mobile ecommerce is on the rise

Mobile commerce is a $230 billion opportunity which is set to open up to smaller businesses in a big way over the next few years.  This week we’re chatting with Ryan Smith of SandBox Commerce to learn about commerce in the mobile app space.  Ryan and his team are one of a few startups doing the leg work to democratise commerce in the mobile app space. Read on for insights from the front-lines.

Tell us a little about yourself and SandBox Commerce

Sandbox Commerce is the only way to seamlessly turn an existing eCommerce store into a smartphone app. Mobile commerce is growing far faster than any other segment within the retail sector:

  • 54% of mobile transactions take place within retail apps
  • Apps convert at 3x the rate of mobile web
  • The average order value of an app is 40% higher than mobile web.
  • None of the major eCommerce platforms (Shopify, Etsy, or BigCommerce) have a workable app strategy for individual merchants.

SandBox Commerce allows any retailer to build and deploy their app in less than a week. They then leverage their mobile commerce expertise to offer turn-key solutions and services to engage, market, manage, and grow the app.

I am a co-founder and Head of Product for SandBox Commerce. Shortly after getting my PhD, I decided I wanted to make things that change the world instead of talking about it in a classroom. That’s when I decided to get into startups. I’ve done a number of startup product and operations roles for the past 8 years, including working on agency projects for Groupon and OpenTable, which sparked my interest in the eCommerce space. I’ve been building products brands love ever since.

How do mobile apps fit into the commerce market as a whole?

eCommerce has been one of the fast growing spaces in tech since the 90s. This has come to a head with services like Shopify and BigCommerce who have democratized access to these technologies. Now any person can get a full blown eCommerce presence up and running with very little barrier to entry.

Mobile commerce is a relatively new part of the space but is growing in leaps and bounds. In 2017, mobile commerce is expected to be a $320 billion industry. What’s interesting about this stat is that this much growth and revenue is being driven by 2% of retailers who have had the time/resources to implement a mobile app solution. Therefore, there’s a lot of opportunity for mobile commerce to grow into a trillion dollar industry as more and more retailers are able to adopt mobile apps as solutions like SandBox Commerce are able to remove the previous barriers of entry to the market.

Let’s start with the basics of how mobile is stacking up against eCommerce:

US mobile commerce sales grew from 24.6% in 2014 to 29.7% in 2015

IR 2016 Mobile 500 Guide — Mobile is growing

Mobile is showing substantial year over year growth and is becoming a major portion of eCommerce sales.

mobile commerce is estimated to reach $638 billion in the US in 2018

mCommerce is $320 billion opportunity in 2017

So with the percentage of mobile commerce sales growing in leaps and bounds against eCommerce sales as a whole, there is a lot of money on the table for retailers. Yet, what’s interesting about this statistic is that only 2% of retailers have a mobile app. SandBox Commerce’s mission is to democratize access to this market opportunity by making it easy for all retailers to build, deploy and manage amazing mobile commerce application experiences for their customers.

Why is mobile commerce growth so explosive? Retailers’ customers are asking for it.

Smartphone users spend 81.5% of their time looking at apps but just 18.5% in web browsers

Mobile Drives Opportunity

As you can see applications are dominating mobile websites for retailers in terms of engagement. Consumers find it easier to look for directions, receive messaging from brands, check-in to locations, and perform other functions while using a retailer’s mobile app. Consumers want convenience, security, simplicity and native functionality available via mobile in their shopping experiences.

Apps allow: 1 click purchasing, push notifications, geolocation and personalisation

Reasons why Consumers want Apps

What is consumer behavior like when it comes to the mobile space?

There is a shift taking place in how consumers shop online – this shift is moving consumer behavior more and more into the mobile space. This shift is also largely occurring across demographic lines as millennial shoppers are the ones who are leading this trend. Millennials represent ¼ of the US population (80 million individuals) and have a projected annual buying power of $200 Billion. In the US, 83% of Millennials own a smartphone, and an extraordinary 18% are mobile-only shoppers, meaning they do all their online activity via mobile devices.

This is truly a mobile first generation. They spend more time on mobile apps than any other generation with an average of 75 hours of mobile app usage each month. This generation is also more likely than other generations to make purchases via mobile. Retailers cannot ignore this generation and must talk the talk and walk the walk.

Retailers need native mobile apps to appeal to the hearts and wallets of these consumers. It is no longer enough to have a responsive site or a non-native app (desktop website wrapped up as an app). Millennials crave compelling content; they want promotions created with their interest (and not their wallet) in mind. Millennials also care about convenience and want their shopping experiences to be contextual, based on what their friends are talking about, where they are geographically, and what their search/purchase history is.

Apps give retailers a platform to reach these engaged consumers via storytelling vs. product pitching. These consumers want a compelling reason to return and engage with the app. They want authentic and personalized content. If they feel bombarded with irrelevant content and offers, they will uninstall the app and move onto another brand or retailer that better understands them. 36% of Millennials have made a decision whether to buy from a company or switched companies based on the mobile app experience.

And it’s not just millennials who are shifting the behavior and demographics of customers on mobile. According to Internet Retailer, “61 percent of U.S. consumers have a better opinion of brands that offer a compelling mobile experience than brands that do not, and 40 percent will turn to a retailer’s competitor based on a bad mobile experience.” 84% of shoppers consult their app at least once during the customer purchasing journey and actual in-app purchases increase by 54% last year.

What are three reasons why retailers should adopt a mobile app for their store?

SandBox Commerce has repeatedly seen the following 3 reasons be major driving forces in why the major retail brands have invested in native app experiences for their customers.

  1. Loyalty (Repeat Engagement) — Build brand loyalty because customers are increasingly looking for their favorite brands on their home screen. You’ve earned your customers business and you should keep them engaged via rewards and coupon programs. Also, use enhanced and more personalized messaging to fine tune your marketing message down to the individual.
  2. Increase Sales — Apps allow you to add a new sales channel and increase monthly revenue. 40% of eCommerce sales happen on mobile. This is because push notifications and geo-targeting allow you to target the customer in a contextual and personal matter at the right time of sale.
  3. Improve UX of how customers interact with your brand — Apps provide the user experience your customers have come to expect from technology. From one-touch payments to beacons to social sharing and selling, having an application allows your users to take the most advantage out of what their phones offer. Join our community and scale with us as we work week after week to deliver features that keep your brand on the forefront of mobile commerce technologies.

In what ways do apps enhance a customer’s experience?

Personalization and predictive shopping – the app “knows” a user is interested in a certain brand or product and can automatically send updates about pricing information or availability without the user having to ask about it. This hits the user with the right message at the right time, increasing conversions. Beacons add a geographic component to this personalized data and can target a user based on their location to make better shopping decisions. Mobile payments offer easier, more secure solutions to credit cards and help increase customer experience and cut down on fraud. Lastly, I’m connected socially to others in the brand’s community that can enhance my shopping experience.

What are some examples of retail brands with successful apps?

Sephora is at the forefront of testing out new technologies on mobile. An example of this is their release earlier this year of virtual artists that allows app users to virtually try on 3,000 shades of lipstick.

Chubbies talks the talk with their consumers and leverages native app functionality such as push notifications to engage their users with humor. They have done everything from sending push notifications with references to Point Break to notifications entirely in pig latin.

Starbucks’ mobile app is the hub of its My Starbucks Rewards loyalty program. Millennials are very loyal to brands they love and Starbucks has made it easy to order and pay via its app and incorporated free music and app downloads.

What makes apps special compared to chatbots, AR/VR, voice and other shopping user experiences that technology is making possible today?

There’s been a lot of talk here, there, and other places regarding a post-app economy run by bots, conversational commerce, and virtual reality worlds. However, SandBox Commerce thinks that these arguments run counter-intuitively to what we’re seeing in the retail space. We are seeing retailers use apps as a hub of information and data through which they can provide individuals with a tailored, personalized look at how they interact with that brand. The general store experience of brick and mortar shopping was disrupted by the operating costs and efficiency of eCommerce; eCommerce is being disrupted by the personalization and customization that mobile offers individuals. It’s taken mass selling down to the individual level if retailers can harness the correct information. Therefore, we think it’s more likely that we’ll see the App as a company’s hub in the new economy, with emerging technologies as user experiences that pull from that central hub’s data to deliver the best contextual form of commerce for the situation.

Conversational commerce is great for short-order transactions, food delivery, etc but often times fall short if you’re not confident in what you’re shopping for. Browsing experiences, more robust interaction with shopping carts, and loyalty efforts fall short in a conversational UI. We think that bots will supplement and automate some of the mCommerce ecosystem (especially customer support) but will still rely on more fully-featured apps for more robust shopping experiences. VR has promised us virtual shopping malls for years now and that technology gets closer every day. Yet, even the VR companies are finding the best way to create content and headsets around the mobile phone. This focus on democratizing access to VR through the mobile device and cheap headsets such as Google Cardboard shows that VR will first be a mobile technology that relies on apps to power experiences.

Therefore, we think it’s more likely that our unbundled and increasingly mobile world will rely on the app bundle as the central point of interaction with the customer, while still providing new ways to mediate those interactions with the latest technology. Apps that are able to deliver those engaging experiences are the ones best poised to take the mCommerce market by storm. We hope you use SandBox Commerce as your sandbox for easily, cheaply, and efficiently modeling new customer engagement experiences through mobile application development.

Moderator: How can a retailer get started building an app today?

There’s a couple of options available to retailers today, even though we firmly believe there’s only one right answer in today’s mobile commerce environment (that being SandBox Commerce). One option, which is unsustainable for retailers and largely responsible for many retailers deciding to not have apps today, is to go get it built by a mobile app development or marketing agency. This may get you the end product you want but on average you’re going to spend $75,000 and 3-6 months per platform for development. At the end of that process, you don’t know whether the app is going to increase engagement for your brand.

A second option is to hire developers to do your mobile app in house. This can be a key strategy for retailers looking to build intellectual capital as IP that can be leveraged in the future. However, this also takes a substantive budget and often leaves retailers outside of their wheelhouse. There is a lot of training and development risk.

The least risky and best solution is for a retailer to use SandBox Commerce. SandBox Commerce gives non-technical retailers a 10 step platform for creating and launching a mobile app in less than a week. After you’re launched in the app stores, SandBox Commerce provides you with the marketing tools necessary to see your app grow and succeed. We are the best way for a retailer to open up the mobile selling channel today and start seeing success with it!

Co-founder and Head of Product for SandBox Commerce – the easiest way for a retailer to create native mobile apps that engage and convert shoppers.

Written by EcommerceRVW
EcommerceRVW is a dedicated Ecommerce Blog bringing you regular ecommerce articles, reviews, case studies and guides. We're passionate about helping ambitious store owners take their business to the next level.