As eBay celebrates the fifth anniversary of its app, Fadi Shuman, CEO, Pod1, uncovers some worrying data that shows that most retail apps are expensive white elephants – and offers some thoughts on how to avoid your’s turning into such a preposterous pachyderm.
At the time of writing this column, eBay’s ecommerce app is celebrating it’s fifth birthday. As one of the most successful apps on the market, it has notched up 160 million downloads in that time. To mark this achievement the retailer launched some fascinating research in conjunction with retail analysts Conlumino that shows that huge amounts of money is being ploughed into apps and seeing no return whatsoever.
According to the global research study 64% of apps that started development were either never finished or were rejected by app stores. And apps aren’t cheap: the average price of a basic app is now around $18,000 (£12,000) and more advanced apps are an estimated $83,000 (£55,000). eBay and Conlumino believe these failures account for around $4.85 billion (£3.19 billion) of development costs globally. Mind you, at least these brands are spared the ongoing costs of updates and overhauls to cope with new devices and major operating system upgrades, which can cost up to 42% of the original development cost.
Clearly this shows that retailers are racing to take advantage of the opportunity to engage with consumers via their smartphones and tablets – a market that eMarketer has tipped to break the $1trn (£804bn) barrier this year globally. Yet what it also shows is that too little thought is being put into whether an app is the right way to move forward, or indeed looking at how one is going to be executed and supported effectively.
Olivier Ropars, senior director of m-commerce, eBay Europe, is quoted in the press as saying: “Sales of mobile devices have rocketed and smartphones are the mission control for our lives. They are always on, always with us and changing everything, including how we shop and pay. Many brands and retailers have created apps, but driving regular traffic to the app is another matter.”
Apps are an expensive thing to create, and ecommerce-enabled apps even more so – although apparently only around 18% of retail apps are ecommerce enabled. Surely, you have to question the point of having such a powerful ecommerce tool and making it ‘information only’. I think what this means is that brands need to have a far more critical approach to apps, rather than just thinking they need to jump on a bandwagon and create one just because everyone else seems to have one. They need to really think them through.
Also, it’s important to remember that app stores are walled gardens – and they are currently hugely overcrowded. Only the really stand out apps or those with the most marketing budget to push them forward will succeed.
I’m not saying don’t do apps, but surely most smaller (and some larger) brands would be much better pushing their money into developing their websites to ensure their multi-channel offering is fully supported across the different device platforms than taking flights of fancy down the app route. The reality is that although apps may look nice and be seen as a cool way to engage customers they don’t work for everyone, and unless you have the resources to support them long term they’re likely to become something of a white elephant.
Here are some great examples of companies that are getting it right:
Nine West App
Most retailers with apps tend to view their storefronts and apps as separate entities, women’s shoe and handbag retailer Nine West is making the connection.
In addition to pre-loading its 200+ locations into the app, Cache also customizes the type of notifications the customer gets.
Fandango takes mobile ticket purchases to a new level by integrating with Apple’s Passbook where the ticket can be scanned by the theater’s ticket-taker so that all the user has to do is find a seat and enjoy the show.