The Truly Pathetic State of Mobile Commerce

Do you know why Internet Retailer’s Mobile 400 List isn’t “The Mobile 500”? Because of all the companies Internet Retailer reviews to compile its famous lists, there weren’t 500 retailers with mobile sales worth mentioning. The last company in the list, #400, did just a little over $17,000 in mobile revenue in all of 2012.  If that’s not pathetic, I don’t know what is.

Don’t get me wrong, I don’t want my money back. I think this was particularly insightful to see, and glad they published it.  It was also interesting to see that most of the big winners in mobile commerce are in travel and entertainment. If you’re in that industry, I would take mobile commerce seriously. Hotels, airlines, rail travel, vacations, car rental, movie tickets, concert tickets. Basically ticketing and reservations. That’s not to say that the top of the list isn’t peppered with huge retailers like Walmart and the like, but if you were to remove the retailers who are just doing 1% to 2% of their total online revenue on mobile, the top of the list would be almost exclusively ticketing and reservations. Think about what this says.

While Internet use is obviously trending away from desktops to mobile devices, mobile Internet usage is fundamentally different than desktop. People seem most comfortable using their mobile phones to transact when they don’t really have to “shop” or closely look at or evaluate what they’re buying.

They just know they want to go to a particular place at a particular time, and are fine closing the transaction on mobile. What drove them to decide to stay at that hotel or watch that movie or take that flight did not originate online or from a mobile search engine.

If you’re not in ticketing or reservations, here’s my generalizing takeaway. Large brick and mortar brands that launch an e-commerce site to sell online without any particular effort, do generally about 2% of the company’s overall revenue online.  It would be zero for most but because of the brand equity from the brick and mortar, about 2% trickles down to their existing customer base who would prefer to transact online. These companies are so big to begin with that even 2% of their revenue translates to hundreds of millions of dollars.  Next time you’re impressed hearing that is on track to do $9 billion online, remember that Walmart’s total revenue is $447 billion, so they’re right on track to claim their default sales of 2%.

Mobile seems to have the same relationship to desktop sites. Mobile revenue seems to be about 2% of online revenue. That tells me that just like big brick and mortar brands who launch an e-commerce site and make only 2% of their revenue online don’t understand to run an online business, online businesses who launch a mobile site and make only 2% of their online revenue via mobile don’t understand mobile.

Take a look at this example with 2012 revenue numbers:

In store revenue vs. online revenue vs. mobile revenue, 2012

From seeing this pattern, you might joke that if the future Internet enabled watches have special apps to shop on them, that you might then take 2% of the already small numbers being done in mobile and attribute that to watch device sales.  It’s almost like the smaller the device, the smaller the sales.

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