Smartphones have become the trusted, portable, always-on shopping companion that desktops or laptops never could be, with 85% of smartphone owners worldwide saying they used a smartphone while shopping in a brick-and mortar store—up from 72% from last year. Half of consumers reported their mobile devices are the most essential aid to their purchase decision vs. less than a fifth who felt laptops or desktops were the most important research tool for making a purchase decision. In 2015, almost a third of total retail sales in the US – an estimated $970 billion – were made with the help of mobile devices at all points in the shopping process.
Despite this robust growth trajectory, conversion rates on mobile devices themselves continues to lag those of desktop— consumers spend 60% of their online shopping time on mobile, but only 16% of shopping transactions are occurring on a smartphone. The main culprits here have been clunky user experiences around the in browser mobile shopping process, especially around mobile payments (as detailed in L2’s recent Insight Report on Mobile Payments).
A mad scramble is on as brands seek to improve mobile conversion rates by overhauling and “mobilizing” their entire shopping process—from research to transaction— to ensure that the mobile checkout experience is more streamlined than one designed for desktop, often starting from a very low bar: very few brands have single page checkout with the average number of pages to checkout ranging between from two to four based on the sector. Additionally, the average checkout experience requires the customer to input anywhere from 13 to 16 fields, with two-thirds of brands failing to incorporate native drop-down fields and iOS-enabled navigation, creating an exacerbated checkout experience that is cumbersome for the shopper.
An equally key issue that is not getting significant airtime: a large segment of the population remains uninterested in using mobile devices for payments in physical stores: 74% of consumers that do not make online mobile purchases would still refuse to engage in mobile payment activity even if all perceived barriers were lifted.
Consumers now have more in-store payment options than ever, but cash is still the preferred method, with mobile wallet usage lagging significantly.
The issue is less about the mobile payment methods than it is about a trinity of issues around consumer inertia and security concerns. On the inertia side, many consumers are staying loyal to traditional payment methods as they are, so far, underwhelmed by the value of picking up new habits. In terms of security, 1 in 3 consumers cite security concerns as the main reason for not using digital means to check out.
Mobile payments success stories like those of Starbucks and Walgreens highlight key areas of success that all retailers should be embracing as much as improving mobile conversion rates; pushing mobile payments on their consumers via the aggressive marketing and signage that educates customers as to mobile payment options available and delivering mobile payment experiences that significantly improve some aspect of consumers in-store experience.
Walgreens—a well-known leader in loyalty marketing— was the first to launch a loyalty
program integration with Apple Pay, encouraging the brand’s more than 85 million active Balance Rewards members to use their accounts through Apple Pay, allowing them to both earn and redeem loyalty points via Apple Pay. To get the most out of purchases, users can add the Balance Rewards digital card to the Wallet app in iOS 9 and use it at checkout. Members simply hold their iPhone near the contactless reader with a finger on Touch ID, and the appropriate rewards information will be sent. On Apple Watch, they just double-click the side button, select their Balance Rewards card, and hold the face of Apple Watch up to the reader.
Not only does it allow Balance Rewards to be added directly to Apple Wallet, Walgreens integrates loyalty-card data into Apple Pay itself, providing a one-swipe experience that combines payment with loyalty.