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Smartphone shopping to account for two thirds of UK e-commerce by 2020, says Google, PayPal study

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By 2020, some £43bn of UK e-commerce purchases – around two thirds of the total – will be made on a smartphone, as the value of mobile transactions trebles from £13.5bn in just four years. This is according to a new report from OC&C Strategy Consultants, Google and PayPal UK – The Mobile Mandate.

The report is based on an exclusive dataset of search and transaction data from Google and PayPal UK, with analysis by and additional research from OC&C. It finds that a further c.£14bn of online retail will involve a smartphone in the research and price comparison phase, making mobile central to 80% of all UK e-commerce by 2020.

Despite consumers’ rapid shift to mobile, overall, UK retailers are lagging behind US and Asian competitors on mobile readiness. According to consumer research undertaken as part of the report, speed is the most important factor when shopping online, but on average, leading UK retailer sites are between 10% and 25% slower to load on smartphone than their US counterparts. Google research shows that improving load times by 1 second can increase conversion rates by almost one third (27%).

Furthermore, half of Britons (48%) would prefer customer support via mobile chat, but only 16% of the top 100 UK retailers offer this service. More than twice as many of the top 100 US retailers do so (41%).

More people use messaging apps each month (3bn+ active users) than social networking sites (2.5bn active users), but few top UK retailers have a presence on a messaging platform. Meanwhile, in China, c.250m consumers made a purchase through WeChat in 2016.

Alex Mathers, Associate Partner at OC&C Strategy Consultants explains: “Smartphone shopping is taking over online retail, bringing with it fundamental changes in how, when and where people shop. Brits are shopping more whilst out and about, they’re using mobile to research and compare prices for later purchases, and they’re spending more on mobile while in-store – very often with other retailers. There’s money to be made by tapping into these changing behaviours, but on the flip side, retailers that fail to adapt will find themselves haemorrhaging customers. Right now, the average UK retailer’s strategy should be mobile first – in a few years, it may well be mobile only.”

Growth in mobile’s share of the overall e-commerce market is underpinned by a fundamental change in shopping behaviour and demands. In 2016, c.£1.5bn was spent by UK consumers on their smartphones whilst out and about – travelling, commuting and in cafes. A further c.£1.25bn was spent while in store, around £500m of this with a different retailer. Currently, two thirds of this (c.£1.5bn) is spent by time-pressured consumers rushing to purchase items for imminent events. More than one third (39%) of consumers trust information they find online more than store assistants. These trends are expected to accelerate as mobile seizes share of online retail.

Mathers continues: “There are many things retailers could be doing to make the most of mobile, but the key to success lies in a few high impact items which together can give them a competitive edge. First, develop a presence on messaging platforms. With more active users than social networks and growing, messaging apps have huge e-commerce potential. In the next ten years, platform presence may well be more important for retailers than having an app. Second, use mobile as the glue between online and in-store. Simple things like providing in-store Wi-Fi, to more advanced digital loyalty schemes, mobile-enabled barcode scanning and in-store wallets are already generating significant engagement, data and conversion benefits for the likes of Topshop, Tesco and Target. Finally, and most importantly, make speed king. Improve load times, but also help consumers complete their mission as quickly as possible – streamline the journey, and help users work cross-device via things like basket sharing, wish-lists and sharing recently viewed items across devices.”

Martijn Bertisen, Sales Director at Google UK, adds: “Mobile technology continues to be one of the key drivers in transforming the retail industry and consumer shopping experience. Consumers are increasingly relying on their smartphones for information around shopping and locations in moments that matter: the ‘I want to know…’, ‘I want to go…’ or ‘I want to buy…’ moments. With a plethora of searches, each showing an intent or a behaviour, there is a great opportunity for retailers to offer useful products and information, just when shoppers are looking for it. As consumers become accustomed to this way of shopping, retailers need to respond by providing a swift and seamless online service – and the best way to do this is by putting mobile at the heart of their marketing, loyalty and e-commerce strategy.”

Rob Harper, Mobile Commerce Director at PayPal UK, says: “Speed is an important factor in any shopping experience, but when it comes to mobile shopping it’s vital. Retailers can reduce the time it takes to browse and select a purchase but if it takes too long to pay, they may lose that sale. It’s a problem that retailers can easily address with one-click checkout services like PayPal One Touch.”

Harper concludes: “The next evolution of mobile shopping will reduce the consumer journey even further. Contextual commerce will enable consumers to buy things at the point of discovery – whether that’s in an email, on a Pinterest page or in a messenger app – rather than needing to click through to an online shop. Mobile technology is determining the future of e-commerce, and retailers need to act now to prepare themselves accordingly.”

These results complement Bazaarvoice’s yearly research findings – the mobile future has arrived, and is headed in-store. A recent report from Bazaarvoice highlights that as much as 30% of consumers have changed their mind in a shopping aisle as a result of information gathered on their smartphone about a purchase. This is ever more relevant as consumers try to evaluate the relative value of an item in-store. Mobile shoppers are looking for specific information about products, checking out consumer-generated content (CGC), such as product ratings and reviews, and Q&A, but also for visual CGC, like product photos and videos.

A good example of an integrated strategy is The Home Depot, which sends location-specific coupons and promotions to consumers in store, just as The Home Depot’s mobile site gives shoppers access to real-time store inventory, pricing, and aisle location for merchandise in the physical store. Store inventory integration allows shoppers to order items that are out of stock for store pick-up later—all via smartphones.

Interactions such as these demonstrate how brick and mortar retailers should no longer fear the mobile shopper, but instead embrace consumers behaviour of using these devices to search for product information, CGC, and price comparisons. It is precisely in these moments that a retailer has an ideal opportunity to reach shoppers with personalised advertising displaying targeted CGC.

Argos , for instance, uses customer feedback to refine product offerings and improve the shopping experience in-store by ensuring the same valuable CGC is available to its retail customers.

As Mark Steel, Digital Operations Director, Argos puts it: “I do genuinely believe mobile is still one of the most important factors, one of the most important trends when we’re thinking about delivering a great experience for our customers. The power and the technology that the vast majority of our customers now carry around with them every single day, it’s just opening up a whole new world of opportunities for retailers to engage with their customers.”

Consumer adoption of smart phones and devices is no doubt proving to be the single most important trend in consumer purchasing behaviour in the last 20 years, with omni-channel shoppers beginning to expect an integrated experience in the shopping aisle and real interaction points at every step along the way. Brands have a window into the retail channel and the in-store shopper, providing a wealth of opportunity for buyers and sellers alike.

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