Record-Setting mCommerce Sales Present Opportunities and Challenges

The 2016 Thanksgiving weekend shopping event is now a thing of the past.

U.S. shoppers set new spending records in 2016; however, a growing number of consumers opted to shop online rather than contend with the crowds, lines, and product shortages at brick-and-mortar retailers.

Though “Cyber Week” deals continue to run as of this writing, I wanted to take a closer look at the initial reports and see how well eCommerce merchants fared during the year’s biggest shopping event.

Holiday Kickoff Exceeds Expectations for eCommerce

Retailers had high hopes going into the holiday season, with three out of four surveyed merchants reporting to have had positive expectations for the final quarter of 2016. Those hopes ultimately paid off, with sales exceeding general projections during the five days between Thanksgiving and Cyber Monday.

Analysts at Adobe Digital Insights expected consumers to spend $3.05 billion on Black Friday and $3.36 billion on Cyber Monday, representing YoY growth rates of 11.3% and 9.4% respectively. Add in Saturday and Sunday, and online sales over the holiday weekend were expected to reach more than $10 billion total.

In the end, while sales on Thanksgiving fell slightly short of the projected 15.6% growth rate, sales the following day nearly doubled ADI’s predictions, producing a 21.6% increase in sales from 2015. Cyber Monday outperformed expectations as well, showing a 10.2% increase.

Mobile is the Fastest-Growing Retail Channel

The impressive gains demonstrated in the eCommerce sphere stand in contrast to physical retail sales over the weekend. Brick-and-mortar merchants saw Black Friday sales fall by roughly two percent in the U.S., while physical retail sales dropped by five percent in the U.K. compared to last year’s event. At the same time, UK merchants saw an even more dramatic increase in online sales on Black Friday, which rose 25% between 2015 and 2016.

There are several factors contributing to the growth in consumers’ preference for eCommerce including affordability, convenience, and the desire to avoid the infamous Black Friday crowds. However, it’s important to note that new eCommerce sales come overwhelmingly through mobile channels, with smartphones quickly becoming consumers’ favorite method for making purchases.

The 2016 Black Friday event set a new mCommerce record; Black Friday was the first day in history on which single-day mobile sales exceeded $1 billion in the U.S.

Mobile showed a 33% increase in total sales over Black Friday 2015, outpacing growth on every other channel. However, the mobile phenomenon is not limited only to the holidays.

Overall growth in mobile sales outpaced that of desktop sales more than 12 times in 2015, reaching $120 billion in the U.S. by the end of that year. By 2020, that total will reach $320 billion, accounting for about half of all eCommerce sales in the U.S. market, and will be close to $2 trillion globally.

Traffic Versus Purchase: Disconnect Across Channels

ADI’s data revealed that 45% of all online traffic during Black Friday originated from a smartphone, narrowly edging out desktop and laptop traffic (44%). Tablets came in at a distant third, with 11% of total shoppers.

However, though smartphones produced the greatest share of traffic, shoppers conducted only 25% of sales through a smartphone. In contrast, tablets produced 12% of sales, with the majority claimed by desktop and laptop shoppers.

Conversion rates were above average across all eCommerce platforms on Cyber Monday. However, mobile conversions ran just 1.9% above average, while desktop conversion was 4.3% above average. All of this points to a great deal of potential for merchants which is not being leveraged when it comes to mobile sales.

Black Friday Shows Importance of Smartphone Optimization

The key to raising mobile conversions will prove to be in optimizing channels for smartphone users. Customers want a simplified interface with intuitive navigation that translates well from one channel to the next.

Without a stable and consistent mobile channel designed with smartphone users in mind, merchants will lose-out to competitors who are willing to offer the experience consumers want. Therefore, merchants who elect not to offer their own app must optimize their sites for mobile shoppers. Otherwise, they risk driving away an increasing number of current shoppers while also discouraging new customers as well.

Mobile Optimization and Fraud Exposure are Year-Round Concerns

Even though the holidays are already underway, merchants who have yet to invest in mobile optimization cannot put it off until next year.

mCommerce is already a popular consumer demand. Those merchants who aren’t utilizing this payment channel are forfeiting significant amounts of revenue.

However, new revenue opportunities must be considered alongside risk mitigation strategies. Anticipating threats and creating a proactive—rather than reactive—solution is best.

Compared to 2015, online credit card fraud increased 20% during the holiday shopping weekend and 34% over 2014’s reported fraud attacks. Moreover, card-not-present fraud is set to increase 43% during the remainder of the year.

With chargebacks set to hit 45-60 days after the transaction, merchants are in a precarious position. Now is the ideal time to take decisive action to optimize profitability in accordance with comprehensive, multi-layer risk mitigation.

Monica Cardone