July 28, 2010, 2:08 PM
Blogger

No m-commerce site? You're losing sales—big time

Bill Siwicki

Managing Editor, Mobile Commerce

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I had a chat yesterday with a prominent figure in web retailing, Scot Wingo, president and CEO of ChannelAdvisor Corp. Talk turned to m-commerce, and he offered a thought-provoking tidbit I just had to share.

“If 5% of your traffic is coming from mobile devices and not generating orders,” he says, “apply your normal conversion rate and that will give you the size of the opportunity you have today if you build a viable mobile store.”

OK, you don’t have a mobile-optimized site, and 5% of your traffic is bouncing—bouncing to some other retailer that does have a mobile site that enables these shoppers to buy then and there. Let’s be conservative. Say your average ticket is $100, the industry average according to Forrester Research Inc. Say your conversion rate is 3%, the industry average according to Forrester. And your monthly unique visitors tally is 500,000—a modest number among Internet Retailer Top 500 e-retailers. 5% (the percent of traffic coming from mobile devices) of 500,000 is 25,000. 3% (the conversion rate) of 25,000 is 750. 100 (the average order value) times 750 is 75,000.

You’re losing $900,000 a year by not offering mobile device users an m-commerce site. And the percent of traffic from mobile devices is only going to increase—substantially.

Is this a no-brainer, or is it just me?

Comments | 5 Responses

  • Okay this article is a "no-brainer" as in the author didn't use his brain to write it. The conversion rate on mobile devices isn't going to be precisely the same as the normal non mobile web. The mobile users are more likely to be moving, and not prone to type in all of the information to make a sale like a normal web user would be. Look at the session times of mobile users versus normal uses. More likely mobile users are price comparing. So, lets try this again, but this time put your brain in gear.

  • Hmmm. Maybe the m-commerce conversion rate won't be exactly the same as an ecommerce conversion rate, but I think the author's premise still holds merit. Even if the conversion rate is half of that of ecommerce, there is still money to be had out there. Using the author's assumed formula and halving the conversion rate, that's still in the neighborhood of half a million. I don't know many companies that would pass up another $450k in sales right now. As mobile commerce really gets going, the conversion number will grow to meet or exceed that of ecommerce. It was just announced this week that Amazon sold $1billion via mobile commerce this year alone. I'm guessing that they're glad they have their mobile site in place.

  • And a lot depends on what your product line is. Faucets may not convert well in mobile. But how about iPhone accessories. And the writer is talking about direct to conversion efforts. Something that may not be a direct conversion may be information gathered that will result in an in-store or online conversion. Whether you agree with the conversion "math", m-commerce will have a greater and greater effect on ALL sales conversions in the coming years.

  • As usual, Bill has generated some good thinking in the mobile space. I agree with comments above that the conversion rate is aggressive but still results in a compelling business case. In a release we put out last month (http://ecommerce.shopatron.com/news/press-releases/higher-conve sion-rates-with-apple-ipad), we reported that smartphones were converting around 0.37% of visitors and that the iPad was converting above 2%. A primary reason for the difference was that our eCommerce sites were not yet optimized for smartphones, but still worked well on the iPad. As the iPad is also an "on the move" device, I think that predicting conversion rates in the 2-3% range is reasonable. We also need to remember that the younger generations, and I am talking college-age+, not high school, are ready to do everything on their iPod, iPhone and Android phones. We at Shopatron believe in the smartphone as a viable commerce environment of the future. Some say eCommerce succeeds because it provides shopping anytime. mCommerce will succeed in part because it provides shopping anytime AND anywhere. - Mark

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