation and usage of

those devices is much

lower than that of iOS.”

—Chris Mason, CEO and

Co-Founder, Branding Brand


What’s driving higher

conversion rates?


Factors driving higher conversion rates:

1. Larger phones

2. Mobile optimization

3. Native mobile search


1. Larger

phones


Smartphone

screens will

continue to

get bigger

Phablet share of global

smartphone devices will rise

from 29% in Q4 2015 to 59% in

Q2 2017


Smaller screens have lower conversion rates

“There is a distinct correlation between the size of the screen

and conversion rates. With a smaller screen, it is harder to

fill out an online form, bringing conversion rates way down.”

—Josh Keller, CEO of Union Square Media, as quoted in Adweek, March 21, 2016


2. Mobile optimization

62%

of B2C sites were responsive in September 2015

(Source: Gorilla Group, September 2015)


Responsive design is just one part of mobile

optimization

“Even though you can provide a responsive

experience, it’s not enough. A lot of retailers

are spending time and dollars on

optimizing for speed of the site.”

—Haresh Kumar, Vice President, Marketing,

Moovweb


Responsive design can slow down load times,

which increases bounce rates

27% of US

digital shoppers

are unwilling to

wait more than

3 seconds for a

page to load

Only 34% will

stick around

after 5 seconds


Faster load times = higher conversion rates

Load Time

2.4 seconds

3.3 seconds

4.2 seconds

5.7 seconds

(Source: Soasta, September 2015)

Conversion Rate

1.9% (peak)

1.5%

1.0%

0.6%


Average load time for a retailer mobile site is the

fastest of any industry

3.1 seconds

average load time

(Source: Radware, March 2016)


Mobile Optimization 2.0: Focused on enhancing

speed and consumer journey

Adaptive elements

Simplified code

– React

– AMP

Commerce embedded in faster platforms


Flipkart had good results from creating a

progressive web app

Cached data allows app-like behavior

– Faster load times

– Offline functionality

– Persistent sign-in and home screen icon

Performance improved vs. old website

– Time spent up 200%

– Conversion increased 70%

– 60% of visits via home screen icon


Checkout optimization: Simplified payment is

central for mobile optimization

“When you can leverage Apple Pay or a

credit card from a prior purchase, the

experience goes from something that takes

10-plus clicks … into one with one or two.”

—Satish Kanwar, Director of Product, Shopify


3. Emergence of mobile-optimized product search

Visual SearchApp Indexing Voice Search


App search has been enabled by deep links

~50%of Internet Retailer 100 use deep links

(Pure Oxygen Labs, 2016)


Image Search:

Google and

other companies

are developing

image

recognition

technology to

index images


Image search can also refine searches and drive

iterative merchandising

(Images sourced from Sentient Technologies)


Pure visual search continues to spread

VivinoNeiman Marcus Amazon

(Image source: iTunes) (Image source: iTunes)(Image source: Yory Wurmser)


Voice search is still in its infancy, but is growing

rapidly

Half of US mobile

phone owners had

tried or regularly

used a

voice-controlled

personal assistant

as of June 2015


20% of queries on Android are spoken queries

(Google I/O, May 2016)


The next steps for

mcommerce


1. Conversational

Commerce:

Commerce

embedded within

AI-enhanced

conversations

(Images source: Kik)


All of the major platforms are working on

conversational personal assistants

Facebook MGoogle Assistant Siri

(Image source: PCWorld.com)

(Image source: Apple)

(Image source: Amazon) (Image source: Microsoft)

(Image source: Gigaom.com)


Messaging apps are positioning themselves as

platforms for conversational commerce

Facebook Messenger introduced:

– Conversations with brands, mostly around

clienteling or customer service (2015)

– Ride requests for Lyft and Uber (2015)

– Chat bots and Send/Receive API (April 2016)

Kik introduced a bot store in April 2016

Image source: Facebook

Image source: Kik


Nearly a third

of WeChat

users in China

had initiated a

purchase via

WeChat as of

January 2016

Up more than 100%

in 2016 vs. 2015


Facebook will have a challenge convincing many

consumers to use Messenger for commerce

Just under a

third of US

Messenger

users are at

least somewhat

likely to connect

with brands on

Messenger


2. Embedded commerce: Buy buttons move away

from retailer sites

Social Media Content Sites Related Services

Image source: Pinterest Image source: iTunes Image source: Button


There has been limited active demand for buy

buttons on social media

Less than a fifth

of consumers

worldwide

polled in

November 2015

were interested

in buy buttons

on select social

media sites


Content apps are

transforming into

marketplaces with

buy buttons

There were 35 million

Houzz users in Q4 2015 (Source: Houzz, November 2015)

Image source: iTunes


Related services: Deep links can create order

buttons for a variety of services in a single view

Resy app

Button for Uber

Image source: Button


Recap

Mcommerce will grow 46.8% in 2016, with smartphone

mcommerce growing even more quickly at 74.2%

Mcommerce growth will come from:

– More buyers

– Better conversion rates

Conversion rates are improving because of:

– Larger phones

– Mobile optimization

– Native mobile search

Conversational commerce and embedded commerce are the

next step in mcommerce

IBM Marketing Cloud helps you use customer

behavior to deliver custom experiences and

messages across the entire buyer journey.

So you can reach the right people,

with the right content, at the right time.

Visit ibmmarketingcloud.com


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Yory Wurmser

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