Retailers' branded mobile apps are proving effective in increasing customer engagement as well as boosting sales on multiple levels, according to a new study in the Informs Journal Marketing Science.
The apps are shown to be increasing sales on retailers’ websites as well as in their stores, the researchers from Texas A&M University found.
At the same time, apps are increasing the rate of returns, although the increase in sales outweighs the return rates, according to the study.
Over 18 months after app launch, the study's authors found that retail app users buy 33% more frequently, buy 34% more items, and spend 37% more than non-app user customers.
On the not-so-bright side, app users were also found to return products 35% more often, and return 35% more items at a 41% increase in dollar value.
At the end of the day, however, the researchers found that app users spend 36% more net of returns.
The research was conducted by Venkatesh Shankar, professor of marketing and Coleman Chair in Marketing and director of research, Center for Retailing Studies, Mays Business School, Texas A&M University, and Unnati Narang, a Ph.D. student in Business Administration-Marketing at Mays Business School, Texas A&M University.
Shankar and Narang based their findings on data from a large US-based retailer of video games, consumer electronics and wireless services with 32 million customers.
“Overall, we found that retail app users are significantly more engaged at every level of the retail experience, from making purchases to returning items,” the research authors note.
“Interestingly, we also found that app users tend to purchase a more diverse set of items, including less popular products, than non-app users. This is particularly helpful for long-tail products, such as video games and music.”
For retailers, the lesson is that having a retail app will likely increase customer engagement and expand the range of products being sold online and in-store, the researchers suggest.
They also found that some app users who make a purchase within 48 hours of actually using an app tend to use it when they are physically in proximity to the store of purchase.
“They are most likely to access the app for loyalty rewards, product details and notifications,” the researchers suggest.