Visitor Monitoring Outlook 2014 | Keynote

Outlook 2014: Can Retail Fit Tablets Into The Omnichannel Mix?

A Look Back At The 2013 Holiday And What It Says For 2014

The 2013 holiday shopping season has confirmed: The age of omnichannel retail is here. Consumers are demanding more and more that the shopping experience be on their terms — when, where, how, and on what device they search, browse, select, and buy. Retailers are chasing consumers as they search on one device, make selections on another, and press the “buy now” button on still another.

In the recent holiday season, shoppers’ embrace of the three-screen experience grew significantly once again, as they used mobile devices heavily from the beginning of the shopping process through checkout. The surprising result was the outsized role that tablets took on: While smartphones generated significantly more site traffic than tablets, the tablet captured well over twice as many online sales. Combined, mobile’s share of online sales grew 49% year-over-year. 1"US Online Retail Holiday Shopping Recap Report 2013," IBM Digital Analytics Benchmark, 1/14

A preview of this kind of tablet shopping phenomenon was seen in 2012. But 2013 saw a rapid proliferation of tablets and an ever more enthusiastic embrace of “couch commerce” by consumers, generating more traffic and capturing more sales than many apparently anticipated. Based on performance numbers captured by Keynote, the tablet surge seems to have taken retailers quite by surprise.

In Keynote’s tracking of three-screen holiday performance, tablets consistently struggled to deliver an acceptable consumer experience. And research shows that 49 percent of tablet shoppers are dissatisfied because retailers have not optimized for tablets. 2"49pc of tablet shoppers dissatisfied with shopping experiences," by Chantal Tode, Mobile Commerce Daily, 5/31/13

“In a sense, retailers can’t seem to catch a break,” says Ben Rushlo, vice president of analytics for Keynote. “It’s been a long struggle for them to catch up to consumer expectations for smartphone performance. Many are becoming more successful at that, but now there’s a very strong imperative for them to specifically address the tablet experience. Very few retailers — and none of the ones we studied over the holiday — are delivering a tablet-optimized experience. Most are defaulting to the desktop site, and that can result in a disappointing experience for users that are on a cellular or slow public WiFi connection.”

Holiday shopping at a glance

Overall, retailers had to be happy with the holiday season. In an economy that continues to struggle with anemic growth and intractable unemployment — and considering the holiday season was six days shorter than last year — U.S. retail pulled off another successful holiday, thanks largely to growth in the online channel, led by mobile. Total November-December holiday sales increased 3.8 percent year-over-year according to the National Retail Federation, reaching $601.8 billion. 3"Holiday Retail Sales Come in at NRF Expectations," National Retail Federation press release, New York, 1/14/14 Online powered nearly 10 percent of that growth, with one out of every six of those dollars spent online, and of those, nearly 20 percent were from a mobile device. 4"US Online Retail Holiday Shopping Recap Report 2013," IBM Digital Analytics Benchmark, 1/14

From an e-commerce perspective, key shopping days and the season as a whole followed a similar pattern to last year, just more so: Mobile surged as a source of both traffic and sales; smartphones delivered significantly more traffic than tablets; but tablets delivered roughly twice the sales of smartphones.

Ten individual days achieved online desktop sales of $1+ billion, led by Cyber Monday’s record-setting (again) $1.735 billion. With a totally realistic repeat of this year’s 18 percent growth rate, Cyber Monday 2014 could be online retail’s first $2 billion day. 5"Billion Dollar Hot Streak: Strong Week for Online Retail Spending Headlined by First-Ever Week Featuring Five Billion Dollar Weekdays," comScore press release, Reston, VA, 12-18-13

While mobile’s growth was impressive across the board, the results on Christmas Day were particularly striking: Mobile accounted for 48 percent of traffic (up 28.3 percent) and almost 29 percent of sales (up 40 percent), with tablets claiming almost 20 percent of all online sales. Whether it was trying out their brand new phones or iPads, or spending gift cards while at grandma’s for dinner, Christmas 2013 was likely the most successful mobile shopping day ever.

In UK, shoppers flock to mobile on Boxing Day, exceeding PCs

On Boxing Day in the UK, for the first time ever, shopping traffic on mobile devices exceeded that on PCs. Mobile captured 58 percent of all online traffic, and tablets accounted for 29.4 percent of online sales, according to IBM. 6"IBM finds mobile and online shopping up again on Boxing Day," by the IBM Holiday Benchmark Staff, IBM, 12/27/2013

Tablets ruled the day for the BBC, too, as users on Boxing Day consumed more content on tablets than on PCs, again, a first. 7"BBC iPlayer sets Tablet Viewing Record," by Sian Rowlands, Analyst Xpress, The Juniper Research Blog, 1/14/14

Boxing Day performance on the desktop, though, was not what retailers would hope, slowing to 3.29 seconds on average, with availability of just 97.08 percent.

“Performance on Boxing Day was problematic,” says Robert Castley, Keynote lead solution consultant. “Apparently, in making the switch from inspiring purchases of Christmas presents to driving post-Christmas bargain sales, a number of sites encountered issues that affected performance and availability. A transition like that needs to be as seamless as possible if companies are going to deliver satisfying user experiences and capture maximum revenue.”


A tale of three screens: Fast, slow, unbearable

Keynote studied performance on all three screens for a select group of retailers for the entire holiday season. Rather than just look at home page load times, a multi-step transaction was measured, typical of a shopper’s journey: home page, search, product view, add to shopping cart.

Results were very clearly mixed. While average desktop performance was quite snappy — 22.79 seconds for the entire transaction sequence, with just half a second of variance in any of the holiday weeks — smartphone performance did not make significant advances this year. And tablet performance was painfully slow.

“The gap in user experience between smartphone and desktop is still not really closing,” says Keynote Senior Consultant Ken Harker. “Smartphone performance is still in that 40-to-50 percent slower range than desktop. There’s still a lot of work to be done.”

“These are sites that are already scaled down, that recognize the need for a small-screen shopping experience,” adds Tim Murphy, senior marketing manager at Keynote. “But they still have not mastered the performance side of the equation.”

The average time for a smartphone to complete the transaction sequence was 32.13 seconds, nearly 50 percent slower than the desktop average. Variation was also greater, with a spread of over seven seconds between the best and worst weeks of the holiday period.

By far, though, the slowest shopping experience was on tablets.

Have tablet, must wait

Shoppers using tablets over a cellular connection were given the equivalent of lumps of coal for the holiday. It took them, on average, 61.35 seconds — over a full minute — to complete the four-step test transaction. In every case, visitors were being served up a full desktop site, rather than a site optimized for a tablet or a cellular connection.

“These retailers are gambling that, if you come to my site on a tablet, you’re going to be on a good enough network connection to make it useable,” Harker says. “But for those users on a 3G network, or sharing a public WiFi connection with 30 users at a Starbucks — or worse, in an airport or hotel — the experience is going to be terrible, and users are going to go somewhere else.”

Given that retailers are still trying to master the smartphone experience, it could be a resource allocation issue that keeps them from focusing on tablets. Or, as Harker points out, it could be they’re gambling that users will have a better-than-3G connection. After all, nine out of ten tablet users don’t use a cellular connection. 8"Sorry, carriers, 9 out of 10 tablets sold are Wi-Fi," by Kevin C. Tofel, Gigaom, 3/20/12 But it’s a rare retailer who is or should be willing to walk away from 10 percent of their market.

A WiFi connection doesn’t automatically guarantee great performance, either; a tablet doesn’t necessarily have a processor that’s as fast as a desktop. A desktop site may be a fast performer, and a tablet may deliver the same site quickly over a hi-speed connection in the development lab, but that in no way assures acceptable real-world performance.

“Nobody has really taken into account the fact that tablets are used in a lot of situations where the network connectivity is not as good as a big-screen desktop at home or in an office,” Harker says. “I keep looking to see if any of these sites are serving some kind of tablet-optimized experience, and if so, how are they making it better and unique? But the answer is no, we’re not seeing it yet.”

How important is the tablet factor?

Does your household own a tablet? Are you reading this on a tablet right now?

The holiday figures make a fairly compelling case for allocating resources specifically toward tablets. There are a host of other numbers that support the argument.

According to the Pew Internet & American Life Project, just over one-third of all Americans age 18+ owned a tablet in mid-2013, double the share of the year prior. It took just three years for tablets to reach that penetration. And that particular one-third of the population is an impressive group.

Fully 94 percent have household incomes of $50,000+; 56 percent earn $75,000 or more. Almost half hold college degrees, and another 35 percent attended some college.

The Pew data also indicates that, aside from these upscale tendencies, tablets are very egalitarian devices. Ownership is spread almost equally among white, black and Hispanic households. Owners are also spread fairly evenly across urban (33%), suburban (37%) and rural environments (27%). 9"Tablet Ownership 2013 / For the first time, a third of American adults own tablet computers," by Kathryn Zucker, Pew Internet & American Life Project, 6/10/13

Growth in tablet penetration is projected to continue at a rapid pace, increasing by 61 percent in the U.S. to more than 130 million users in 2014. 10"U.S. tablet owners to increase to 130 million next year, says Parks Associates," by Phil Kurz, Broadcast Engineering, 6/12/13 IDC projects worldwide tablet shipments to reach 261.4 million in 2016 and peak at 386.3 million units in 2017, before slowing down to single-digit growth. 11"Worldwide Tablet Shipments Forecast to Slow to Single-Digit Growth Rates by 2017, According to IDC," IDC, 12/3/13 In the last quarter of 2013, tablets out-shipped desktop PCs and laptops individually, and by 2015, will out-ship both combined.

Bottom line: Tablets are a competitive factor to be ignored at a retailer’s peril. Together with smartphones, they captured almost $30 billion of e-commerce spending in 2013, and accounted for 59 percent of time spent shopping online. 12"Tablets Are Becoming More Important Than Smartphones For Online Shopping, But Retailers Aren't Ready," by Emily Adler, Business Insider,12/25/13 They are an integral component of what comScore calls “the new Multi-Platform Majority.”

Who will lead the pack for holiday 2014?

There’s nothing subtle about the lessons to be learned from the 2013 holiday season. Performance-wise, retailers’ hard work over the years on desktop sites has paid off with user-pleasing performance. Strides have been made on smartphones, but performance still lags far beyond where it should be. And no retailer in the Keynote study is delivering a tablet-optimized experience, and tablet load times over wireless are universally unsatisfactory.

“The performance culture that has made such a difference on the desktop over the years has to be transferred to smartphones and tablets,” Rushlo says. “We’re at an inflection point where mobile is taking more and more of the mindshare and discussion for our customers. Banks are seeing more users accessing services via mobile than the desktop. Retailers are seeing a sharp uptake in product sales through mobile. If they’re going to keep those customers, they have to focus specifically and individually on the smartphone and tablet experiences. They need to test on 3G, 4G, and WiFi, on real devices, to understand how their sites really work in the hands of users. Because the users will go where they get the best experience.”

Retailers are at least aware of what needs to be done. A recent Forrester/ survey shows that 53 percent have put mobile at the top of their list of priorities for 2014 13"E-retailers will focus on mobile and site design in 2014," by Allison Enright, Mobile Commerce News, 1/29/14; Forrester says that retailers should invest as much as they can in mobile. One of the Yankee Group’s top predictions for 2014 is that companies will allocate more of their investments on mobile customer experience. 14"2014 Predictions: Mobility Hits a Tipping Point as Markets Consolidate, Players Build Out Capabilities," Yankee Group, 12/13

The retailers who focus on both smartphone and tablet performance, individually, and optimize not just for the form factor, but for the connection, will quickly move to the head of the retail pack.

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