Retailers are still falling short when it comes to building out their mobile business through apps, according to a new study. The analysis by mobile marketing firm AppLovin of the top 100 retailers (as listed by the National Retail Federation) found that while most have apps (79%), only 40% of those allow users to make a purchase within the app.
Online retailers, department stores, restaurant chains, pharmacy chains and supermarkets were among the categories most likely to have apps. Online sellers, which all have apps, were also the most likely to enable e-commerce within their apps, at 83.3%. Similarly, 77% of department stores have apps, and three quarters power in-app purchasing.
Meanwhile, 85% of supermarkets have apps, but only 4.5% are transactional, and only a third of auto retail stores (AutoZone, O’Reilly Automotive & Advance Auto Parts) have apps at all.
Looking at consumer ratings, only 27% of the retail apps studied had earned ratings of 3.5 out of five stars across the iTunes App Store and Google Play. AppLovin co-founder and CEO Adam Foroughi says the findings, and his firsthand experience, show retailers have a lot of work to do to get their apps up to speed.
“The whole app concept is pretty foreign to a lot of those companies still,” he said, while acknowledging that the investment and effort that goes into building a robust e-commerce app is hardly trivial. “None of this stuff is easy.”
Started two years ago, AppLovin is focused on helping e-commerce and retail companies drive downloads or in-app purchases through its ad platform. The company uses behavioral data from clients to retarget customers with tailored ads as well as target look-alike audiences. Clients include OpenTable, Nordstrom and Spotify.
Foroughi suggested traditional retailers could learn a lot from digital-only or mobile-only companies like OpenTable and ride-sharing service, whose apps provide a more seamless payment experience. “In a lot of these [retailer] apps, you end up looking at content in the application, or products, but to actually check out it links you out of the app to the mobile site,” which ends up discouraging sales.
Past research from Forrester indicates retailers have been wary about apps because most of their traffic comes from the mobile Web and they face uncertain results from building a standalone app that may be used only infrequently, if at all. But Foroughi argues it’s a chicken-and-egg problem—that if companies had better apps, people would use them more.
“The data from companies that have invested in apps suggests that a good app experience really drives up the revenue per user, to the level of two to four times anything these brands are seeing on the mobile Web,” he said. Foroughi cites NRF data showing that retailers with apps had a median $9.3 billion in sales last year versus $5.6 billion for those without apps. But that suggests a correlation at best rather than a causal relationship.
Forrester estimates that 29% of all online retail sales in the U.S. will be conducted on smartphones and tablets this year, with media goods (video, music, books), clothing and consumer electronics accounting for the majority of the estimated $86 billion in mobile transactions. E-commerce, including mobile, made up only 5.8% of overall U.S. retail sales last year.That may be another reason retailers don’t want to plough money into apps—they still only represent a tiny fraction of total sales. And when it comes to mobile marketing, Forrester e-commerce analyst Sucharita Mulpuru-Kodali recently indicated that retailers are focusing their efforts on mobile optimization of email, search and display ads.