The online apparel retailer’s filing for Chapter 11 bankruptcy protection has drawn several potential suitors, including rapper West and music executive Damon Dash, Karmaloop ...
Retailers diving into mobile commerce are coming up with significant sales.
Many merchants remain to be convinced that it's time to invest in mobile commerce. But those retailers actively engaged in m-commerce are reaping rewards, and most retailers recognize that the time is coming when many consumers will use their smartphones, tablets and the mobile Internet to research and buy products online, according to the latest Internet Retailer survey.
The survey shows only 24.1% of merchants operate a mobile commerce site and only 16.4% have both an m-commerce site and mobile apps designed for specific devices, such as the iPhone, iPad, Android handsets or BlackBerry phones. But for merchants that are already active in m-commerce, a mobile-optimized e-commerce site and apps that enable consumers to complete transactions from mobile devices are beginning to generate business, and in some instances significant revenue.
The survey results, which include responses from 54 web-only merchants, 31 retail chains, 17 catalog companies and 15 consumer brand manufacturers, reveal that 54.8% of merchants with a mobile commerce site, an app or both, are generating annual sales of more than $50,000. A total of 40.6% of merchants with an active m-commerce program are generating annual revenue of at least $250,000, including 9.5% with yearly mobile sales that range from $250,001 to $500,000, 7% from $750,001 to $1 million, 14.3% from $1.1 million to $10 million, 4.8% from $10.1 million to $50 million and 5% more than $50 million.
"Mobile commerce is going to generate significant sales for a lot of retailers sooner as opposed to later," says Carol Steinberg, executive vice president of Internet, marketing and human resources at TV and web retailer ShopNBC, which operates an m-commerce program that the company says generates "several million dollars" in annual sales. "Mobile is how growing numbers of consumers want to shop online and that's going to create some big new opportunities for a lot of merchants."
Mobile already accounts for a meaningful portion of online sales for many merchants. The survey finds that mobile commerce accounts for at least 3% of all web sales at 47.6% of merchants responding to the survey that have mobile programs. That includes 16.7% for whom a mobile web shop and app sales generate 5-6% of online sales, 4.8% where the mobile commerce share of web revenue is between 7% and 10% and 9.4% where greater than 10% of all e-commerce sales are from mobile.
And consumers are rapidly learning to use their iPads and other tablet computers to shop. 16.7% of merchants say that transactions from tablet computers account for at least 20% of mobile commerce revenue. "How mobile commerce is rolling out is very diverse and incredibly fast moving," Steinberg says. "A year ago traffic to our mobile and e-commerce sites from an iPad was practically nascent, and now iPad traffic accounts for more than 10% of our total volume."
Mobile commerce is clearly a high priority for a growing number of web merchants—85.7% of all survey respondents say mobile commerce is important to their future online business development, including 59.2% that see rolling out m-commerce as very important.
To build out their m-commerce channel, more merchants plan to increase the size of their mobile commerce technology budgets. Today, the Internet Retailer survey finds that many merchants, especially smaller companies, have a modest budget for mobile systems and app development. Among survey respondents active in m-commerce, 53.5% spend $50,000 or less on mobile commerce technology, compared with 14% that spend $50,001 to $100,000, 23.2% that spend $100,001 to $500,000, 2.2% from $750,001 to $1 million, and 7.1% over $1 million.
But as mobile commerce catches on with more consumers, many merchants and consumer goods manufacturers plan on increasing their spending on m-commerce technology and staff. The survey, which Internet Retailer conducted in July and August with readers of its IRNewsLink newsletter and in conjunction with marketing and survey technology provider Vovici Corp., finds that 68.2% of merchants will spend more on mobile commerce systems this year. For many merchants, their investment in rolling out a more robust mobile platform will be significant, including 41.4% that will spend at least 20% more this year, 17.3% more than 50% and 10.4% more than 100%.
"In evolutionary terms, mobile commerce is still a pollywog, but quickly advancing to the amphibian stage," says Avi Greengart, research director, consumer devices, at research and consulting firm Current Analysis. "The mobile commerce evolution is going to happen at a much more rapid pace than the time it took for conventional e-commerce to develop a critical mass. The merchants that spend more upfront now will reap the benefits of m-commerce far faster."
Because mobile commerce is so new, many retailers are turning to vendors to help them get started. The survey finds that nearly two-thirds of merchants—59.1%—will use an outside technology partner to help them build their mobile commerce site or apps.
And once the platform is built, retailers anticipate a challenge in finding and hiring enough specialized employees to manage and grow their programs. Today only 36.4% of online retailers have a full-time staff devoted to mobile commerce. For 50% of web merchants, that full-time staff consists of a single employee, compared with 31.3% with two or three staffers and 18.7% with a staff of four or more.
Hiring experienced mobile commerce specialists can be harder than hiring a typical e-commerce program manager, designer or programmer—50% of all companies in the survey say finding the right employees adept at mobile commerce program development is hard, while 37.5% say recruiting veteran m-commerce personnel is very hard.
Some retailers such as Walgreen Co. and Sierra Trading Post Inc. are filling slots on their mobile commerce teams from within. Walgreen, for example, was among the first big chain retailers to name a full-time mobile program manager when the company named Tim McCauley, an e-commerce program director, as mobile commerce director in the fall of 2010.