Making the most of retail apps

The application (app) market is booming. The advent of the iPhone and its application concept just three years ago generated new ground for online revenues. Thanks to this development of the smartphone market and the emergence of app marketplaces such as Ovi (Nokia) and Android Market, the app business is at the exciting beginning of its story.

Figures corroborate this: predictions see app market turnover rocketing to a whopping $17.5 billion in 2012, against $6 billion this year. The number of app downloads should also reach new highs with an estimated $50 billion in 2012 against $7 billion this year. But interestingly, it seems that apps haven’t reached their full potential yet. What the stats also tell us is that gaming and social networking dominate the app market whereas retail apps trail at the rear of the wagon. However, despite mobile retail apps trailing slightly right now, they have a huge power to unleash.

It’s small wonder that retail apps are lagging behind. The whole app concept is fairly recent and most of us are not yet fully ready to embrace mobile shopping: security and payments on handheld devices remain a concern, we’re not yet so keen on purchasing on the go, and we want to feel we’re making informed mature decisions. In the end, why would we use a small device when we’ve got laptops and computers available most of the day? This trend, though, is about to change.

A recent study conducted by miBuys indicated that 85 percent of surveyed women used the mobile internet daily, and 95 percent of them browsed the mobile web at home when they could potentially access computers. Also, 67 percent were interested in receiving mobile vouchers or coupons, whilst 57 percent had already clicked on mobile advertising. Another study from Deloitte revealed that one-in-five consumers plan to mobile shop in the future, 25 percent of whom intend to make a purchase through their phone. The explosion of mobile commerce is therefore scheduled – now how can big e-commerce firms ensure they make the most of mobile apps?

The power of retail apps is two fold: not only do they boost online sales; they also leverage offline sales. In the former case, the added value of apps is clearer. Online revenue is not only limited to the download cost of the app but is also generated by in-app content. Apps can indeed be used as a portal to access product listings or ad hoc services, which can ultimately lead to online transactions. The Ocado app is an interesting success story. Available on multiple platforms including iPhone and Android, the free-to-download app yielded a turnover of more than £15 million in Q1 2010 (five percent of Ocado’s total sales), by enabling users to go food shopping on their phones. Another example is the Sky Sports Live Football app. The app gives football results in real time as games are being played, for free. But if they register within the app for an extra £4 a month service, users can get video clips of the goals on their phone.

The offline value of mobile apps is less obvious yet it is still there. Apps can boost offline sales by acting as a promotional medium. One way to exploit this opportunity is to create a catalogue app, just like Ikea recently did. The app allows users to browse the latest Ikea store catalogue. One of its main strengths is that the catalogue is offline and can therefore be accessed regardless of network signal. Another option is to create an app that sends periodical push alerts to users (e.g. about new clothes collections, promotional vouchers and so on). Desktop websites would then finish the job started by the apps and convert visitors into buyers. US venture company Shopkick is taking mobile retail to a new level by merging mobile and offline shopping. Its app, to be released at some point this summer, will work across a certain number of stores (including Macy’s and Best Buy for a start) and will provide augmented product information. While strolling down the aisles of brick-and-mortar stores, users will be able to use the cameras on their phones to scan items in order to get additional information (such as reviews).

So the power of retail apps is still to be realised. If well thought and well designed, this channel can become another consistent stream of online revenue. If you’re considering designing an app for your e-business, here are a few tips to ensure you make the most of it:

• Know you audience – What type of phones are your customers using? If they use smartphones, think ‘apps’. If they use more primitive phones, think ‘mobile friendly website’
• Track your traffic – Knowing the share of your visitors that access your site via their phones will help you plan your online strategy
• Establish you goal(s) – Do you want to use your app as a sales channel, showcase window or interactive in-store guide?
• Engage with your customers – Apps are different from the traditional web, demanding new marketing strategies
• Make payments easy – Should you decide to implement a checkout process in your app, make sure it is quick, user-friendly and secure. Think Google Checkout, PayPal or similar
• Most importantly, make sure your app is usable – Don’t skip user testing while arguing your app won’t generate enough revenue to justify user-centred research.

This post was written by Xavier Klingenfus

This article was written as part of the Foviance July/August Newsletter