Forrester-Kony: The State of Mobile Commerce for Retailers Today

State of Mobile Commerce: 2012

Sucharita Mulpuru, VP & Principal Analyst

1 © 2012 Forrester Research, Inc. Reproduction Prohibited
2009

Methodology

 Annually, Shop.org and Forrester Research execute a survey with online retailers regarding key
metrics and areas of focus; this year's survey was entirely focused on mobile commerce and mobile
retail execution. This survey was fielded in April 2012 and included questions pertaining to mobile
strategy, investment and mobile marketing.

 The Shop.org/Forrester mobile survey resulted in 59 complete and partial responses across a
variety of industries, including apparel, footwear, general merchandise, home furnishings, and
personal care.
– 75% of participating companies were multichannel retailers; 8% were web-based/pureplay retailers; 17% of
respondents were manufacturers selling direct to consumer
– 40% of respondents generated more than $100 million in direct sales from their web channels in 2011
– 63% of respondents have been selling online for more than 10 years.

 The information for this study was also supplemented by data (anecdotal and empirical) from the
Retail Advertising and Marketing Association (RAMA) as well as vendor interviews, which provided
some additional information about the role of mobile marketing for multichannel retailers.

 Where relevant we also supplemented the data with information from consumer surveys taken from
Forrester’s partnership with Bizrate Insights.


Respondents profile

Company type
Multichannel retailers 75%
Web-based/pureplay retailers 8%
Manufacturers 17%
Annual online sales

Less than $10 million 17%
$10 - $100 million 43%
More than $100 million 40%
Online Tenure
1-4 years 12%
4-10 years 25%
More than 10 years 63%


Key data points captured in this report

 Smartphone and tablet device strategy:
– KPIs/metrics used
– Sales metrics
– How metrics compare to web site metrics
– State of mobile app implementation and strategy
– Areas of retailer focus and investment

 Mobile commerce:
– Where traffic originates
– Mobile web and app traffic
– Site features used
– Mobile usage in store

 Mobile marketing:
– General mobile marketing spend
– Mobile marketing tactics

Perspective: key findings from last year (2011)

 The majority of retailers (91% of those surveyed) reported having some
mobile strategy in place; this includes all retailers planning to dedicate
some resources to mobile
 Many retailers still had not optimized their mobile presence
– 44% of retailers surveyed said that they had "nothing special" about their
mobile sites

 There is little differentiation in objectives for smartphones versus tablets
– Most retailers agreed on a key priorities for their mobile efforts (both tablets
and phones) were direct revenue and sales

 Mobile sales were a small single-digit percent of overall web revenue for
most retailers

Source: The State of Retailing Online, 2011

Forrester expects US smartphone commerce to grow
to $31 billion by 2016

+40%

+67%

Source: Forrester Research Mobile Commerce Forecast, 2011 to 2016 (US)
Note: eCommerce does not include mobile ring tones, mobile gaming and mobile video. Tablet sales are excluded from this forecast.

Key findings from 2012
 Tablet and mobile sales continue to constitute a fraction of total web sales;
tablets are coming to represent a significant portion of "mobile" revenue
 Site conversion and order value on tablets tend to replicate if not exceed
comparable "desktop" rates

 The majority of site traffic to mobile originates from search, email and organic
load
 The majority of mobile marketing investments go into paid search, email and
display campaigns
 Objectives for smartphones and tablets are different (e.g. smartphone
objectives focus more on multichannel goals) but investments in
functionalities are similar

 For retailers who offer customer-facing apps, the majority of their mobile
sessions still happen through their mobile-enable website
– These retailers typically find that apps are nonetheless critical to providing a
premium service to their best customers

Overview of research
Covered in this deck Partially covered in this deck

Customers browsing Customers browsing Store usage of
and buying outside and buying in stores mobile devices
of stores
Location

Home, on the go, outside
In stores In stores
stores
Users

Customers Customers Store associates, customers
Resources

Shop.org, Bizrate Insights,
Forrester Technographics, Shop.org, NRF Research NRF Research
NRF RAMA


The top objective for smartphones is
driving traffic to other channels.
The top objective for tablets is being a
source for product and price
information.*


*Base: RAMA retailer interviews

Retailers use their website, emails and social media
to promote their mobile offering

Top ways to promote mobile offerings to customers
Rank Top ways to promote mobile offerings to customers
1 On website

2 Emails

3 Social media

In-store signage offering QR-type codes + In-store signage
4
promotes smart phone app(s)

5 Paper catalogue

6 Print advertising

Base: 4 online retailers
Source: RAMA survey with retail marketers

The majority of mobile marketing is dedicated to
smartphone and store mobile marketing
Do you currently use any of the following mobile marketing
tools?
Smartphone marketing Tablet marketing Store mobile marketing

QR codes or other barcode scanning 75%

Smartphone paid search campaigns 55%

Mobile email optimization 52%

Mobile display ad campaigns 41%

Tablet paid search campaigns 39%

Other location based marketing 27%

Check-in campaigns 25%

SMS campaigns 23%

Tablet display ad campaigns 20%

Identifying device IDs 18%
Source: “The State of Retailing Online 2012”, a Shop.org study conducted by Forrester Research


Mobile advertising budgets are in single digit numbers
Percentage of interactive marketing budget dedicated to mobile advertising

By total online sales
$10 Million to Less
All Less than $10 million than $100 Million $100 Million or More
3.9% 3% 4.1% 3.6%

By type of retailer
All Multichannel Pureplay
3.9% 4.2% 3.6%

On average, less than 4% of total interactive marketing budgets are
dedicated to mobile advertising. 4 out of 5 retailers surveyed have increased
their budgets compared to last year.*
*Base: 5 online retailers
Source: RAMA survey with retail marketers

QR codes are popular with retailers of all sizes
because of the ease of dissemination
15% of web
buyers with
mobile phones Top mobile marketing tools by size of total sales
have ever
scanned a 2-D
barcode.
$10 Million to Less than
Rank Less than $10 million $100 Million $100 Million or More

QR codes or other QR codes or other
1 Mobile email optimization
barcode scanning barcode scanning

Smartphone paid search QR codes or other Smartphone paid search
2
campaigns barcode scanning campaigns

Other location based Smartphone and tablet Tablet paid search
3
marketing paid search campaigns


The majority of site traffic on mobile originates from
search, email and direct typing

Top 3 places where traffic to retailers’ websites on mobile
devices originates

Smartphone Tablet
1. Search engines (84%) 1. Search engines(85%)
2. Email (80%) 2. Email (81%)
3. Direct (Typing in the mobile 3. Direct (Typing in the mobile site
site URL) (76%) URL) (79%)

20% of emails in given campaign are opened on a mobile device!

Few retailers reported SMS/text to be a top-3 driver of mobile traffic but
SMS list sizes ranged from <10k to up to 1MM



22% of retailers report that social
media is a top-3 source of mobile
traffic


When retailers have apps, the majority of mobile
sessions are Web sessions

Of your total mobile device browser sessions, how do your mobile
browser sessions break out?
(among retailers who have tablets and smartphone apps)

*Web* sessions *App* sessions *Web* sessions *App* sessions
(smartphone) (smartphone) (tablet) (tablet)

45% 17% 28% 11%



Many retailers surveyed offer mobile apps

 45% of online retailers have
implemented mobile apps.
 Retailers have on average 500,000
downloads for their smartphone apps
and 100,500 for their iPad apps.
 When retailers have apps on
different devices, 70% of
smartphone app downloads are on
iPhones.



One quarter of consumers prefer the same
experience on both mobile devices and the PC
Do you shop (i.e. browse, research, or If you have interacted
purchase) online via your mobile with [MerchantName] on a mobile device,
device(s) with any online retailer? then which experience do you prefer?

Accessing the standard website
(i.e. the same view you would 28 %
Yes, including see on your computer)
purchases 26% Using the mobile version of the
site (i.e. the site may have less 7%
content but is optimized to look…
No, 45% Using an app (if this retailer has
one available for download) 9%

Yes, excluding I don't have a preference 14 %
purchases 29%

I have never interacted with
[Merchant] from a mobile device 43 %
Base: 3,035 recent online shoppers Base: 1,627 recent online shoppers
with web-enabled mobile phones with web-enabled mobile phones

Source: Bizrate Insights/Forrester Research Mobile Flash October 2011


Page load times and page navigation are leading
consumer challenges on mobile devices
When shopping online using your mobile device, do you ever experience any of the
following problems?

I don't ever experience a problem 33 %
Pages load slowly 31 %
It is difficult to click on exactly what I want 28 %
It is difficult to enter information 22 %
Graphics and information are not sized correctly 18 %
It is difficult to tell if my data is secure 16 %
It is difficult to clearly read the content 16 %
I am unable to find what I am looking for, but it is … 15 %
There isn't enough text information available 10 %
There aren't enough pictures/graphics 9%

Base: 622 recent online buyers with multiple mobile devices
Source: Bizrate Insights/Forrester Research Mobile Flash October 2011


Unique content and service to customers drive app
development – but maintenance remains a challenge
What describes your company's views about apps?

Enable barcode scanning 57%

Give us the ability to provide
57%
functions that the site won’t easily…

Are good for one’s best customers 57%

Are hard to maintain 48%

Are critical to our business 19%
Apps are a premium
service but also hard
Will become obsolete with HTML 5 19% to maintain

Enable other benefits like games 14%

Allow us to tap into 3rd party
10%
developers


Tablet and mobile sales are still a fraction of total
sales

Tablet/mobile sales as percentage of web sales in 2011

137MM 61MM
consumers consumers
with with tablets
smartphones in the US in
in the US in 2012
2012

1.5% 3.2%



Tablet sales though look more promising than
smartphone sales

1.0% 2.4%
Site conversion rate

$134.37 $159.28
Average order value

29% 29%
Repeat customer rate

69% 62%
Shopping cart abandonment rate


Half of retailers surveyed reap higher average order
value on tablets than on PCs

Higher than my Web About the same as my Lower than my Web
site Web site site

Site conversion
rate on smart phone
6% 7% 87%

Average order
value on smart phone
8% 28% 64%

Site conversion
rate on tablet device
13% 33% 54%

Average order value
on tablet device
49% 28% 23%



Retailers are missing metrics that more accurately
reflect where mobile fits into the shopping process
Which KPIs/metrics do you use to measure the success/progress of
your mobile strategy and business?
Revenue transacted directly via mobile
devices 96%

Mobile site traffic (sessions) 94%

Site conversion 91%

Average order value 87%

Number of QR code downloads 43%

Shopping cart abandonment 37% Leading metrics
mirror those for the
Product searches via mobile devices 33% web.

Number of mobile app downloads 31%

Repeat visits/log-ins 24%

Smartphones are better suited for cross channel
activities such as in-store online research
Site features used frequently (high and medium use)
smartphone tablet
Product detail info 84%
80%

Customer ratings and reviews 59%
64%

Store maps 49%
38%

Easy check out 35%
46%

Coupons 29% The difference in the
29%
use of store maps
Alerts for specials and sales 26%
26% shows that
20% smartphones
Request for help / questions… 28% support store visits
In-store inventory availability… 18% more frequently
16%

Bar codes 13%
4%

Retailers plan to invest in similar features for mobile
and tablets, but levels vary for QR codes and payment
options

High investment in features smartphone tablet
Product and price information 76% 84%
Customer ratings and reviews 71% 71%
Easy payment options 56% 45%
Store information 53% 50%
Alerts for online specials or sales 49% 45%
Scanning a QR code with a mobile device 49% 37%
Coupons 47% 47%
Shipping notification 33% 26%
Storing a shopping list on a mobile device 33% 26%
Alerts for in-store events, specials, or sales 29% 21%
In-store product availability 29% 32%
Store maps / layouts 27% 24%



The list of less popular investments reflects more
accurately what retailers should invest in by device type

Less popular investments in features smartphone tablet
Check out and payment in a store 24% 16%
Scanning a bar code 24% 11%
Sharing a shopping list on a mobile device 20% 16%
Access to the loyalty program 18% 8%
Alerts for in-store pick up orders placed online 16% 8%
Expert reviews 11% 16%
Gift registries for friends and family members 11% 16%
In-store navigation 11% 8%
Real-time coupons while customers are shopping
in a store 11% 13%
User manuals or other product information and
instructions 11% 16%
Gift registry creation capabilities on a mobile device 9% 8%
Price comparison information 7% 8%


Topics to be tackled…stay tuned

 Wi-fi implementations in store
 Store associate usage and other store deployments of
mobile devices
 Mobile payments
 Mobile investment levels


Thank you.

Sucharita Mulpuru
smulpuru@forrester.com

@smulpuru

© 2009 Forrester Research, Inc. Reproduction Prohibited

Practical Mobility in Retail
- Design for Success
Chris Dean
Kony Solutions, Inc.
chris.dean@kony.com


Kony Overview
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Company Founded Launch Positive Topline Growth Company
Milestones
KonyOne: B2C + B2E
Releasing in Next Six Months
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Platform - One Platform - Native – all channels - Tablets Multi-Channel Desktop Web support
- One Language - Hybrid - Kiosks
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Customers Volume Industry Awards
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• 3 of the top 5 U.S. airlines • Across millions of consumers & employees • Gartner Cool Vendor
Impact •
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“Change Once, Change Everywhere”
Alternative
solutions
Effort New Functionality
Level
Add Security
Launch
Add Languages

Custom App +
Mobile Web
Update Features
40% – 70% TCO Savings
OS Update

Time

MOBILE RETAIL DESIGN


Mobile Web vs. Native – Industry Avgs

 More channels = more customers
 Mobile web represents half of all traffic
 Native apps together also represent half of traffic
 Adding any channel permanently increases visits –
some customers will still only interact with you in a
particular channel

 Conversion rates vary by channel
 iPhone native apps 30% more
than mobile web
 Rates likely to dramatically change
with short notice

35

Mistakes in Mobile Retail

• Not solving pain points for the consumer
• Starbucks, for example, was reducing in-store POS times, not
maximizing loyalty card adoption with its app
• Siloed mobile efforts
• Consumers – loyalty or not – want a ‘joined-up’ experience
across channels, and want to interact with you the way they
want, not the way you want
• Under-resourced team
• Mobile isn’t going anywhere. ‘Well, let’s try it and if it doesn’t
work at least we tried’ is not a strategy
• Transactional or Informational ?
• Driving consumers to transact is often incompatible design-wise
with a brand awareness/informational app

36

Mistakes in Mobile Retail (cont’d)

• Poor Design
• Apps are important but are currently being designed and
deployed poorly by a many retailers
• Reasons for regular and ‘sticky’ engagement are few
• Gamification elements missing
• Loyalty programs are chunky
• Basic, Intermediate, Advanced ‘tickles’ and rewards
• Few mobile-specific, well integrated campaigns
• Consuming campaigns and offers should be seamless
across all digital channels
• Disconnected experiences across channels
• Consistent information, experiences and ‘remember me’
lacking. Apps different device-to-device


Gamification & The Changing face of Apps

How long to reach 1 million users ?

AOL took 9 years

Facebook took 9 months

DrawSomething took 9 days


Design Principles for Personalization
 Look-and-feel – 70/30 rule
 Implement visual appeal
 Color coding, visual clues, icon usage and branding
 Homogenous design principles
 Keep it simple - Less text, single way to do things, intuitive navigation/flow
 User awareness – Maintain context ; remember me, minimize user entry
 Preferences
 Let user create customized experience
 Template preferences based on user type – defaults
 Temporal/Spatial/User awareness – Date ; Time ; Location ; User ; User type
; User’s process step
 Local data storage

39

Release Options and Challenges
 Big Bang – mobilize all or most desktop web features at launch
 Market changing during development
 Complexity risks delays
 Risk releasing nothing
 Agile – quickly release a ‘table stakes’ mobile version
 Initial release risks becoming the only release
 Maintenance challenges cannibalize innovation
 Device variations increase complexity
 Offering could fall behind
 Wait and See – watch and learn from your competitors prior to investment
 “Fast followers” difficult to catch up
 Difficult to leapfrog the competition
 Hard to gain experience
 Make similar mistakes
as early movers
 Lose customers

40

KONY FOR RETAIL


Kony Mobile Retail

 Complete Secure Retail Solution
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 Highly Brand-able
 Social Media Integration
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 Full Channel Support
 Native Mobile Devices
 Mobile Web
 Tablets

Reach All Your Customers
42

QUESTIONS?

More information on www.kony.com/resources
www.kony.com
sales@kony.com

43

Forrester-Kony: The State of Mobile Commerce for Retailers Today

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