KEY POINTS
Mobile has played a huge role in cementing the dominance of what we're describing in this report as the Big Three e-commerce retailers, Amazon, eBay and Wal-Mart. Mobile-only users account for one-fourth to one-third of the total U.S. digital audience for each of these retailers.
Despite all the media attention lavished on these three brands, surprisingly little is said about their impressive mobile statistics. For example, Amazon has more mobile-only users than Facebook in the U.S.
eBay is way ahead among the five largest mobile commerce apps for time-spend in the U.S. eBay's users spend 108 minutes a month on its app.
Wal-Mart's mobile usage gives it a 48% boost over its PC audience size. A full 15% of the U.S. population accesses Wal-Mart.com on their smartphones.
Wal-Mart, eBay and Amazon have built their mobile apps and sites not as extensions of their desktop experience, but as services designed to play to each service's overall strengths, across platforms. eBay privileges user engagement, Wal-Mart convenience, discounts, and in-store features, while Amazon focuses on optimizing user experience.
E-commerce players large and small will follow the Big Three's lead in solving mobile challenges. Many retail sites are still aren't usable across all mobile browsers and operating systems. Shopping carts don't sync across mobile and desktop, and many payment processes are still clunky. There's also the looming threat from reverse showrooming.
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Introduction
Amazon and eBay launched in 1995, and their foundation marks the beginning of e-commerce.
As the Internet grew and Amazon and eBay became more prominent, retail industry observers began to think that malls and big box stores were on the path to extinction.
Some imagined a future in which the lights would go out at bricks-and-mortar stores the world over.
The same anxieties accompanied the rise of smartphones, and the new shopping habits that grew up around them. Consumers armed with mobile phones can price compare at the blink of an eye, and buy something on their phones at a discount even while standing in a physical store looking at the same item.
Showrooming, as this practice is known, became the central concept in many media articles explaining why traditional retail stores and chains were dead.
But the Internet didn't kill bricks-and-mortar commerce, and neither will smartphone-driven showrooming. Some particularly outmoded retail brands are definitely at risk in this era of hyper-informed consumers. But some of the old guard, Wal-Mart to name just one, have adapted well to the new smartphone-centric retail landscape.
Meanwhile, the two e-commerce giants eBay and Amazon have been remarkably nimble in managing the transition from a world dominated by laptop and desktop PCs to this new era of mobile computing. That success wasn't necessarily a given.
Today, they are the two largest e-commerce sites in the U.S., across desktop and mobile. Wal-Mart is third.
In fact, Amazon's websites have the fifth largest total digital population of any U.S. digital property, 162.6 million people. Nearly 30% of these people access Amazon solely on mobile devices, meaning smartphones and tablets.
The three retailers have managed something remarkable. In a world of millions of apps and websites competing for attention, each has carved out a mass audience.
Other tech companies, including Yahoo and Microsoft, have not been able to adapt to mobile as successfully.
In this report from BI Intelligence, we will look in detail at what the "big three," Amazon, eBay, and Wal-Mart, are doing right to win at mobile retail.
Of course, there are many other retailers that have done innovative things with mobile apps and sites, mobile advertising and local-mobile marketing.
But Amazon, eBay, and Wal-Mart have each distinguished themselves by creating suites of mobile-focused services. These complement one another and also work in synergy with desktop e-commerce and in Wal-Mart's case — in-store merchandising efforts.
For all three, mobile isn't just a "sales channel," but a thoughtful effort at using mobile to achieve their goals. Every retailer seeks to draw consumers in, earn their loyalty, encourage their sharing of preferences and other useful data, and nudge them toward increased lifetime purchases. Smartphones and tablets can play an important role in advancing each of those goals.
Online retailers are beginning to look very closely at the hurdles in the way of increased mobile commerce. We'll look at the often-awkward process of paying for things on mobile, and the fact that shopping isn't easily completed when moving between devices.
This report is meant as a companion to our mobile commerce outlook published last week, where we estimated total U.S. consumer spending for the year on mobile commerce at $30 billion, with e-commerce at $261 billion.
In other words, mobile's share is at 11.4% of all annual e-commerce. The stakes are high. And retailers that can't keep up with the Big Three or emulate their success will risk more than just lost sales. They will risk irrelevance.
Retailers Are Lagging In Terms Of Mobile Experience
And, in fact, most retailers aren't very sure that they're doing a good job on mobile.
According to a March and April 2013 survey of 582 e-commerce executives by Econsultancy and IBM Tealeaf, e-commerce executives are markedly less likely to rate their company’s understanding of the mobile customer’s experience as excellent or good compared to their understanding of the customer’s desktop experience.
The survey's results point to an e-commerce mobile performance gap:
Only 24% of respondents said they had a good understanding of the mobile customer experience, compared to 37% responding in the same manner about their understanding of the desktop experience.
Twenty-four percent of respondents said their understanding of the mobile customer experience was poor, compared to 12% who said that for the desktop.
Though these numbers were actually an improvement over the results of the same survey, conducted a year before, it still points to a somewhat shocking fact: a full six years after the launch of the iPhone, e-commerce decisionmakers are still not sure-footed when it comes to mobile customers.
Mobile commerce will define the next generation of retailing.
Understanding and applying what market leaders have achieved will drive positive results and help e-commerce executives shore up their mobile strategies.
Too much attention is paid to metrics like average order value, abandoned shopping carts, and conversion rates in e-commerce. The cornerstone to e-commerce success is more basic than that. It's the strategy that the top retailers have used: audience-building and engagement. Once Internet retailers manage to do that, the sales will follow. Mobile must be a key part of that strategy.
How Amazon, eBay, and Wal-Mart Are Dominant
Before digging into what the "Big Three," and others, are doing to be successful, let's take a look at the data to see exactly how dominant and successful they are on mobile.
Total Audience:
In September of this year, 162.6 million unique visitors in the U.S. browsed Amazon's sites and apps, according to comScore's measurements of total digital population for the top 50 U.S. Internet properties.
eBay's total digital population is 93.9 million, putting it in 12th place.
Wal-Mart is the 29th largest desktop and mobile Internet property by audience in the United States, with a total digital audience of 58 million people.
Mobile Usage:
Twenty-nine percent of Amazon's audience visited exclusively on a mobile device, according to comScore's June 2013 multi-platform data. Another 28% visited Amazon on both a desktop and a mobile device. In all, 57% of Amazon's total audience experienced a mobile version of what Amazon had to offer.
For Wal-Mart, 33% of its digital population is mobile-only. And 49% of its audience has experiences its mobile properties.
eBay's mobile-only users are 24% of its audience. Fifty percent of its total digital audience have used its mobile sites and apps.
Incremental Mobile Audience
One interesting measure that can be used to gauge how much of an audience boost any Internet property has gotten from mobile is what we're calling "mobile lift," which looks at the audience increase attributable to mobile-only users.
These users arguably would not have accessed a site if mobile devices weren't available for them to do so.
Mobile lift might also be taken as a proxy for how mobile-first or mobile-focused an Internet retailer is.
Here's how the big three stack up for mobile lift:
Wal-Mart gets a 48% lift from mobile.
Amazon sees a 40% audience boost.
eBay gets a 32% bump.
Somewhat surprisingly, Wal-Mart outpaces the e-commerce giants as a mobile-focused property.
If you think about it, however, it makes sense.
Wal-Mart has bricks-and-mortar locations, so mobile-only users might be accessing Wal-Mart on their smartphones for quick information look-ups such as finding the nearest store. eBay and Amazon don't have physical stores, and many users are going to these sites for browsing and research. These activities require longer online sessions that many users still prefer to complete on laptops or desktop PCs.
Mobile Audience Penetration And Engagement
A final gauge of these shopping sites' success on smartphones and tablets is the proportion of the mobile population that uses their apps or sites, and their engagement measured as minutes per month.
eBay wins on app penetration and engagement, according to Arbitron data from earlier this year. Fourteen percent of smartphone owners use eBay's apps, and spend over 108 minutes a month on the app.
Amazon's app is used by 13% of U.S. smartphone owners, but they spend only 40 minutes a month on the app.
Wal-Mart does not rank in the top five among commerce smartphone apps. But it does rank in the top five among mobile Web sites. Fifteen percent of the U.S. Web population accesses Wal-Mart.com on their smartphones, and spend an average nine minutes a month on the site.
All the numbers above can serve as aspirational benchmarks for mobile commerce apps.
To achieve mobile success on par with the Big Three, your e-commerce property should see about half its total audience visit the site via mobile Web and mobile apps.
About one-third of your audience should be mobile-only, and you should see a 40% incremental boost in overall digital audience size thanks to those mobile-only users. Call it the 50-30-40 rule.
Studying the Case of the Big 3
The key to mobile success for Amazon, eBay and Wal-Mart is not that they have apps on multiple platforms and state-of-the-art mobile websites.
They do have these things, but the real key is that they have each devoted significant resources to creating a mobile customer experience from the ground-up, so that it's truly adding something rather than just being another point of contact.
These companies haven't just created sites and apps that are like stripped-down versions of their desktop sites.
They've created experiences that fuse the strengths of mobile with the unique positioning of their own brands. In the following sections we'll show how each of the Big Three has basically reimagined themselves for mobile, and some of the specific products that undergird those efforts.
eBay
eBay has gone out of its way to make shopping on its app a stimulating and entertaining service.
The company has always been first and foremost a peer-to-peer network, and that type of interaction pairs well with a mobile experience.
Like Amazon, eBay has made bar code-scanning a deep part of the app. Buyers can scan UPC codes to find items they want to buy on eBay, and sellers can do the same to find prices for items they want to put on eBay.
eBay has made it easy for mobile users to participate in auctions on-the-go. Auctions and mobile are a powerful combination since smartphone shoppers are now able to check on their bids in time-sensitive auctions from anywhere, any time of day.
The company has also focused on search and discovery. One of the keys to eBay's success is the thrill of finding hard-to-locate items, locally-available items, and deals. eBay has organized its app around search, product images, and personalized feeds and interests.
eBay has also single-mindedly attacked frictions in terms of payment, leaning on its PayPal payments platform to make payments easier. If users have their credit cards or checking accounts registered with their PayPal accounts, then eBay transactions can be completed without laborious reentering of credit card information, which is particularly tedious on mobile.
Many of eBay's recent acquisitions have been directed toward improving the mobile experience. It's a good example of a company iterating continuously to build a more robust presence on a certain platform. Mobile is a less mature platform than desktop so iterating frequently is important in order to not get left behind. Here are some key acquisitions:
Earlier this year, eBay bought Braintree, which powers transactions on mobile for many top apps, including AirBnB. Braintree will help eBay and PayPal beef up mobile transaction volume and improve its technology, particularly for powering payments on other sites.
In 2011, the purchase of Where, Inc. boosted eBay's local search, and in the same year eBay acquired Hunch, which created technology for personalized recommendations.
The 2010 acquisition of RedLaser allowed eBay to incorporate barcode scanning into its app, which we mentioned earlier as an important innovation in mobile e-commerce, which helped it bridge the physical and online world.
In 2007, eBay acquired StubHub, a peer-to-peer ticket exchange (ticket sales are a big sector within mobile commerce).
Not surprisingly, given its focus on search, discovery, and personalized news feeds, eBay leads the field in terms of average user time-spend in the month on the app.
Wal-Mart
Wal-Mart has been equally single-minded in transforming its mobile app and site into a complement to its bricks-and-mortar and e-commerce sites.
In contrast to eBay, which seems particularly focused on engagement, the two key principles driving Wal-Mart's mobile strategy seem to be convenience, and accessibility.
If anything, Wal-Mart seems to be striving to move faster on mobile than it did on PC-based e-commerce. Neil Ashe, the company's top e-commerce executive, told Fast Company earlier this year that Wal-Mart "is going to go away if we don't get the Internet and mobile right."
Wal-Mart also has been noticeably aggressive in providing avenues for price-conscious mobile customers to find special deals. For example, this year Wal-Mart is letting mobile customers preview Black Friday offers and local ads.
The company's high rate of mobile-only customers would seem to indicate that many users are in fact using the app as a way to find stores and find deals when they're in-store, not to complete purchases or browse items from home as they might on a traditional e-commerce site, activities that are typically associated with combined mobile and PC visits.
These focuses are consistent with Wal-Mart's philosophy of providing the best selection of items at the best prices to the most people, and its focus on offline sales. Wal-Mart's app isn't all about attracting online shoppers and engaging mobile users, it's also about directing them to Wal-Mart stores, and helping them shop there.
Wal-Mart Labs: Wal-Mart has tended to acquire and develop its e-commerce, mobile and social media technologies through its very own accelerator "Wal-Mart Labs," which seeks to incubate start-up style projects to improve online customer experience. Wal-Mart has also innovated by teaming up with American Express to launch Bluebird, a debit card, checking account, personal finance app, and peer-to-peer payments system rolled into one.
Added in-store convenience: Wal-Mart's app has an in-store mode that allows users to receive targeted coupons, create a shopping list via voice commands, and access special payment options. They can scan products they intend to purchase, and bag them as they go. Special self-checkout lanes allow customers to pay without needing to scan individual items.
Wal-Mart has partnered with certain apps to provide gamified deal and offers to mobile customers. The benefit to Wal-Mart is store foot traffic, while customers are treated to special deals.The Jingit app, for example, rewards users for visiting certain Wal-Mart stores and scanning specific product barcodes. A partnership with Pinterest means oft-pinned items are featured in the mobile app.
In-store pickup: Wal-Mart purchases made online or on mobile can be scheduled for in-store pickup. This adds a layer of convenience, since shoppers can buy an item without having to be home for a package. Wal-Mart benefits by driving even more in-store traffic.
Wal-Mart was named 2012 mobile retailer of the year by Mobile Commerce Daily.
It's interesting to note, however, that although Wal-Mart is by far the largest retailer in the United States, it is still way behind Amazon in terms of overall mobile visitors, trailing by 56 million unique monthly visitors.
Amazon
Amazon's mobile experience is part-and-parcel of its celebrated focus on the customer experience. That experience is distilled on mobile into a kind of super-concentrate, whether it's on the mobile Web or on Amazon's apps. Amazon mobile is a blend of seamless 1-click payments, intuitive navigation, and data-driven recommendations.
Arguably, mobile has served as an even better stage for Amazon's trademarked and patented 1-click payment system than the desktop did. Amazon has a larger mobile-only audience in the U.S. than Facebook, and that's surely a testament to its slick user experience.
Amazon has among the largest collection of customer credit cards in the world, outpacing eBay in this regard, and giving it a unique advantage in payments.
Uniquely among e-commerce players, Amazon has also built a mobile device business based on tablets and e-readers that works hand-in-glove with its e-commerce capabilities. These tablets nudge users toward purchases of books and other media on Amazon, and allow Amazon end-to-end control of the user experience.
The loyalty program Amazon Prime also serves to reinforce e-commerce purchasing, rewarding frequent customers with free shipping and video streaming. These privileges tend to enmesh users deeper within the Amazon ecosystem and its world of e-commerce, media distribution, and hardware.
Local-Mobile offers: The Amazon Local app is the company's effort to shoehorn its way into the local deals space, with many of the deals powered by LivingSocial, a company that Amazon has a significant stake in. Amazon remains the undisputed leader in mCommerce. Amazon uses its email list to push these offers and the Amazon Local app.
As is the case with eBay and Wal-Mart, Amazon hasn't achieved its success solely on the back of mobile apps.
In general, there is too much attention paid to apps. Plenty of data supports the well-known fact that a greater proportion of mobile commerce activity happens on the mobile Web, and not in apps.
Critical Issues Facing Online Retailers
There are a few important challenges that all e-commerce players of all sizes must consider as mobile carves out an increasingly large share of mobile commerce. eBay, Amazon, and Wal-Mart have led the way in attacking these problems.
Seamlessness, particularly in payments, will continue to be differentiators: Shoppers will increasingly expect their shopping carts to sync across mobile and PCs. Wal-Mart, Amazon, and eBay all facilitate this, but consumers will come to expect it wherever they shop. Payments will also be an area where consumers will require ease-of-use. Amazon has licensed its 1-click technology to Apple, and eBay's PayPal has its own similar technology.
Why is seamlessness so important? Impulse buying is one reason: A survey by Rackspace indicates that mobile is spurring a wave of impulse buys, and only those e-commerce players with streamlined mobile-based checkout systems stand to convert a higher percentage of would-be impulse buys. Groupon announced a feature last month that would enable users to save payment info simply by snapping a picture of their credit card.
Device and platform proliferation: There are a dizzying array of devices, Android versions, mobile browsers, and alternative mobile operating systems out there. Programming sites and apps for all the resulting combinations is expensive and time-consuming. Large companies can afford to be nearly everywhere, but smaller outfits will likely need to be strategic about where they are present and lean more heavily on the mobile Web rather than apps.
Reverse showrooming: The data is now mixed on showrooming. Price-matching and other offline merchant practices appear to have made some headway in keeping e-commerce from eating too quickly into bricks-and-mortar retail. Now, there's a threat from online sites like Pinterest that facilitate "reverse showrooming," browsing for products online and then going to physical stores in order to actually see products and buy them. Millennials in particular prefer reverse showrooming to showrooming, according to a January 2013 survey from the Urban Land Institute. Reverse showrooming and a backlash against impersonal e-commerce is a looming threat for online-only retail.
Quick pace of tech innovation: Payments and online tech is changing fast enough to keep even major retailers on their toes. It's never clear where the next disruptive technology will come from. For example, retailers have experimented with augmented reality or AR apps that overlay relevant content on what users can see through the phone camera. For example, if a customer points it at a storefront the AR might show icons that describe available deals inside.
These challenges mean that the current online commerce leaders need to keep an eye on competitors and new trends — such as social media-facilitated reverse showrooming — to stay relevant.
eBay and Amazon have only been around for 18 years. There are opportunities for new mobile-centric commerce sites to launch and thrive, if they are savvy about catering to the unique needs of smartphone-toting audiences.
THE BOTTOM LINE
Amazon, eBay, and Wal-Mart are the most successful U.S.-based retailers in e-commerce, and on mobile.
Each of them sees about one-third of their online audience visit them solely on mobile devices.
These three mobile retailers have achieved this dominance by making sure that mobile plays to their core philosophies. For example, Wal-Mart emphasizes in-store features, discounts, and convenience.
Competition is increasing for mobile commerce dollars, and only retailers that address some of the ongoing challenges — like making sure shopping carts sync across devices — will be in a position to succeed.
Click here to download the charts and data in Excel →
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