Mobile apps in retail: who needs them?

The lack of guidelines or general wisdom as to which retailers should actually have a mobile app and which shouldn’t can be confusing. 

In this post I’m going to start writing those guidelines myself, if you’ll stick with me.

There is definitely a burgeoning anti-app movement, fuelled in part by the move to adaptive or responsive websites. On top of this, the growth in app downloads is in sharp decline and we seem to be reaching market maturation for apps, in those countries that have highest smartphone adoption.

But what should retailers do? Should some still be entertaining the idea of a new app? There are certainly some great success stories out there. 

Some feel that the consumer has no interest in using many different retail apps, whereas others think the goal of consolidation is often unrealistic, with consumers happier using a range of options. 

Where should apps lie in a priority list of ecommerce to-dos? Which apps are succeeding and which aren’t? How do customer base, product range, internationalisation and other factors affect the decision whether to build an app? 

Well, these are the questions I’ve been attempting to answer. Read on to see what I dug up. If you make it to the end of my investigation, you’ll find my own criteria for apps in retail.

Point one: in general, the novelty of apps is wearing off

Paid apps, for certain, are dying off and account for less than 10% of app downloads. The average price of an app download is $0.06 for Android and $0.19 for iPhone. Data from Distimo has shown that 76% of app store revenue comes from in-app purchases, not from charging for the app right away.

But free apps are also seeing slowed growth.

The ratio of app downloads on Christmas day compared to a normal December day has been declining since 2011, according to Flurry’s analysis of more than 400,000 apps. This indicates the market for tablets and smartphones is maturing to an extent that there are fewer newly mobile users on Christmas day, looking to play with their device and download and test new apps. 

Long-time smartphone users are more comfortable with their devices and apps and less willing to experiment. 

However, app downloads proper are still increasing on Christmas day, just nowhere near as quickly as they have done over previous years. 

This chart explains. 

Point two: the majority rarely shop on their phone, but mobile commerce is still growing fast

Some people are yet to come round to the idea of shopping via phones, but that doesn’t mean there isn’t a trend towards mobile commerce.

Also, people are now more likely to shop via mobile or responsive sites than apps. 

It’s just that we’re perhaps at the tip of the iceberg. Many are shopping from tablets, the biggest device segment over Christmas, and many from smartphones (Schuh Australia reported smartphones as the biggest segment over Christmas).

Of the Christmas app downloads, games represented the biggest category, followed by social, media and lifestyle. Retail wasn’t present in one of the larger categories but that’s to be expected. Games and media apps are simply more popular and more likely to be in the app charts. Retail apps are often only for regular customers.

It should be noted here that many marketers are separating smartphone and tablet traffic and not referring to both together as ‘mobile’. 

But what about apps specifically? Let’s move away from Christmas day now and look further at the market. 

Point three: the converted are certainly…converted. Apps are for regular customers and retention.

A survey from Mobidia shows that 52% of monthly active users of 50 top iOS commerce apps shop through the apps at least once a week.

Ok, it’s a survey of already active users of the best 50 apps, so one to take with a pinch of salt, but this still indicates that those who are using retail apps monthly are doing so with gusto. 

Here’s some more Mobidia data showing some popular apps and their usage by the most active.

In general though, one has to assume that median retail app usage, across all downloads is much lower. But this probably highlights a trend.

Retail apps are often for customer retention and used by regular customers, therefore there’s likely to be a great range in usage, from people who download once and don’t stick, to those who use apps everyday.

Of course, the apps listed above all do different things and this impacts usage. Some are straight ecommerce apps, some are for rewards, deals and coupons.

This is where we have to look at a few separate categories of retail apps and see how they differ…

Point four: mobile payment and loyalty programme apps (e.g. Starbucks) are perhaps the most successful, though many retailers have shunned apps all together.

The responsive website, the standardisation of web design, these are undoubtedly causing many to move away from apps. UK Government Digital Services, as a non-retail example, takes a firm, no-apps stance.

Stand-alone mobile apps will only be considered once the core web service works well on mobile devices, and if specifically agreed with the Cabinet Office.

Those retailers that have decided to go with an app have used many features. These include but are certainly not limited to:

In-store benefits:

  • Check-in, with associated offers/coupons.
  • In-store navigation.
  • Product scanner.
  • Mobile payment and loyalty scheme.

Out of store:

  • Store finder.
  • Product ratings and reviews.
  • Ecommerce functionality.
  • Gamification (short-lived coupons) – e.g. 7-Eleven, Meatpack.
  • Order and shipment notification.
  • Magazine style features and content.

iBeacons from Apple suggests we could be due another step forward in-store, too.

iBeacons will allow more powerful location-based marketing, which may lead to some more snazzy functionality to apps, though it’s again worth bearing in that lots of apps on a consumers phone, constantly searching for location and updating may put a strain on phones and data.

As many commentators have pointed out, Starbucks is one of the few big successes in retail apps and this is because Starbucks has been fully committed in promoting its app as part of the brand experience.

The app isn’t promoted as an afterthought and it definitively changes the customer experience, improving it and making customers more loyal in an already loyal market.

This aspect of loyalty, the app being a loyalty card ‘on steroids’, is evident more and more in apps, with a focus on improved in-store customer experience and rewards.

Of course, there are a few very popular retail apps, often from pure-plays such as Amazon or eBay that stand out, have done for a while and have much broader usage. 

In the case of Amazon and eBay it’s because of their online heritage. This heritage means these pure-plays have designed very usable apps and also have a customer base that is used to interacting with them online and already have accounts.

Point five: are apps only for retailers with unique needs? If so, what are these needs?

Following from the points above, I thought I’d have a crack at defining some criteria for developing a mobile retail app.

Here are a number of rationales for retailers designing an app. With all of them, the key criterion is that users must be regular customers. That’s the thing about apps.

1. Improving in-store customer experience

This is the perhaps the largest category and is best summed up by the Starbucks app.

  • Time and money is available to develop an app.
  • The app build will not delay improvements to other important digital ‘stock’ i.e. website
  • Current stores are already well branded and the customer experiences a unique or characteristic experience already.
  • A loyalty programme, quicker payment.

2. Simplifying customer experience out of store, for niche products sometimes defined by mobility

Here I’m thinking of something like Autotrader, Domino’s or a drug store. Simplification of use on the cellular network is a definite plus for these customers. Use of a mobile app will likely to be of a different nature than use of desktop website.

  • Customer may need the product or be thinking about it specifically when mobile.
  • Customer may be a subscriber to a service already.
  • Ease of payment is still an important factor.
  • The app could provide location based information.

3. Improving the online shopping experience for large and perhaps lifestyle-based product ranges

These retailers will have a loyal customer base that are sometimes mobile, but they may be defined by interrupted purchase paths, perhaps browsing extensively across devices, perhaps browsing increasingly on tablets.

Here, perhaps a mobile optimised website is an alternative solution, but again brands like IKEA have invested in continuing a lovely brand message in an app environment.

This may extend to fashion, but only for strong brands that incorporate extra content (e.g. magazines or features like Nordstrom and Mothercare) within the app.

  • Retailer has a large product range.
  • Products need to be beautifully displayed.
  • A strong brand identity and again commitment to customer experience is evident.
  • Once again, the retailer wants to make storing of customer details and checking out as smooth as possible.
  • Customer service may be important.

4. For big pure plays and supermarkets 

I’ve grouped these together because I feel both may be defined not necessarily by mobility but again by interrupted purchase, tracking of orders etc. These will be the apps used most frequently.

  • Customer uses the retailer regularly.
  • Customer wants to track orders and order history, perhaps repeat orders.
  • Retailer has a massive customer base that see the service as a part of weekly life.
  • Retailer is big but still in a competitive market e.g. groceries where colonising a user’s phone represents a coup.
  • The goal for the retailer is increased conversion and money for dev isn’t an object.

If you have other suggestions of types of apps relevant for retailers (perhaps non-transactional ones?) let me know your thoughts below. I’ll be following this post up with a list of the best retail apps out there.

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Mobile apps in retail: who needs them?

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