Amazon has been dominating the retail market for some time now, and in leveraging this dominance its made some major acquisitions and expanded internationally. 2017 was a very big year for the company so it should come as no surprise that according to retail research firm One Click Retail, Amazon was responsible for an estimated 44 percent of U.S. e-commerce sales and four percent of all retail sales overall, totaling approximately $200 billion. While it’s true the majority of retailers will never achieve Amazon-like success, the opportunity in the e-commerce market is only going to continue to grow. NRF attributes higher consumer confidence, strong employment and growing wages to the highest holiday sales since the Great Recession. Holiday sales during November and December increased 5.5 percent over the same period in 2016 to $691.9 billion. These figures bode well for 2018, the question is how can retailers of all sizes increase their share of the e-commerce revenue pie?
In research we conducted during the recent holiday shopping peaks, the data points to one specific sales channel that retailers should seriously review and adjust budgets to optimize in 2018: mobile. Specifically, despite mobile traffic having hit record highs during the holiday shopping peaks, the mobile channel continued to be a leaky bucket for retailers.
Using data from more than three dozen retailers on the Black Friday 2017 weekend, we saw that while mobile traffic made up 53.5 percent of total visitors, the average revenue per visitor was 56.6 percent lower on mobile than on desktop. Mobile revenue generated just 38.8 percent of all revenue for the entire holiday weekend, while desktop generated 57.4 percent of revenue. So, while mobile sales increased, the average revenue per mobile transaction was lackluster.
The trading data in the run up to Valentine's Day 2018 also showed the consumer move to mobile. The influence of the mobile channel is best represented when comparing the session data where we've seen an inflection point ― there were more mobile sessions (51.54 percent) than computer sessions (48.46 percent), finally surpassing the halfway mark in 2018. The big challenge for retailers in the first half of February, just leading up to Valentine's Day, continued to be: getting the percentage of sessions and the percentage of revenue to match. Desktop represented 70.26 percent of revenue in 2018, showing that even though the majority of visitors were using mobile to discover brands, they were moving to desktop to complete the purchases.
Unless retailers address the weaknesses contributing to underwhelming Revenue Per Visitor (RPV), we predict this same issue will occur during future peak shopping periods during 2018 when there will be an uptick in mobile traffic and conversions, but RPV will remain lower than it should be.
There is no doubt that the mobile-first era has arrived. Unfortunately, retailers weren’t ready for the speed of this transformation and, as a result, weren’t able to fully leverage increased mobile traffic during the high-peak holiday shopping season. One reason for this is many retailers are still serving updated mobile sites that aren’t designed for the way people prefer to discover products and make purchases on their mobile devices. Our analysis also revealed that retailers are still depending on the desktop channel for most of their revenue. Shoppers clearly have issues with the mobile web, as both revenue per visitor (RPV) and overall revenue were much lower on mobile than on desktop.
With product catalogs in the hundreds or even thousands, traditional mobile web sites provide poor navigation and search capabilities. By applying new AI and machine learning technologies, mobile sites can provide a modern, smarter and more customized product discovery process that mirrors a Pinterest-like or Instagram-like experience, on the retailers mobile site.
If anything, this recent holiday season should be a wake-up call to retailers. It’s time to stop doing “business as usual” and consider the following in order to take advantage of the lucrative mobile commerce opportunity in 2018:
1 – Reevaluate your e-commerce technology spend – Focus on building out your mobile site and investing in new AI and machine learning technologies to modernize the product discovery process and to provide the smarter and more engaging shopping experiences that consumers have come to expect.
2 – Stop relying on the desktop as your revenue driver — The majority of consumers now shop via mobile so this must be the year that retailers stop relying on the desktop for most of their revenue. Retailers that put the customer first will be working on their mobile experience to get it right.
3- Brand loyalty is on life support ― Considering that 81 percent of U.S. and U.K. consumers would switch their loyalty to sites that provide them with a better experience (see our research about this here), and the fact that mobile is an industry-wide challenge that retailers haven’t gotten right yet, this presents a unique opportunity: retailers who achieve a great mobile experience will be able to win over new shoppers very quickly in 2018.
4. You’re not just competing with other retailers – Keep in mind that social media has changed everything. This means you aren’t just competing with other retailers, but also with the more mobile-friendly experiences provided by the likes of Instagram and Pinterest. These popular social sites have helped change how consumers interact with brands while fueling an appetite for more advanced product discovery on mobile.
It’s clear that we’ve reached a mobile inflection point. The consumer has switched to being mobile-first and retailers must adapt or lose traction in a very competitive market. This mobile megatrend came through loud and clear in November and December 2017 and has put retailers on notice. Those that put their customers first, and prioritize their mobile sales channel, will have a winning strategy and gain more of the ecommerce market share in 2018.
Leah Anathan is the Chief Marketing Officer at Qubit. She has more than 20 years of experience in brand and product strategy, and growth marketing for technology startups. Passionate about product innovation, Anathan has helped multiple software companies to launch award-winning products in ecommerce and digital marketing. Prior to Qubit, she was the CMO at PrestaShop, an open source ecommerce platform.