Retailers rely more on mobile sales this holiday season

This is the headline I expect to see this year as retailers in the US, especially, focus more of their sales through mobile devices. As consumers spend more time on their phones, and less in the stores, retailers are preparing targeted strategies to address the emerging ominchannel and online/offline (O2O) opportunity to include m-commerce. In countries that have lower at-home PC penetration it is already the norm.

If anyone saw the recent sales figures from China’s “Singles’ Day” (their equivalent to Valentine’s day and Cyber Monday rolled into one), the massive online vendor Alibaba saw a 54% increase of sales to $14.3 billion in just the one day, with almost 70%  of purchases via mobile phones. Compare that to 2014 US Black Friday/Cyber Monday sales of about $51 billion, and just under 30% done on mobile phones. Retailers in the US have seen a steady rise in mobile device transactions but nowhere near the numbers in other countries. This year will be different.

This year retailers expect that almost 50% of their traffic will be done on mobile devices. One reason is that more bricks-and-mortar stores won’t be open during the holiday, because pressure on retailers to give their employees a day off on the holiday is increasing. Major retailers like Wal-Mart and Target will open late on Thanksgiving and REI, Nordstrom’s and others plan to shut down bricks-and-mortar locations completely. More efforts on virtual mobile and online sales will be one way to replace actual stores being open.

Online retailers are even planning new “traditional” market strategies. In the past, online only retailers initially focused on competing with physical retailers primarily on price, often offering free-shipping as an added incentive to ‘not leave home’.  Physical retailers focused on offering better ‘service’, relying on the instant gratification of walking out with products and betting on consumers wanting to ‘touch and feel’ products before buying to rationalize not trying to compete on price. Retailers are combining both with a focus on O2O is increasing as companies start a new strategy to compete across all platforms and evolve their offerings. For example, Wal-Mart recently changed its store configurations (moving it up front) to allow easier local pick-up of goods ordered online. Amazon just opened up a “real-life” bookstore in a shopping mall so now has a physical presence, challenging its own online-only doctrine! No doubt, the more successful companies will need to have a presence both on the Web and in the malls.

Obviously, these business models are evolving and retailers have yet to hit a clear balance between O2O and mobile commerce needs. In many cases, consumers still haven’t fully figured out their own preferences. So in the meantime, retailers should:

• Quickly embrace O2O and mobile commerce as a long term, fundamental opportunity and balance offerings based on consumer needs
• Focus on the customer for O2O plans, as customer expectations and behaviors are continuously re-shaped by digital and mobile capabilities
• Plan and invest in key technologies such as mobile payments and analytics to gain holistic customer insights, including crash and purchase analytics built right into their apps

As mobile device penetration plateaus in developed countries, the driver of m-commerce will be more about retail offerings, user experience and how these offerings are combined for online/offline  (O2O) access. The next couple years will see many changes in strategy, but expect m-commerce to increase, especially as mobile payment systems mature.

Happy holidays everyone, wherever and however you spend them.