Mobile behind e-tail’s bigger share of retail sales
New research from Forrester concludes that mobile devices (smartphones and tablets) will be used to transact some $114 billion in sales this year in the U.S., with tablets accounting for $76 billion of the total. Today, mobile represents 29 percent of all e-commerce sales and that percentage will grow to 54 percent by 2018.
Mobile will be a major driver in the growth of e-commerce, according to Forrester, which projects that online sales will grow at an annual clip of nearly 10 percent, grabbing 11 percent of all retail sales by 2018, up from eight percent last year.
It’s clear from the numbers that even with double-digit annual growth, e-commerce is a long way from conquering retail. In a blog post, Forrester analyst Sucharita Mulpuru lists "the three biggest myths" around the growth in e-commerce sales and its effects on conventional retail stores:
- Retail real estate is dead. Good properties continue to attract tenants and consumers.
- Stores are dying. New concepts are replacing those that are worn out.
- No one goes to malls anymore. Pretty much the same answer as #1.
"The web keeps doing what it has always done well," writes Ms. Mulpuru. "It provides huge assortments of products, at comparable, often lower, prices than physical stores, with 24/7 access and often free shipping."
Discussion Questions
How high a percentage of total retail sales do you expect e-commerce to eventually reach? How do you see the ubiquity of mobile devices affecting e-tail and retail sales over the next five years?
Here’s an answer to the first question (e-commerce penetration to total retail sales)…”It depends.” Aside from pure-play companies like Amazon, most omnichannel retailers would like a higher percentage than they have right now, especially laggards like Target and JCPenney. But those same companies need to consider how to drive more productivity out of their brick-and-mortar locations using e-commerce as a tool. Just closing stores is not enough.
Briefly, on the second question, there is no question that mobile devices are rapidly overtaking the PC or laptop as the “computer of choice.” This has huge implications for companies’ e-commerce strategies, along with every other way in which consumers buy goods and services.
I believe that customers don’t care about platforms, they care about products, price, access, experience and service.
If e-platforms can deliver those five aspects of retail transactions better than physical stores, they should pick up most of the marbles. If not, they won’t.
I also think it all depends on where in the world you sit. E-commerce clearly has an edge in developing markets, for example, or markets where consumers don’t have excess to disposable time to shop.
As to the second question, clearly any platform that enables digital sales will enable (and therefore increase) digital sales.
I think we’re drawing the wrong correlation here. Certainly ecommerce sales will continue to rise, but the shift to mobile is more about the death of the PC as a consumer device than it is about driving business.
I suppose the ability to buy from your couch rather than an office chair is something, but mostly I think these are separate events.
The computer is being replaced by tablets and large format phones.
Ecommerce upward trajectory will continue.
And I agree with Sucharita. The store is not dead either.
The convenience of e-commerce in general, and mobile commerce in particular, needs to be balanced with security concerns. As more companies change the format of pages to display well on mobile devices, and as more people use their mobile devices more often, retails will increase unless security breaches continue to happen. Convenience is a powerful motivator, but so is fear of identity theft.
E-commerce certainly has more room to grow as a share of total retail sales, and mobile as a proportion of e-commerce sales. What’s unclear, though, is the level at which each channel (physical stores vs. e-commerce) influences sales in the other (i.e. webrooming and showrooming). Because of this, I’m not sure that it’s a valid proposition to look at each channel in exclusivity.
Regarding mobile, I would argue that while it’s more a question of platform preference for large shares of consumers, the fact that minority groups such as Hispanics embrace mobile in greater numbers than broadband suggest opportunities for retailers to bolster e-commerce sales with this cohort.
It’s interesting to see that tablets are combined with smart phones to illustrate the share of e-commerce sales that are represented by mobile devices. As others have commented today, tablets are often a substitute for a PC or laptop. So the sales they account for often come from the “traditional” process of e-commerce transactions.
My initial reaction to the article was that I’m surprised that e-commerce sales are not a higher percentage of retail sales. But mobile devices (excluding tablets) will probably not be the drivers of e-commerce sales. The size of the screen and the formats of the websites on a mobile device (excluding tablets) will probably prohibit some of the transactions.
On the other hand, sales with mobile devices at vending machines are probably gaining traction at a faster clip.
TV is dead! 46% of 18-34 year olds use mobile device as primary screen. Well, that’s the headline in a blog post I made recently. Also, mobile and social are driving 36% of CPG in-store retail sales. That’s right, mobile is helping sales IN-store. For the foreseeable future, I see physical stores being the “outlet” for the need to touch, smell, etc., products in ways eCommerce shopping cannot.
I expect retail business models to continue to bend against the winds of technology innovation and consumer demands. I think these changes will meld physical with the e-com, m-com, and other channels to a degree that we all stop talking about omni, multi, mobile, etc. Over the next 5 years, consumer devices and the use of them will continue to have a dramatic affect on retail environments and channels of all types.
Just this week, I used my mobile phone to make a dinner reservation for Mother’s Day at a restaurant at a local mall. While strolling through the mall after dinner, we encounter at least half a dozen people we knew and enjoyed the opportunity to chat.
No doubt that the percentage of e-tail sales will continue to increase, but it will never come close to usurping retail sales on a grand scale. The physical marketplace is more than a place to buy and sell. It serves as a hub of social activity where people have traditionally gone to meet friends, dine or seek entertainment.
A mobile device is just a tool that enables shoppers to more easily locate and purchase desired items. Some of those transactions will occur digitally, some will take place in the store or a combination of both. Some retailers like Starbucks are providing apps to enable their customers to make purchases at their locations with their mobile devices. Does that count as an e-tail or a retail sale?
While it’s good to measure the impact of mobile devices on sales, retailers should always strive to create the optimal customer experience.