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In depth research of the mobile commerce market in March 2011
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The Shopping Mindset of the Mobile Consumer
1.
The “Shopping“ Mindset of
the Mobile Consumer By Lauren Freedman President, the e-tailing group March, 2011 Sponsored By: www.shopcoffeetable.com Bringing America’s Best Retail Catalogs to the iPad.
2.
Table Of Contents I.
Introduction .......................................................................... pg.3 II. Survey Methodology ......................................................... pg.4 III. Smartphone Findings ..................................................... pg.5-9 IV: Tablet Findings ............................................................ pg.10-16 V: The Coffee Table Story .................................................. pg.17-18 VI: About The Companies ..................................................... pg.19 www.shopcoffeetable.com pg. 2 Bringing America’s Best Retail Catalogs to the iPad © Copyright Real Valuable LLC 2010-2011
3.
Section I: Introduction The
e-tailing group has had the good fortune to participate in the growth of ecommerce over the last 16 years and today we are thrilled to witness the power of mobile devices and their growing importance for both consumers and retailers. The following facts justify that significance and merit merchants’ attention. • By 2013 more mobile phones will be shipped globally Involved in this emerging market, Coffee Table, (having than desktop and laptop computers combined (Mobile recently deployed an aggregated catalog app, (where Internet Retailer Summit) consumers can preview and buy from an array of catalogs) commissioned the e-tailing group to explore consumer • Mobile and social made strong inroads on Black Friday browsing and buying behavior relative to smartphones and 2010 when consumers using mobile devices accounted tablets. By taking a thought leadership perspective, they for 5.6% of visits to retail websites (Coremetrics) believe that greater understanding of mobile consumer behavior will grow this market exponentially for all. • Mobile commerce sales in the United States are expected to hit $5.3 billion in 2011, up 83% from a year ago, The 10th Annual e-tailing group Merchant Survey, according to Barclays Capital completed by 200 merchants in 1Q 2011, reinforces the important role merchants expect mobile to play in their • ABI Research projects that in 2015, shoppers around the businesses and the lives of their customers. In fact, 77% world are expected to spend about $119 billion on goods responded that they will be investing in mobile in 2011. Half and services purchased via mobile phones; representing of those merchants plan to spend $50K or less and 15% will about 8% of the total ecommerce market be spending over $100K with the remainder falling in the middle-ground. Traffic from mobile browsers and mobile • A majority of the respondents to a 2011 Adobe survey – applications is growing with single digit percentages 62% – said that they have bought physical goods from reported while revenues follow suit, most often in the low their smartphone in the last six months single digits. The customer is leading the charge when it comes to mobile, This white paper will compare contrasting consumer making it imperative that we understand how they desire behavior between the smartphone and the tablet. In to use these devices. Such knowledge will be essential particular, we will explore interest in shopping via tablets for driving revenue as well as positioning marketing and and present a discussion of the aggregator opportunity merchandising strategies to optimize consumer interest. that companies like Coffee Table and others provide. Just as in the early days of ecommerce, there are a plethora It is important to remember that we are still in the early days of stats on mobile device ownership and marketing of mobile with unprecedented adoption projected over capabilities. However, there is only limited data on customer time. Just as ecommerce has become ingrained into our behavior and preferences regarding both smartphones and culture, so too will mobile shopping transform consumer tablets from a browse and buy point-of-view. shopping behavior forever. www.shopcoffeetable.com pg. 3 Bringing America’s Best Retail Catalogs to the iPad © Copyright Real Valuable LLC 2010-2011
4.
Section II: Survey
Methodology An online survey was fielded in February, 2011 targeting shoppers who spent $250 or more online annually; currently owning a smartphone and/or a tablet where ownership and activity were as follows: Mobile Devices Device Ownership Type of Usage by Device As the charts below indicate, mobile users reflect device ownership with slightly older and higher income individuals who tend to be well educated. Retailers have not lost sight of these facts, looking at this audience as one likely to spend significantly in the coming years. Demographics Age Gender Household Income www.shopcoffeetable.com pg. 4 Bringing America’s Best Retail Catalogs to the iPad © Copyright Real Valuable LLC 2010-2011
5.
Section III: Smartphone
Findings Topline • Room for improvement in mobile shopping experiences exist as 68% reported less than a “very satisfied” experience citing usability, security, and connectivity challenges • Shopping and aggregator app usage is relatively limited • Mobile’s role in locating stores, products, and competitive prices prior to store visits and while in the store is significant and a “game changer” relative to shopping behavior • 64% of smartphone users have made a purchase on their phone with commodity product categories (Books/Magazines, Music, Tickets) and Clothing/Accessories topping the list • Despite today’s challenges consumers expect to purchase more in the near future App Preference Interestingly, shopping is not a featured category option on the iphone indicating consumer’s likely app interest is limited relative to other kinds of apps. Per our research 57% of consumers surveyed have downloaded individual retailer or aggregator services. Perhaps as more retail apps are introduced consumers will show greater interest but single store usage may prove to be significant mostly for top merchants such as Amazon and eBay. Shopping Apps Downloaded from a Smartphone in the Past Year www.shopcoffeetable.com pg. 5 Bringing America’s Best Retail Catalogs to the iPad © Copyright Real Valuable LLC 2010-2011
6.
Section III: Smartphone
Findings Browse and Buy Behavior Given the “anytime, anywhere” nature of mobile, we felt it was essential to understand how consumers are using their smartphones prior to making a purchase as well as activities they may engage in when visiting retail stores. Just as with websites, the retail locator serves as an important destination in anticipation of store visits. Smartphone users have followed similar trends with frequent usage of store locators seen by 44% of respondents while one-in-three consumers take an aggressive stance when researching. This includes information gathering activities such as checking for sales and specials (40%) and looking for competitive pricing at Amazon (38%) or at other retailers (32%). Strong browsing of an online store for product of interest (37%), and seeking out the always popular product ratings and reviews (36%) play an important role in this early shopping stage. Current Usage of a Smartphone Prior to Visiting a Store Over the Past 6 Months www.shopcoffeetable.com pg. 6 Bringing America’s Best Retail Catalogs to the iPad © Copyright Real Valuable LLC 2010-2011
7.
Section III: Smartphone
Findings Not surprisingly utilization of smartphones within the retail store assumes an “early adopter” mode. All indications suggest that particularly for the younger customer such behavior will soon be commonplace and retailers who don’t adopt in-store mobile capabilities will be at a severe disadvantage. Saving money sets the tone for commonplace behavior such as accessing promotional coupons (31%), looking for competitive pricing on Amazon (29%), and via other retailers (26%). With retailers limited by physical space constraints, in-stock product and broader online assortments, consumers are taking advantage of their phones to research options (27%). Product ratings and reviews that serve as confidence builders are seen as valuable to shoppers (26%) as well. Current Usage of a Smartphone Prior to Visiting a Store Over the Past 6 Months www.shopcoffeetable.com pg. 7 Bringing America’s Best Retail Catalogs to the iPad © Copyright Real Valuable LLC 2010-2011
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Section III: Smartphone
Findings Browse and Buy Behavior • Browsers are evenly divided between heavy (daily/weekly) at 22%, monthly (28%) and intermittent (25%) or no usage at all (25%) • 400 (64%) of these consumers made purchases on their smartphones in the last six months; one-third did not make any purchases in this manner • Books/Magazines (37%), Tickets (31%), Clothing/Accessories (26%), Music/DVD/Videos (26%) were purchased by one-in-four individuals in the past six months • 84% will spend somewhat more to about the same as current levels via their smartphones this year As a result of usability challenges and the early state of mobile shopping, it’s interesting to see that only 32% are very satisfied with their mobile shopping experiences while 41% were somewhat satisfied. Level of Satisfaction from Mobile Shopping www.shopcoffeetable.com pg. 8 Bringing America’s Best Retail Catalogs to the iPad © Copyright Real Valuable LLC 2010-2011
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Section III: Smartphone
Findings Shoppers suggest that smartphone usability is still awkward (49%) while credit card security (36%) and connection speeds (31%) top the list of challenges for retailers to overcome. It is important to remember many of the issues cited in the chart below to ensure that satisfaction scores ascend over the next year. Superior experiences and additional retailer participation will have the greatest influence on time spent shopping via one’s mobile device. Reasons for not Shopping More on Smartphones The Bottom Line: The smartphone is an important device for consumers in pre and post-shopping behavior that still faces challenges to be a desirable shopping tool for the masses. www.shopcoffeetable.com pg. 9 Bringing America’s Best Retail Catalogs to the iPad © Copyright Real Valuable LLC 2010-2011
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Section IV: Tablet
Findings For the past year I have been interviewing retailers on a range of topics where mobile initiatives have been in the forefront. I was struck by how many times retailers have discussed their iPad traffic, high penetration of the Safari browser, and the purchasing patterns resulting from tablet usage. They speak to the importance of this well-heeled group of consumers as a customer base they covet. Among the most interesting aspects of our research were the consumer’s perception, satisfaction, and usage of their tablets in contrast to smartphone behavior for shopping. A number of charts in this section offer a comparison of consumer sentiment across the topics of discussion. The tablet’s ability to better showcase product and conveniently deliver a more compelling experience suggests its continued ability to foster revenue generation for retailers. Topline • Tablets are perceived as ideal tools for researching products and browsing followed by purchasing • Aggregator apps and single retail downloads see limited usage • Browsing and buying patterns show higher concentration of buyers in the tablet segment as 68% of tablet owners vs. 48% of smartphone owners made a purchase confirming the tablet’s strong positioning as a shopping tool • 78% of tablet browsers and buyers have purchased with favorite stores dominated by Amazon followed by Best Buy, eBay, and Target • Shopping satisfaction is stronger on the tablets than smartphones • Core capabilities of Coffee Table are seen as valuable by tablet owners; browsing favorite catalogs and receiving alerts top the list App Preference To date, aggregator services are the shopping apps most frequently downloaded to tablets yet despite this they still see limited usage. www.shopcoffeetable.com pg. 10 Bringing America’s Best Retail Catalogs to the iPad © Copyright Real Valuable LLC 2010-2011
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Section IV: Tablet
Findings On Your Tablet, How Often Have You Downloaded the Following Apps? Browse and Buy Behavior The tablet’s portability and ease of use explains why consumers see them as ideal tools for researching products and browsing followed by purchasing. Browsers were receptive as 59% agreed that these devices would serve as an ideal tool to research products before making a final purchase. From there it was important to understand if shoppers would be comfortable utilizing catalogs in this environment. More than half (56%) believed the tablet to be an ideal tool for browsing their favorite catalogs and retailers while 49% thought the device would be ideal for purchasing. This is quite strong given the short time tablets have been on the market and an exciting opportunity for the retail community. www.shopcoffeetable.com pg. 11 Bringing America’s Best Retail Catalogs to the iPad © Copyright Real Valuable LLC 2010-2011
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Section IV: Tablet
Findings Agreement With the Following Statements Regarding an iPad or Tablet. Digging deeper into a specific Coffee Table application where catalogs are aggregated under one umbrella, consumers expressed strong sentiments. Browse my favorite catalog and receive alerts on private sales, promotions and products topped the list (67%) of how they might use their tablets. A free marketplace to discover new catalogs (64%) and receipt of new catalogs when available (64%) followed close behind. Single cart checkout was favored by 60% of respondents and representative of further desire for control while being able to manage individual catalog subscriptions received a 57% value-rating. All responses bode well for extending shopping interests via aggregated applications. www.shopcoffeetable.com pg. 12 Bringing America’s Best Retail Catalogs to the iPad © Copyright Real Valuable LLC 2010-2011
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Section IV: Tablet
Findings How Valuable Would Each of the Following Functions Be? Tablet users are active from a researching and buying perspective. They appear to use these devices to browse and buy online more frequently than smartphone owners thus we deduce its shopping potential can be exponentially greater. Daily to weekly usage at 29% tablet/22% smartphone and monthly or more (31% vs. 28%) indicate a proclivity for making shopping part and parcel of today’s tablet culture. Frequency of Browsing or Buying Online? www.shopcoffeetable.com pg. 13 Bringing America’s Best Retail Catalogs to the iPad © Copyright Real Valuable LLC 2010-2011
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Section IV: Tablet
Findings Tablet owners use these devices to purchase online more frequently than smartphone owners, moving beyond browsing. One-in-four has made at least 6 purchases in the past six months versus 16% on their smartphones while 39% have made 2 to 5 purchases vs. 30% on smartphones. Time spent coupled with already strong purchase behavior elicits optimism among merchants. Purchases Made in the Past 6 Months? Favorite Retailers/Favorite Products Over 100 different merchants were named as one of the last three stores where purchases were made via a tablet with Amazon, Best Buy, Target, eBay, iTunes, and Wal-Mart topping the list. Others favored included Apple, Barnes and Noble, and specialty retailers such as Staples, Lands’ End and JCPenney. Tablet owners primarily purchased Books/Magazines, Clothing/Accessories, Digital Books, Consumer Electronics, and Computer Hardware & Software. Given their greater propensity to shop, they simply purchased more across most categories. Categories favored for shoppers via their tablet included Books, Clothing/Accessories and Furniture while Tickets and Food skewed higher for smartphone users. www.shopcoffeetable.com pg. 14 Bringing America’s Best Retail Catalogs to the iPad © Copyright Real Valuable LLC 2010-2011
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Section IV: Tablet
Findings Purchased Products or Services from the Following Categories www.shopcoffeetable.com pg. 15 Bringing America’s Best Retail Catalogs to the iPad © Copyright Real Valuable LLC 2010-2011
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Section IV: Tablet
Findings Shopper Satisfaction Shopping via a tablet delivered a more satisfactory experience than shopping via a smartphone. Charting satisfaction of tablet owners versus smartphone users, 88% of tablet owners reported that their most recent shopping experiences via these devices were very to somewhat satisfactory compared to 73% of smartphone users. Satisfaction Level from Recent Shopping Experience Further supporting such sentiments when asked to rate the experience against one another, 69% of tablet owners reported that their most recent shopping experiences via these devices were significantly (39%) to somewhat better (30%) than shopping with their smartphones. Shopping Experience Rating of Tablet vs. Smartphone The Bottom Line: The Tablet Is Better Positioned To Deliver A More Positive Browse And Shop Experience. Aggregated Applications May Be More Convenient And Stickier For Shoppers To Buy Across Retailers Where Ultimate Satisfaction Is Stronger. www.shopcoffeetable.com pg. 16 Bringing America’s Best Retail Catalogs to the iPad © Copyright Real Valuable LLC 2010-2011
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Section V: The
Coffee Table Story We concluded our research by attempting to gauge consumer sentiment for Coffee Table’s new app and were thrilled to see that for more than one-half of tablet owners convenience would be core to the top-two reasons for becoming a “Coffee Table” user followed by time-savings via one-click (47%) and environmental consciousness (41%). The convenience of downloading an app where one can view catalogs and checkout across multiple retailers is a promising model consumers will be sure to embrace. Coffee Table is Exciting in the Following Ways www.shopcoffeetable.com pg. 17 Bringing America’s Best Retail Catalogs to the iPad © Copyright Real Valuable LLC 2010-2011
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Section V: The
Coffee Table Story An Innovative Solution Exists That Extends Reach Through an iPad Catalog Marketplace Coffee Table offers iPad users a virtual mall to browse and purchase from the catalogs of their favorite retailers. As an eCommerce enabled catalog aggregator, Coffee Table turns inspirational window-shopping into impulse purchasing by converting rich media catalog assets into real-time purchasing tools. Through an intuitive two-touch process, consumers are able to purchase across multiple catalogs, which is almost frictionless compared to navigating multiple checkout systems that require a full keyboard in a traditional retail website. Catalogs are automatically updated by pushing them out to shoppers’ mobile devices as new issues are released. Coffee Table represents an exciting “green” way for consumers to shop as tablets continue to proliferate. Coffee Table merchants extend both their brand reach and customer relationships by increasing sales with favorable ROI by participating in our marketplace. To learn more about how to be fill contact us at contact@shopcoffeetable.com or visit our website at www.shopcoffeetable.com and our retail department will be in touch with you to setup a demo. www.shopcoffeetable.com pg. 18 Bringing America’s Best Retail Catalogs to the iPad © Copyright Real Valuable LLC 2010-2011
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Section VI: About
The Companies About the e-tailing group The e-tailing group is a niche e-commerce consultancy that helps merchants deliver the right customer experience on their websites and across all of their channels while adeptly assisting technology companies to create and execute go-to-market strategies that simultaneously educate the retail community and deliver cost-effective thought leadership and lead generation. For more information on this research or the e-tailing group, visit their website www.e-tailing.com or contact Lauren Freedman at LF@e-tailing.com. About Coffee Table Coffee Table offers iPad users a virtual mall to browse and purchase from the catalogs of their favorite retailers. As an eCommerce enabled catalog aggregator, Coffee Table turns inspirational window shopping into impulse purchasing by converting rich media catalog assets into shopping tools, allowing users to purchase across multiple catalogs through an intuitive two-touch process. The customer experience is enhanced by having catalogs digitally pushed to shoppers’ mobile devices as new issues are released. Additionally, Coffee Table allows retailers to send catalog recipients time-based flash sale promotions through push notifications. Coffee Table represents an exciting “green” way for consumers to shop, much in the same way ecommerce revolutionized traditional mail order retail. Coffee Table merchants extend both their brand reach and customer relationships by increasing sales all at a predictable and favorable ROI. To learn more about getting your catalog on Coffee Table, email sales@shopcoffeetable.com or visit www.shopcoffeetable.com for more information. www.shopcoffeetable.com pg. 19 Bringing America’s Best Retail Catalogs to the iPad © Copyright Real Valuable LLC 2010-2011
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