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Mobile payments rule the early holiday shopping season

December.08.2014 0 Comments

holidayshoppingseasonTo get a sense of how mobile devices have changed the holiday shopping experience, look no further than what Amazon and eBay offered their U.S. customers last week on Thanksgiving Day.

Each retailer featured deals on their respective mobile apps that were unavailable to consumers online. Amazon did this for the first time this year and it’s a move others are sure to follow now that the holiday shopping season officially begins on a mobile device hours before Thanksgiving dinner is served.

“A lot of this has to do with merchants making it easy for consumers to buy items on their [mobile devices],” Mary Monahan, executive vice president and research director for mobile at Javelin Strategy & Research, told Mobile Payments Today about the recent increase in remote purchases via mobile devices.

The mobile surge continued during the recent five-day stretch that included Thanksgiving, Black Friday and Cyber Monday. Adobe, IBM and others released stats about shopping trends during that period and while they varied, it was clear mobile devices impacted sales:

  • from Thanksgiving through Cyber Monday, overall online sales increased 12.6 percent, with mobile sales up 27.2 percent compared to the same period in 2013, according to the IBM Digital Analytics Benchmark;
  • Cyber Monday mobile traffic accounted for 41.2 percent of all online traffic, up 30.1 percent over 2013. Mobile sales were also strong, reaching 22 percent of total Cyber Monday online sales, an increase of 27.6 percent year-over-year, according to IBM; and
  • twenty-nine percent of sales on Thanksgiving Day came from mobile devices, up from 21 percent in 2013, according to Adobe. Mobile devices drove 27 percent of sales on Black Friday, three percent more than last year.

Last week’s frenzy was just the beginning of the mobile onslaught this holiday season. Cyber Monday now is a weeklong event for outlets such as Amazon. Super Saturday (the Saturday before Christmas Day) represents yet another opportunity for mobile sales. Christmas Eve is a cash cow for digital gift card providers, and Dec. 26 looms as another significant shopping day for consumers.

“There’s no doubt there will be recording-breaking years for mobile commerce, mobile payments and mobile marketing and promotions,” Ben Kaplan, CEO of digital gift card provider CashStar, told Mobile Payments Today in a recent interview. “I don’t think that even fully speaks to the impact mobile has in the daily lives of consumers and that it is influencing all aspects of shopping.”

Indeed, Bank of America’s recent “Trends in Consumer Mobility Report” served well as a crystal ball for mobile’s impact on the holiday shopping season.

The bank found a preference for mobile payments among consumers, with 38 percent of respondents saying they are comfortable using their smartphone as a wallet. Nearly half (43 percent) use their smartphone to purchase items online, and more than half (52 percent) report receiving deals or offers on their mobile devices.

“With holiday shopping already underway, I suspect we’ll see consumers turning to their smartphones even more,” Marc Warshawsky, mobile solutions executive at Bank of America, told Mobile Payments Today in an email. “Whether it’s for mobile payments, checking an account balance, or searching for the latest deals and offers, the smartphone has become the must-have tool for staying in financial control, particularly during the holiday season.”

Mobile’s allure as a shopping destination extends beyond the U.S., and we saw a glimpse last month of what was to come this holiday season during Singles Day in China.

Alibaba sales reached more than $9 billion on Nov. 11. Consumers conducted almost half of those transactions on mobile devices. Over the years, the holiday has become the largest online shopping day worldwide. And with Alibaba acting as Amazon in China, the company benefits in a record-setting way.

One interesting stat from last week’s holiday shopping bonanza was Apple Pay’s performance. It was a bust with consumers, at least according to one survey from InfoScout.

Only 4.6 percent of 170,000 households with an iPhone 6 device used Apple Pay to purchase items at retailers who accept the new mobile payment. Thirty-one percent of those consumers didn’t pay with Apple Pay because they were unaware that the retailer accepted it. Some 25 percent of respondents forgot to use it, which highlights how difficult it is to change consumer behavior after years of card swipes at the register.

“The checkout process has become habit for most, and integrating mobile payments into your purchase flow requires change to a very deeply ingrained pattern of behavior,” wrote InfoScout’s Ittai Barzilay on a blog post.

Apple’s bigger issue besides forgetful consumers is the fact that many of them are not familiar with how Apple Pay works despite owning one of the two iPhones capable of such payments. InfoScout’s survey found that 32 percent of respondents aren’t familiar with how Apple Pay works and 11 percent are unaware that it exists.

“That means that nearly half of people who are eligible to use Apple Pay can still be influenced via informational outreach or educational advertising,” Barzilay wrote. “We’ve already seen that most users who pay with Apple Pay find it to be easier and faster, but now Apple needs to better inform their potential user base of these benefits.”

Going into last week, Monahan did not believe Apple Pay would have much of an impact.

“Eventually, a wallet will help drive sales,” she said.

Despite Apple Pay’s shortcomings at the physical point of sale, Apple scored a victory against Android-powered devices when it came to remote shopping.

Apple iOS device owners accounted for 21.9 percent of online sales on Thanksgiving Day compared with just 5.77 percent on Android-powered devices, according to data from IBM. Apple iOS users spent more, as well, as the average order was $121.86 compared with $98.07 for Android users.

Apple should be impressed with both stats since its share of the smartphone market in the U.S. is 42 percent compared with Android’s 52 percent stake.