Mobile Retail Traffic Spiking, Sales Not So Much

Mobile devices accounted for close to 50 percent of e-commerce traffic in the first quarter of 2014, up from 3 percent in Q1 2010. And U.S. mobile commerce is set to rise from $40 billion to $50 billion this year, according to Custora’s Mobile Commerce Report, released today.

That represents 1,875 percent growth over four years, and an 111 percent four-year compound annual growth rate. This year is off to a strong start with $12.2 billion in mobile e-commerce sales in Q1 alone, Custora says.

Custora provides a predictive analytics platform for e-commerce and multi-channel retailers, and the data comes from more than 100 online retailers, 70 million consumers, and $10 billion in transaction revenue flowing through Custora customers, as well as external data sources including U.S. Department of Commerce e-commerce growth figures. It uses all these data sources to extrapolate growth trends from within the Custora data universe to arrive at predictions for the U.S. industry at large.

The big picture is mobile traffic to retailers is growing phenomenally, but consumers are still more likely to buy via desktop or tablet, according to Corey Pierson, chief executive (CEO) of Custora. He acknowledges, “The majority of purchases are still happening on desktop. There’s growth everywhere; we see a much bigger spike in traffic growth on mobile, as opposed to revenue growth.”

custora-chart-1-mobile-trafficWhen it comes to mobile devices, Amazon and Samsung are taking shopping traffic share from Apple, with the iPhone’s share of e-commerce orders from mobile phones decreasing from 75 percent in 2012 to 54 percent as of March 2014. Samsung phones grew their share of phone orders over the same time period from 7 percent to 31 percent.

In tablet shopping, the iPad still accounts for 80 percent of tablet e-commerce orders, though share of orders made from Samsung tablets increased from 2 percent in 2012 to 12 percent as of March 2014; Amazon’s Kindle Fire tablets now account for 4.9 percent of all tablet orders, Custora says.

This mirrors IBM data on Father’s Day sales, released in June. In that report, based on customers of IBM’s ExperienceOne, smartphones drove 24.8 percent of all online traffic compared to tablets at 12.8 percent, while tablets drove 12.2 percent of all online sales, compared to 6.4 percent for phones.

It’s worth noting that, according to IBM, iOS users spent more, averaging $103.85 per order compared to $73.08 for Android users, a difference of 42 percent. IBM found that tablet users averaged $106.71 per order, versus smartphone users, who averaged $89.55 per order. Custora’s data confirms and expands the fact that Apple users spend more (hey, they’re used to it after shelling out for Apple’s pricey hardware): As of Q1 2014,the iOS average order value was 14 percent higher than Android AOV on mobile phones, and 3 percent higher on tablets, per Custora.

custora-conversion-ratesCustora also looked at customer behavior across devices. It found that only 10 percent of shoppers had made purchases via multiple device types. But these customers tend to be 20 percent more valuable over the lifetime of the customer relationship.

Pierson thinks this has more to do with the type of person who uses the devices than it does with the shopping experience on different devices, despite retailers’ work to optimize the experience across channels. He says, “It’s more that the people who tend to shop a lot in general will touch your products in multiple ways.” The fact that average order sizes on mobile are a little lower could be, he thinks, because mobile is used more for impulse purchases.

“With the way mobile has grown, we certainly wouldn’t say you don’t want those mobile-only customers,” Pierson says. “But the next wave of a lot of this analysis about cross-channel will be focusing on understanding what types of customers do and don’t [shop on mobile]. The customer-focused lens will continue to get more prominent as the data grows.”

Good old-fashioned email marketing is highly effective at converting mobile phone users, driving 27 percent of sales on phones, compared to 21 percent on desktops and 23 on tablets.

This was surprising data, according to Pierson. His intuition is that this is because email marketers tend to pay good attention to optimizing email for mobile devices, while it’s harder for retailers to produce a good customer experience across mobiles. Conversations with Custora customers indicate that smartphone sales tend to happen after the customer already has a desktop relationship with the brand. “When you already know the brand, clicking on that email in which there’s a relevant, interesting product is a simple conversion process,” he says. “So it might be case that customers are not first finding the brand on the mobile phone, but more direct-to-purchase email campaigns are still very effective on mobile.”

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