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Opinion

Retailers Have Little Reason to Build Their Own Mobile Apps

M-commerce and payments are a tsunami that no retailer can ignore, but engaging consumers on mobile, and more importantly, converting consumers, remains a challenge for retailers of all sizes.

Neither dedicated apps nor the mobile web represent a viable way to directly drive revenue for merchants, making an affiliate model one option to reach mobile consumers with payments technology and services.

Building an app does not make sense for most retailers. One reason is that mobile screens are small and people are highly selective about the apps they download. Consumers access an average of 27 apps per month, most of which are for entertainment and utility (communication, email, calendars, to-do lists). That doesn’t leave a whole lot of room for commerce apps.

In addition, downloading, installing and configuring a mobile app takes time and effort. An app like Uber, which you plan to use over and over again, provides an instant and valuable service that is only accessible on mobile. Instagram grew popular because it allows people to edit and share photos on the same device they take them. With mobile commerce many transactions are impulsive and one time and consumers have other, better options. They can wait until they are at a desktop or go into a physical store to buy, so going through the whole process of installing a commerce app (and registering a credit card) seems unnecessary and inconvenient -- unless they plan to use that app on a regular basis.

For example, let’s say a consumer is an Amazon Prime member who uses Amazon at least once a week. In this case, downloading the Amazon app and registering is worth the effort. However, if that consumer wants to make a single purchase from a speciality sporting equipment brand, downloading an app is more trouble than it’s worth. That’s why you’re seeing traction for big, vertical players like HotelTonight for hotels or SeatGeek for tickets. It’s much tougher for smaller, one time purchase propositions.

The chances are pretty slim that enough consumers will engage with a retail app enough to drive significant revenue. And since mobile apps are expensive to develop, the returns generally do not justify the expense.

So why not just forget about the headache of app development and getting end users to install them? Well, the mobile web is also not a great option for capitalizing on mobile commerce. Mobile web checkouts (where say a customer is using a mobile Safari or Chrome web browser) involve friction, and friction spells death for mobile conversions. The more steps and data entry a customer has to do on their phone, the less likely they are to make a purchase.

How about social commerce? Over the past year, Facebook, Twitter, Pinterest, Instagram and other social media giants launched commerce initiatives, anticipating that they could turn users’ browsing interest into buying, but the results have fallen far short of expectations. What we’re learning is that social implies browsing and relaxation while commerce required intent and a totally different state of mind. You may “impulse” buy when you’re in a physical store, but you’re still in a store with your credit card ready with an intent to shop. So far, that intent is largely missing when it comes to social networks.

So what’s left? One strategy is to participate through an affiliate model with existing, popular commerce apps. With this approach, a retailer is able to offer customers the frictionless, user-friendly experience that apps can offer without requiring them to jump through hoops. The consumer’s payment information is already registered, which means the battle is 90 percent won.    

Ultimately, success on mobile boils down 1) winning coveted app real estate on the device 2) optimizing for the mobile experience and 3) creating a painless payment process. Every retailer is unique and thus requires a unique mobile strategy.

It’s becoming very difficult for all but the largest retailers to be successful in all three areas. However, the broad strokes of success are the same: Remove friction, deliver value, and inspire trust. Capturing the full value of mobile commerce is all about balance.  

Justin Benson is CEO of Spreedly.

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What a great article. One point to add is that shoppers have overwhelmingly choose mobile web based sites over mobile shopping apps by 2:1. And there is more mobile web traffic for eCommerce than desktop traffic. Shoppers even squint and zoom tiny web pages to see what they want. But the big issue is the payment friction during checkout. PayPay helps here, but the easiest checkout is with Sekur Me. A fingerprint and 5 seconds is all it takes - no typing.
Posted by Ayanti | Thursday, February 18 2016 at 7:11AM ET
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