Holiday Shopping More Mobile Than Ever

Source: eMarketer, DEC 31, 2012

Consumers want in-store mobile offers

Holiday shoppers were more likely than ever this year to whip out their smartphones for some mobile assistance, according to research.

When a GfK Roper poll conducted for agency SapientNitro asked smartphone owners how they used their devices for holiday shopping, higher percentages said yes to every activity queried than did so last year.

More than eight in 10 smartphone owners researched and browsed for products on their phone, up 15 percentage points from 2011, and nearly three-quarters bought something via mobile, up 19 percentage points.

These increases also come as smartphone ownership overall has increased. eMarketer estimates that nearly 116 million US consumers had a smartphone in 2012, vs. 93.1 million in 2011. So higher percentages of smartphone owners doing any given activity are amplified by the fact that the overall base of smartphone owners is larger as well.

Motorola Solutions also queried holiday shoppers about their mobile habits this December, specifically about what they were doing in-store. Age played a major role in shoppers’ likelihood of participating in every mobile shopping activity, with millennials leading the way. Nearly two-thirds of 18- to 34-year-olds reported using their mobile phone for shopping this holiday season, and almost half said this made their phone a faster resource for accessing information than asking a store associate.

As ever more consumers adopt smartphones, holiday shopping is likely to get only more mobile. The SapientNitro/GfK Roper survey asked all consumers, not just smartphone owners, how retailers could make the in-store shopping experience better for next year’s holiday season. More than half wanted exclusive offers delivered in-store to mobile devices. Among smartphone owners, in-store navigation on their phones and mobile payments were also popular.

 

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5 things to know about digital wallets

Using mobile devices to buy on online isn’t just a fad anymore

Source: MarketWatch, 11/29/12

SAN FRANCISCO (MarketWatch) — With the holiday shopping season in full swing, there are signs that mobile devices have become a force driving the e-commerce market, changing how people go about paying for goods, not only online but in traditional retail stores as well.

Evidence of that can be found in recent data from IBM Corp. (US:IBM), which showed that mobile devices accounted for 16.3% of all U.S. online sales on Black Friday, up from 9.6% on the same day a year ago.

IBM also said that on Cyber Monday, mobile devices were responsible for almost 13% of all purchases online, nearly double that on the same day in 2011.

“Not only are consumers spending more online this year, but smartphones and tablets are becoming an incremental driver of [online sales] growth,” wrote Robert W. Baird analyst Colin Sebastian in a report this week, where he estimated that mobile devices drove about half the growth in e-commerce over the Black Friday weekend.

But just as when e-commerce first came on the scene in the mid-1990s, the rise in mobile devices has come with its own set of questions about using a smartphone as a digital wallet to pay for things. Back at the dawn of online shopping, for instance, people were initially skeptical about putting their credit-card numbers into their computers and hoping that Amazon.com Inc.(US:AMZN) and other merchants wouldn’t steal their personal information.

Here are five things industry officials say consumers should educate themselves about when it comes to mobile payments and digital wallets:

1. Just what is a digital wallet?

A digital wallet is both a concept and a reality, and something that is becoming more and more associated with smartphones and mobile devices.

EBay Inc.’s (US:EBAY) PayPal is probably the best-known example of a digital wallet. You set up an account for free, enter you credit card billing information, and are pretty much done.

Your data is stored so that when you purchase something and you select your digital wallet for payment, you don’t have to re-enter your credit card number, address or any other necessary information to complete your purchase.

If you are paying with your mobile device, this can be as simple as holding up your smartphone to a digital reader at a merchant’s cash register.

EBay said the volume of mobile payments processed by PayPal on Cyber Monday increased nearly three times over the same day a year ago.

“For the average consumer, the digital wallet is about solving the problems of inconvenience,” said David Talach, vice president of industry engagement for VeriFone Systems Inc. (US:PAY), one of the biggest electronic-payments processing companies. “The main challenge is that all these digital wallets try to be everywhere, but they aren’t accepted everywhere. It’ll take some time to grow.”

And Talach’s point about the limited acceptance for certain digital wallets gets at another issue affecting the use of the technology….

2. PayPal vs. Google vs. Visa vs. …

There are a lot of options for digital wallets, and not every wallet is accepted everywhere. Because of this, choosing might just depend on familiarity with a name — and convenience of where the wallet can be used.

“Nobody’s going to adopt anything that’s not going to solve a problem in an existing way,” said Anuj Nayar, a PayPal spokesman. “Right now, everybody’s looking at technology and not what it’s doing to make my life better. It should be about technology to make the consumer’s life easier.”

Some of the leading digital-wallet providers are:

— PayPal, with its ties to eBay and other online retailers, has recently added deals for its digital wallet to be used at Home Depot (US:HD) stores, and is in the process of expanding its usage to wherever Discover (US:DFS) cards are accepted at offline retailers.

— There’s also Google (US:GOOG) Wallet, which lets users store credit cards, gift card information and other data on their Android-based mobile phones in order to pay for things at merchants who use MasterCard’s PayPass and Visa’s payWave systems by tapping their phones on a terminal at the time of payment.

— Earlier in November, Visa (US:V) staked its claim to the digital-wallet marketplace as it expanded its V.me service to include 53 more banks and 23 merchants, such as 1-800-Flowers.com(US:FLWS) and jewelry company Blue Nile Inc. (US:NILE)

— Mobile-phone network operators AT&T (US:T), T-Mobile USA and Verizon (US:VZ) founded Isis, a digital wallet that stores credit, debit and loyalty card information. Currently, Isis only accepts payment cards from American Express (US:AXP), Capital One and J.P. Morgan Chase (US:JPM)and the service is only available in Austin, Texas and Salt Lake City.

— Merchant Customer Exchange, or MCX, is a digital-wallet application currently under development, but with the backing of several major merchants and retailers, including Wal-Mart Stores Inc. (US:WMT) , 7-Eleven Inc. and Target Corp. (US:TGT).

3. NFC

The terms NFC refers to “near field communication,” a set of technology standards that allow smartphones and other devices to communicate, via radio waves, by touching each other or getting very close together.

If you have used an Android-based smartphone with Google Wallet to pay for something, then you have used NFC. The technology is an outgrowth of RFID standards that transmit information between devices in short bursts, and only when the devices are being used to complete a transaction.

The technology, which rivals that of traditional bar-code readers, is seen as having a set of pros and cons, even as it becomes a more pervasive means by which people can use their mobile devices to complete their purchases.

One of the main issues with NFC is that it isn’t used everywhere.

“NFC’s been bandied about so much that it’s practically become part of the vernacular,” said Tom Nawara, vice president of solutions and innovations at Acquity Group, a digital-services and e-commerce branding consultancy.

“For all of its hype, there are a couple of Catch-22 items here,” Nawara said. “It requires a lot of parties to agree on using it, and one is the end consumer. On the opposite side is the merchant, for whom it takes a significant investment in hardware to make this work.”

Jerry Irvine, chief information officer of IT consulting company Prescient Solutions, said one of the benefits for merchants with NFC-standard payment systems is that “it gives them the ability to offer an easy way to pay without having to invest in a proprietary device.

Still, Irvine said, “I wouldn’t do it [use a smartphone to pay] without the NFC chip.”

4. Security matters

Irvine said that with digital wallets and mobile payment systems still in the relatively early stage of adoption, “these are going to be used across many mobile devices, which are the most vulnerable platforms in the computing world.”

“Once people have physical access to a device, getting data is easy,” Irvine said. “Depending on how they [mobile devices] communicate with each other, there is a great ability to steal data.”

But Irvine said that at the end of the day, there is no foolproof way to ensure that someone’s personal information is 100% secure at all times on their smartphone.

Irvine says the risks are similar to that of a person’s data being stolen from a magnetic strip off of a credit card, and suggests that people use just one, small-limit credit card for their digital-wallet transactions.

“When it comes to security, there is the benefit of leveraging a lot of technology that already exists,” said John Sims, president of Sybase 365, the mobile services division of SAP AG (US:SAP). “There are multi-step authentication schemes and encryption. If my mobile device has become my wallet and I lose it, I can do a remote wipe of it and know the data is still secure.”

5. Loyalty and convenience will make a difference

“We’ve got the gift-card graveyard in our wallets, and it’s a problem,” said David Stone, chief executive of CashStar, a company that provides platforms for retailers to digitize their gift cards. CashStar’s clients have included Starbucks Corp. (US:SBUX) and Groupon Inc. (US:GRPN)

Stone is referring to the situation whereby a person carries around multiple gift cards in their wallet that they have likely forgotten about. The digital wallet offers the potential to keep gift cards as digital items, thus clearing out all the space that half-used plastic cards use up in a traditional wallet.

“There’s no question that people don’t want to schlep around a stack of plastic gift or loyalty cards,” Stone said. “When you take the gift card and turn it into something digital, you no longer have to carry all that extra stuff with you.”

Among the advantages of having gift and loyalty cards in a digital wallet is the potential to reward customers’ loyalty with instant deals as soon as their smartphones are recognized when they place an order or enter a store.

Starbucks, for example, offers a mobile deal for reward members that gives them a free coffee for every 12 drinks they purchase.It’s the digital-wallet version of a frequent customer stamp or punch card.

“Imagine walking into a Best Buy, and the staff member knows what you bought a year ago,” Stone said. “They can suggest other things, and it shows they care about me and my business.”

In Stone’s opinion, integrating gift and loyalty cards into digital wallets can act as a catalyst for increasing people’s use of mobile payments, allowing them to get comfortable with the new way of paying for things without having to worry about the technology behind the digital wallet.

“People don’t care about the systems,” Stone said. “For your customers to care, it has to solve two problems: It’s got to work and be really convenient.”

Gen Xers the Biggest Online Retail Spenders, Gen Y Most Connected

Source: December 21, 2012 by MarketingCharts staff

Forrester-Online-Retail-Spending-by-Generation-Dec2012With retail e-commerce setting new peaks seemingly with every passing week, and an impressive87% of the online population visiting a retail site in November, new research from Forrester Research identifies who the biggest spenders are on an age basis. In itsState of Consumers and Technology: Benchmark 2012[download page] report, Forrester finds that more than three-quarters of the 57,499 US online adults surveyed had ordered products or services online during the previous 3 months. And while Gen Y adults (24-32) were the most likely to have done so, it was Gen Xers (33-46) who spent the most.

Specifically, 84% of Gen Yers shopped online during the 3 months prior to the survey, slightly above the roughly 8 in 10 Gen Xers who did so. But, with an average $561 in spending, Gen Xers spent about 15% more online than Gen Yers ($489), and roughly 25% more than the average online adult ($449).

While Gen Z (18-23) was about average in its propensity to shop online, its average spend stood at just $294, even less than the Golden Generation (68+; $297), and the least of all generations.

4 in 5 US Adults Are Online

Further analysis from the survey indicates that an estimated 181.9 million of the 229.6 million US adults are online, or 79.2%. Gen X sports the largest number of online adults (46.5 million), followed by Gen Y (33.4 million) and Younger Boomers (47-56; 33 million).

When it comes to connectedness, though, Gen Y moves to the fore, owning an average of 2.2 connected devices (desktop, laptop, netbook, tablet, smartphone). They’re most likely to own a tablet (25% – equal with Gen X), netbook (11%), internet-connected TV (13%), and e-reader (21%). They also sport the highest rate of smartphone adoption (72%), far ahead of Gen Z (64%) and Gen X (61%).

Other Findings:

  • Forrest predicts that the online population will grow to represent 84% of the adult population by 2016.
  • 19% of online adults own a tablet, up 11% points from 2011.
  • 10% own an internet-connected TV, up 2% points from last year.
  • Gen Zers have an average network size of 306 on Facebook, the largest of any generation. Gen X has the largest average network on LinkedIn (98) and Twitter (80).
  • The average social networker likes 9 brands on Facebook (13 for Gen Zers).

About the Data: The Forrester data is based on its North American Technographics Online Benchmark Survey (Part 1), Q2 2012 (US, Canada), in which it conducted an online survey fielded in April and May 2012 of 58,068 US and 5,635 Canadian online adults ages 18 to 88. All data contained in this article is specific to the US.

Holiday Highlights: Spending Tallies, Consumer Behavior, and More

December 20, 2012 by MarketingCharts staff

comScore-Season-to-Date-Retail-E-Commerce-Spending-2012-v-2011-Dec2012

If there was ever any indication that the holiday period is in full, unfettered swing (aside from today’s date), it would be the latest figures from comScore, which show $35 billion in retail e-commerce spending for the season-to-date, including the first $7 billion online spending week, from December 10-16. That includes4 individual days during that week with more than $1 billion in spend, led by Green Monday’s almost $1.3 billion in sales.

Figures from the Chase Holiday Pulse show a similarly high level of activity during the so-called “Green Week” (Dec. 10-16). Those results, based on aggregated processing data from 50 of Chase Paymentech’s largest US e-commerce merchants, show that Green Week was the busiest online shopping week of the season, with 1.3% more transactions than even Cyber Week (November 26 – December 2). Even so, the Chase data puts Green Week’s sales volume slightly (0.9%) below Cyber Week’s tally.

Holiday Highlights from the Research Pile

Obviously, given the importance of the holiday season to the retail year, the amount of research being released has been weighty. Below is a list of interesting points from studies released this month (in reverse chronological order) and not covered elsewhere on MarketingCharts, with a link to each source for additional results, and the date of release.

Shopping Destinations (including online, mobile commerce)

  • Mobile devices will affect the shopping experience for 87% of US adults. Source: Mobile Marketing Association and Sybase 365, reported by Mobile Commerce Daily. Date: 12/19. For more on mobile shopping this holiday season, see here.
  • For the week ending December 15, 57% of consumers shopped at a brick-and-mortar store, and 64.5% made a purchase. Source: NPD Group. Date: 12/18
  • During a 10-day period beginning on Thanksgiving Day, 1 in 5 online shopping sessions began on a search engine. Source: RichRelevance. Date: 12/13
  • Online sales generated via rewards-based sites soared by 88% between Thanksgiving and Cyber Monday. Source: Cartera. Date: 12/13
  • Consumers say Apple provides the best mobile shopping experience of various retailers, but Walmart is most popular for browsing and purchases. Source: Mobiquity. Date: 12/12
  • 81% of shoppers prefer to shop through mobile browsers rather than through smartphone and tablet applications this holiday season. Source: BuyVia. Date: 12/11
  • 33% of consumers plan to shop primarily or online in-store, compared to 18% who plan to shop primarily or exclusively online. Source: Ipsos. Date: 12/6
  • Women are more likely than men to be using their mobile devices for a range of activities this holiday season. Source: Prosper Mobile Insights. Date: 12/4

Marketing and Advertising

  • Real-time bidding (RTB), which accounted for 20% of all paid impressions during Q3, soared during the Thanksgiving holiday week to range from 40 to 45% of all paid impressions (50-65% in the shopping vertical). Source: PubMatic. Date: 12/20
  • Return on ad spend from Facebook ads reached $10.95 on Cyber Monday. Source:Kenshoo Social. Date: 12/13
  • Newspaper ads (43%) are the most popular way for consumers to find deals, ahead of promotional flyers and circulars (38%), TV and radio ads (36%), and email promotions (29%). Groupon (15%) and Facebook (11%) prove less popular. Source: Consumer Reports. Date: 12/6
  • Retail CMOs say that social media represents 10% of their marketing and advertising budgets this holiday season. Print is the top expenditure for 42% of respondents, and broadcast advertising the biggest outlay for 22%. Source: BDO USA. Date: 12/3

Consumer Behavior and Wish Lists

  • 55% of American teens only want to receive gifts they’ve identified on a wish list, rather than be surprised. American teens prefer money over presents. Source: Research Now and K&A Brand Research. Date: 12/19
  • Gift card sales will top $100 billion this year, at $110 billion, as 85% of Americans will exchange them. Source: CEB TowerGroup. Date: 12/17. More on gift card purchases, courtesy of BIGinsight, released here on December 18.
  • December 20 is slated to be the busiest day in UPS’ history, as it expects to deliver 28 million packages. Source: UPS. Date: 12/17
  • As of December 10, consumers had completed an average 57% of their holiday shopping, with clothing the top gift. Source: NRF. Date: 12/13. The same day, Nielsen reported that 54% of consumers had yet to begin their holiday shopping. Source:Nielsen. Date: 12/13
  • US broadband households are more likely to buy a tablet than a laptop this holiday season. The iPad is favored over the Kindle Fire. Source: Parks Associates. Date: 12/13
  • 12% of consumers plan to buy music as a gift this year, and these buyers will up their spend by 18% over last year. Source: NPD Group. Date: 12/10
  • The top tech gadgets mentioned on social media on Cyber Monday were the iPhone, Xbox, and Wii. Source: Compass Labs. Date: 12/10
  • Hannukah shoppers expected to spend $945 this year, 26% more than holiday shoppers in general. Source: BIGinsight. Date: 12/7
  • 2 in 3 holiday shoppers will buy gifts for themselves. Source: Lab42. Date: 12/7
  • Among consumers top gift items for the holiday season, fragrance has moved up to the #6 position. Source: NPD Group. Date: 12/6
  • 1 in 4 online Americans are last-minute shoppers, waiting until just days before holiday events to make their purchases. Also, an estimated 8 million admit to forgetting a holiday gift for their parents. Source: CashStar. Date: 12/5