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October 08, 2013

Mobile Sales Surge 60 Percent in IBM Online Retail Index for Q3, Largest YoY Increase Since 4Q 2012

Here is some interesting fallout from the shutdown of the U.S. government. The U.S. Department of Commerce’s Census Bureau quarterly report was not published as usual. However, do not fret: the good news is that IBM is open for business, and the latest findings are showing that online mobile sales prove that the Internet continues to thrive by keeping businesses open to customer interactions 24/7/365. 

In fact, according to the IBM Online Retail Index, part of the cloud-based, IBM Digital Analytics Benchmark, 2013 third quarter mobile sales as a percentage of online sales increased more than 60 percent year-over-year (Y0Y), the largest YoY increase since the fourth quarter of 2012.

As IBM notes in describing the index results, led by big gains in Home Goods and Department Stores, mobile traffic for U.S. Retail overall reached almost 32 percent in the third quarter. This is up more than 51 percent from the same period in 2012, while online retail sales overall growing close to 10 percent.  

Image via Shutterstock 

For retailers, it pays to be online, especially to accommodate growing mobile-based transactions

Key findings of the IBM Online Retail Index include:

  • Overall online retail sales continue to grow, up close to 10 percent (YoY)
  •  Mobile percentage of sales were near 14 percent, a 60 percent increase over 3Q 2012, with the Apple iPhone generating more online traffic than any other mobile device;
  • Home Goods sales increased 48 percent YoY, with a 17 percent increase over 2Q 2013, as consumers spend money on long lasting items like appliances and home improvement items.
  • Consumers took a reprieve from colder weather by logging onto their favorite Department Store websites to stock up on warmer fall apparel and seasonal merchandise. Department Store sales increased more than 45 percent YoY, up 15 percent over 2Q 2013.

Specific highlights from IBM’s 3Q analysis include:

  • Housing Improvement Projects Fuels Home Goods Online Spending:  There was a 48 percent increase in Home Goods sales over the same period in 2012.  Average order value and items per order were also both slightly up, seeing increases of 5 percent and 6 percent, respectively. On average, consumers spent $275.96 and purchased more than four items per order.
  • Fall Weather and Seasonal Shopping Fuel Department Store Growth:  Department Store online sales were up 46 percent YoY, with mobile sales up almost 60 percent for the same period. Mobile percentage of sales hit close to 22 percent, up close to 60 percent over 2012, with the majority of mobile consumers looking to their iPhones as their shopping device of choice.
  • Retailers Make Mobile a Priority Ahead of the Holiday Shopping Frenzy:  The trend toward mobile has not gone unnoticed by retailers preparing for the holiday season. The number of consumers using a mobile device to make purchases reached almost 14 percent – up more than 60 percent compared to the same period last year – in Q3. Apple continues to dominate the mobile device experience, with the iPhone generating more traffic than any other mobile device at close to 12 percent of retail traffic – a 53 percent increase over Q3 2012. The iPad closely follows, generating 10.35 percent of traffic, with Android devices generating 9.51 percent. However, Android mobile sales grew the most with a 74 percent jump YoY.

While there is still industry debate over the effectiveness of mobile advertising, what the numbers show is there is no arguing any more that people are more than willing to use their personal devices to actually purchase things regardless of how, when, where or why that intention was created. 

To that end, it is not surprising that Home Improvement and Department Stores are leading the charge. In many instances these are impulse purchases. However, the traditional notion of impulse purchasing has been altered as a result of the popularity of shopping online. This is no long just about, for example going past a cosmetics counter and purchasing something you had not intended to when you walked through the store doors, it is about acting/transacting when the need arose, something having that personal device makes ridiculously convenient. 

It also leads to why retailers are so interested in making the payment process frictionless, and in using big data to help better predict and target when those impulses may strike, or can be nudged (coupons, time-sensitive and/or alert driven discounts, gift card expiration notifications, etc.) along. Mobile still has a way to go in terms of creating an experience where I want to engage advertising, but as noted it clearly is a transactional platform of huge and growing value.

Edited by Alisen Downey

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