The Mobile Mandate: How retailers must adapt in a mobile-first world

The Mobile-first World


2016 marked the first month where over 50% of online purchases involved a smartphone - making it truly the year of ‘mobile-first’. However by 2020 c.80% of eCommerce purchases are expected to involve a smartphone.

However UK retailers are falling behind US and Asian competitors on some key aspects of mobile:
  • Leading UK retailer sites are on average 10-25% slower to load on smartphones than US counterparts1 - and with a Google study showing that out of the top 20 fastest retailer sites in Europe, only 2 originated in the UK2
  • UK retailers have been much slower to embrace mobile chat support than leading US retailers – only c.16% have a ‘chat support’ option compared to c.41% in the US3 where chat support is also more prominently advertised
  • Western retailers also risk falling behind Asian competitors in contextual commerce, where it is estimated more than 31% of WeChat users in China have made a purchase through the platform4
  • Looking to the future, retailers from the US (eg Nordstrom, American Eagle) and Japan (Uniqlo) are experimenting with chatbots on Facebook Messenger and Kik – a nascent channel but one UK retailers need to address in anticipation of this channel shift.


Retailers need to act now – new research from OC&C Strategy Consultants, PayPal and Google has delved into the key actions retailers must take to be ‘mobile first’ – and ultimately ‘mobile only’.


1 Based on analysis testing site speed for the IR500 ‘leading’ retailers in the UK and the US – using google analytics benchmarked with Akamai mobile testing (tested at similar local times)  
2 New Look and Boots 
3 Based on the top 100 retailers from the IR500 in the US and the UK  
4 ​I​nternet Trends (KPCB / Mary Meeker)


The Mobile Mandate

Our research has revealed 10 principles retailers need to follow in order to adapt to this shift in consumer behaviour, or risk being left behind. These form our mobile mandate.

1. Re-orient the customer journey around speed, removing friction points

In today’s time-pressured world, speed is everything. Our research showed that ‘Speed’ was the top-ranked of consumers’ ‘key performance criteria’, whether users were ‘Shopping at Home’ or ‘On the Go’. And consumers won’t wait for your site to load – Google research has shown that improving load times by 1 second can increase conversion rate by 27%, so the benefits are real. 


Speed isn’t just about how fast your site loads though – it’s also about enabling your customers to complete their missions as rapidly as possible – particularly purchases. We found that 15% of consumers who didn’t use their mobiles for shopping felt it just took too long to complete purchases on their phone – giving retailers an opportunity to increase conversion with some simple changes, harnessing functionality such as 'One Touch' checkout from PayPal, Apple Pay and Android Pay
.

2. Enable customers to 'snack', not binge

User engagement is fragmenting – with users browsing more often but for shorter periods, often described as ‘snacking’ - rather than the longer browsing sessions associated with tablets and desktops. 

"We've seen a definite shift towards content snacking along with the consumer shift towards mobile devices - customer engagement is coming in shorter and shorter periods, and we've had to adapt our content, including our website merchandising, social marketing and our email strategy accordingly"  James Sturrock, MD Moonpig  

This has major implications for how retailers design their mobile experience - particularly:
  • Don’t fall into the ’Too Long Didn’t Read’ trapContent across all channels, web, social and email, should be designed to be consumed in short bursts
  • with mobile sites designed to easily allow customers to pick up where they left off in later sessions.

3. Join the dots between devices

Users are also increasingly fragmenting their experience across devices, with nearly 80% of online users using multiple devices5. 35% of survey respondents use smartphones alongside other devices when online shopping – with different devices used at different points. This also meant that 44% of people who researched on smartphones intended to purchase later either in-store or on tablet/laptop etc.  

For retailers it is therefore vital to join the dots between devices: design for customer journeys to be split across multiple engagements and channels, not completed in one burst or on a single device, and make this as easy as possible for users – eg support basket sharing across devices, recently viewed items, wishlists etc.  



5 Google / Ipsos Connect, March 2016, n=2,013 US online respondents 18+

4. Get an app – if you’re ‘top 3’ for your customers

A lot of buzz around mobile has been around mobile apps and the ‘app economy’ – however whilst the typical consumer in the UK downloads 25 apps per year6 , we found they only have c.3 retail apps on their smartphone, so for many retailers a compelling mobile site is a higher priority investment.



"We target our app at existing customers...our mobile website is our main acquisition channel" Jonathan Wall, E-Commerce Director, Shop Direct (speaking about Very.co.uk)

Mobile web and mobile apps also play different roles – customer segments with high affinity / usage will still adopt a retailer’s app – but for one-off purchases or new customer acquisition mobile web is key.

Progressive web-apps now provide a way to bridge this gap – giving an app-like experience without forcing users to download an app. Retailers can add additional functionality such as full-screen views and home-screen icons, and even push notifications and offline access on Android devices.

This has shown benefits of reducing cart abandonment by up to 9x7 , and increasing conversion overall by 75%8.


6 Publicis Media ‘Mobile Matters’ Survey – 2016 
7 Google research – Nigerian retailer Jumia increased conversion on abandoned carts by 9x 
8 Google research  - using PWAs Alibaba acheieved 76% higher conversion


5. Amplify what makes mobile unique

Creating compelling experiences on mobile isn’t about re-creating your website for a smaller screen – it’s about making the most of what makes mobile unique.

The current mobile leaders harness both interaction patterns (often supporting ‘snacking’) and the two aspects where mobile particularly excels – social and visual. These are brought together in two of the fastest growing social networks on mobile devices, Instagram and Snapchat – who over 2016 have been growing both daily unique users and engagement. Facebook meanwhile has seen a notable decline in usage (although at a monthly level unique users remain flat). 


Image recognition and visual search is coming to the fore with retailers like John Lewis exploring visual matching in their iPad app, and startups like ASAP54 and SnapFashion built on using image recognition to identify clothing and provide links to retailers where similar items can be purchased.

Another great example of using a native mobile interaction pattern is the ‘swipe to hype’ feature on the Missguided app – which is particularly used to build wish-lists, perfectly tying into both shorter, more fragmented sessions and a mobile-friendly interaction.

Across all types of apps it is clear that taking advantage of uniquely mobile properties is key to success. 9/10 of the fastest growing apps take advantage of these properties vs only 20% across all apps (camera integration, GPS functionality or UI features such as swiping, pinching etc.). 

These aspects are the ‘now’ – the next decade will see machine learning transforming mobile again. Immersive experiences using both augmented and virtual reality (as used by retailers in the UK like Specsavers and Ikea) are likely to become mainstream, virtual assistants will be commonplace and retailers will be able to take advantage of sensors in devices not currently used.  

6. Rethink your approach to search marketing

Retailers need to consider how search behaviour is changing, in order to leverage the new opportunities available to create personal and actionable experience for their users, and to attribute the right value to it:  
  • Be personal​: Identify the audience you would like to connect with, using the information you know to deliver a tailored experience. Customer Match has been proven successful for Retail customers to bring offline data into the online business. For example, Roland Mouret offered tailored messages to their customers outside of e-Marketing and AdWords campaigns conversion went up by 22% YoY9
  • Be actionable: Present the right information to the right users at the right time. For example 30% of mobile searches show local intent, so it is imperative that you show the relevant extensions for your business (eg. Locations, Call or Apps) when a customer is nearby. Retailers such as Argos and PCWorld are even taking advantage of Google's local inventory ads and will show users availability in nearby stores
  • Be measurable: Take into account all the conversions and interactions of the user (Cross-Device, Store Visits, Calls, Apps download etc..) and attribute the right value to mobile. Data-Driven Attribution model is a good example: we have seen advertisers increase CvR of generic mobile campaigns by 70% from adopting data-driven attribution10

Google shows product queries in a visually friendly, mobile format; returning Shopping product results based on user browsing intent. This enables users to scroll through the most relevant product options and navigate direct to retailers. This format, known as Shopping Ads, is increasingly important with the total volume of mobile clicks growing by 95% in 2016.

To take advantage of this format, retailers must think carefully about how to utilise their Google AdWords campaign management and feed optimisation. Submitting feeds with accurate, clean & updated inventory data, providing high-quality images as well as developing advanced bid strategies is essential in highlighting your offering on mobile devices.  


7. Exploit the potential of contextual commerce

The era of messaging has begun, with 2015 the point at which the user base of messaging apps (Whatsapp, Messenger etc.) overtook social networks (Facebook, Instagram etc.)11. Users also spend at least the same amount of time in social networking and messaging apps as in the browser.

Retailers will need to reach out to these contexts, rather than expect consumers to come to them.

These platforms allow retailers to respond to contextual cues (for example within a chat conversation) and seamlessly allow the customer the ability to take action (eg place an order). This aligns perfectly with the desire for speed seen in consumer KPIs for mobile commerce, streamlining and shortening the customer journey.

As in many aspects of mobile, looking to Asia provides a clear example – where 31% of WeChat users made an eCommerce transaction through the platform in 201612
– not via conversational / bot-served commerce, but via online stores run within the WeChat platform.

Over the coming years this ‘platform presence’ may become more important than having an app – retailers should keep this front of mind when plotting mobile strategy to avoid being caught out by this shift. 


11 BI Intelligence, September 2016 
12 KPCB Internet Trends report (Mary Meeker)

8. Re-invent customer service around chat

The other massive growth area within mobile has been the rise of chat – across all demographics, not just younger users. For example, in the UK approximately 3 billion messages are sent through Whatsapp and Facebook Messenger each day – more than a 15-fold increase from the number of SMS messages sent in 2007.


This has translated into a preference for online chat for customer service interactions too – in our research half of consumers said they would prefer to do this but only 16% of top retailers13
 currently support this via mobile (vs 33% who support this on desktop). Retailers must adapt rapidly to this new world to prevent customer perceptions of poor service compared to newer rivals – and also to access cost savings through improved efficiency available from using chatbots to handle simpler enquiries. 80% of retailers14are expecting to use some form of chatbot by 2020 – improving customer service whilst significantly cutting costs. 


The next frontier of ‘chat’ is conversational commerce – and whilst this is likely to prove disruptive in services first (as can be seen by existing offerings from Uber, Skyscanner, Domino’s Pizza etc), we expect this to move into retail rapidly, enabled by changes such as payment support in Facebook Messenger.  


13 Based on the Internet Retailer Top 100 Online Retailers (from the IR500 report) 
14 Oracle (2016) – survey of 800 CMOs / CSOs across Europe & South Africa

9. Use mobile as the glue between online and store

"Mobile is the glue between online and the store"  Mark Lewis, Retail Director, John Lewis

Mobile is key to the future of the retail store – our research found that 10% of mobile shopping was carried out whilst in-store – and 14% of mobile researching ended with an in-store purchase.

Retailer responses to this have included basics like in-store wifi, which has had notable success for instance in the US where when Target installed wifi in late 2012 they discovered that the majority of visits were to Target.com, suggesting customers were blending online and offline information to complete their missions.

More advanced retailers offer specific in-store functionality in their mobile sites and mobile apps including digital loyalty schemes, barcode scanning to access enhanced product information and in-store wallets. Tesco have launched PayQwiq, a wallet attached to their app enabling customers to pay for baskets worth up to £250, similar to Walmart in the US – and using the Hollister app allows customers access to reviews through barcode scanning as well as a store specific music
playlist.

Additionally, providing digital loyalty schemes does more than just digitizing traditional loyalty cards – it increases engagement, generates additional data and creates a context for marketing messages. Retailers which added digital loyalty schemes as part of their mobile apps saw monthly growth in unique daily visitors increase by more than 150%15.

Creating a digital loyalty scheme is typically approached in phases:

  • Firstly, harnessing mobile wallets – eg Apple Wallet, Android Pay – which provides benefits over traditional physical cards in that these virtual cards can be personalized, updated and refreshed remotely
  • Secondly, building more comprehensive loyalty features into mobile apps – e.g. rewards and redemption
  • Finally, adding full integration with payment / store systems, to enable checkout from the app etc. (as in the Starbucks model).

Mobile also provides great contextual information to help retailers drive footfall to stores – 30% of all mobile searches have local intent16, with ‘near me’ searches in the US growing at 146% year on year April 15-1617. Google have also found that across UK retail search ads drive four times as many store visits as conversions on mobile devices following paid clicks18, suggesting mobile is a vital driver of in-store sales.

Retailers therefore cannot see mobile as a channel in isolation – but need to consider mobile as one element of an experience that criss-crosses multiple channels – true omnichannel retailing.  


15 Based on Comscore data on Unique Daily Visitors on mobile apps launched by 4 retailers between Jan 2015 and Dec 2016 - BodyShop, Harvey Nichols, Waterstones and House Of Fraser
16 Google Data, Global, April 2016 
17 Google Data, US, April 2015 & April 2016 
18 ​Google Data​, UK, June 2016


10. Evolve the role of colleagues in store

The natural evolution of this mobile usage in-store is that it begins to change what customers are looking for from store colleagues.

We found that 39% of consumers trust online information more than store colleagues when in-store – and many consumers prefer to self-serve, with 50% turning to their phone to find products elsewhere if out of stock in their current location. 

Over time, we expect this to lead to a split between lower skilled ‘lift and shift’ roles supporting fulfilment (and increasing click & collect volumes), and higher-skilled ‘consultant’ roles providing specialist tailored advice not available online. Additionally, many ‘lift and shift’ roles are likely to move upstream into distribution centres for many retailers, as use of standardised ‘retail ready’ units increases.

Retailers must prioritise store colleague development nowto prepare for this – to ensure they add value above and beyond online channels.

"We expect the role of partners to increasingly become about advice, inspiration and helping to solve complex problems"  Mark Lewis, Retail Director, John Lewis  

Act now – prioritise mobile

In the coming years, mobile will redefine the retail experience for consumers - both on- and off-device. We expect mobile to be so influential that by 2020 80% of online purchases will involve a smartphone - but for retailers, the time to act is now. The retail leaders of the future will be those that think ‘mobile-first’ now - and are ready not just to respond, but to lead this change.


For more information about the themes and topics raised in this research, or to discuss how OC&C could help you with your mCommerce proposition, please contact Alex Mathers / alex.mathers@occstrategy.com