I got my first mobile phone, a Motorola flip phone, sometime around 1995. The technology had been around for about 20 years at that point, but the phones weren’t in widespread use in the US. They still suffered battery issues – short charge life, and it would get so hot it would burn your ear after five minutes or so. And the reception was spotty once you were outside larger urban areas, which limited its use.
Today’s mobile phones are a far cry from those dinosaurs. More like mini-computers, they can stream live music, TV and movies. They’re video game systems, word processors, dictionaries, calendars, maps and personal assistants. We use them to pay bills, find information and shop.
When the smartphone was first introduced, users were limited in what they could do on the web, but now retailers are much better at designing their sites for commerce, so consumers are rapidly getting on board. According to the UPS Pulse of the Online Shopper™ by comScore and UPS, the growth in mobile (defined as mobile phone or tablet) shopping grew 45% year over year in Q4 2016 versus the same quarter in 2015.
The impact of mobile devices is even more evident when you look at mobile’s share of consumer discretionary spending. Gian Fulgoni, co-founder and CEO of comScore, told IRCE attendees that “digital commerce (shopping via mobile or tablet) now accounts for one in every five dollars of discretionary spending in the US, and there is no sign that this is slowing down.”
That’s pretty dramatic growth in a single year. And that’s just one of the extraordinary stats in the study that Fulgoni and Louis DeJianne, director of retail marketing at UPS, presented at IRCE in Chicago. The report always has outstanding data and insights, so I found myself a front-row seat.
Let’s Set the Stage
According to the US Department of Commerce, total discretionary income grew by about 4% in Q1 2017. In the same period, ecommerce (buying from a laptop, desktop or mobile device) grew 14% YOY and total retail sales grew 5.1%. In Q1 2017, ecommerce sales accounted for 8.5% of all sales.
Brick-and-mortar locations are still important to retail – but simple solutions aren’t cutting it anymore. Stores need to create customized experiences with quality products that customers can touch and engage with. They need to employ customer service staff that are knowledgeable, available and invested in delighting the consumer from the moment they walk in the door until they leave. It sounds simple, but that’s what sets a store apart – and will prevent them from being one of the eight thousand stores projected to close this year.
Retailers should keep their eye on these shifts in consumer behavior and plan strategically. Here are my top three takeaways from their report:
Beware the Bright Shiny Object
In 2016 and the first half of 2017, we heard a lot about smart speakers, smart dressing rooms and the potential for AR/VR. So I wasn’t surprised that these researchers took a look into consumer behavior and expectations surrounding advanced technologies. They shared their findings surrounding the rise of smart speakers – is it simply a fad or new tech you should get on board with? You decide, but the data suggests consumers are ready for a new channel.
ComScore collects some of its data via a special computer connected to the router in nearly 12,500 Wi-Fi-connected households. Through this computer, they see the connected devices each family uses to interact with the internet. Some of the more interesting trends they’ve uncovered:
- Eight percent of US connected homes have a smart speaker, and they use it an average of 23 days per month. “We can expect that consumer behavior will be radically different as the kids [in these homes] get older,” theorized Fulgoni.
- The number of connected devices is exploding. Homes with a smart speaker have an average of 12.8 connected devices, including computers, tablets, smartphones, smart TVs, gaming consoles, smart speakers, wearables and streaming boxes/sticks.
- There’s a correlation between the number of children in the home and the number of connected devices. “It’s not unusual to find 20 connected devices in homes with 3 or more children,” explained Fulgoni.
- Today, most people aren’t using the smart speakers to buy things, though Fulgoni expects that to change very quickly. The most common uses include getting answers to general questions (60%), weather updates (57%), streaming music (54%) and setting alarms/timers (41%). Only 11% use the device to order products, and only 8% to order food.
Be Mindful of Shipping and Shopping Preferences
Three in five consumers will abandon the shopping cart at checkout if free shipping isn’t available. According to Fulgoni, “one of the drivers of this behavior is Amazon Prime, which has trained consumers to get two-day free shipping.” He estimated that 50 million US consumers are on Amazon Prime. “That’s putting a lot of pressure – and maybe not good pressure – on retailers to also offer free shipping. I say ‘not good pressure’ because there’s clearly a significant cost to free shipping.” But 74% of consumers rank free shipping as important during checkout. Retailers might consider offering consumers options for it, such as purchase minimums or shipping to a brick-and-mortar store.
Shipping is also a friction point when it comes to returns, with 79% of online shoppers rating free shipping as important when buying online. Fifty-eight percent prefer to make a return to a brick-and-mortar store. For retailers to provide a seamless experience, including a possible return, it’s good practice to include a return label with the original order – the easier and more enjoyable the overall experience is, the more likely the consumer will be to consider that retailer again.
And retailers need to stay competitive, especially now that international shopping is on the rise. According to DeJianne, the reasons are lower price (43%) and unique merchandise (36%). The UPS and comScore findings reinforce research we did last year on global commerce and found that international commerce is up 4% from last year to 47%. In the US, Amazon is the leader. In 2016, 30% of consumers started their search on a marketplace, and 85% of consumers completed purchases from marketplaces. Retailers need to find out why customers are using marketplaces and how they can bring them back to their websites.
Fulgoni says, “Evaluate the path to purchase – buy a product on your site, a competitor’s site and a marketplace. Once you identify the best experiences, try to incorporate those into your customer experience.”
Is Multichannel Going Away?
The way people shop is shifting toward convenience and efficiency. The report found that “shoppers are showing a greater preference for single-channel vs. multichannel shopping. This reverses the upward trend of multichannel shopping, which grew from 36% in 2015 to 38% in 2016.” This could indicate that shoppers are more adept at searching and finding what they want. It could also be attributed to the work done by retailers to improve their online and in-store experiences. One area retailers could continue to focus on is educating their shoppers on what is best found in each channel. What differentiates the in-store experience from the online one?
Don’t Look Around – Your Direction Is Forward
With shifting markets and a never-ending supply of bright, shiny options available, retailers need to navigate toward their true north rather than continually shift with the winds of change. Take some time to understand your business and what you want it to be. If you understand your business, your customers and what they need, you can create a strategy that will delight them, earn their loyalty – and grow your business.