emarketer mobile commerce roundup

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eMarketer Mobile Commerce Roundup COMMERCE OCTOBER 2013 sponsored by US retail mcommerce sales growth has been dramatic over the past few years, albeit from a small base. But sales of products and services made to digital buyers using mobile phones and tablets will reach nearly $41 billion this year, or 16.0% of total retail ecom- merce sales. eMarketer has curated a roundup of key trends, statistics and information relevant to retailers who can no longer ignore the mobile lives of digital shoppers.

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eMarketer Mobile Commerce Roundup report

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Page 1: eMarketer Mobile Commerce Roundup

eMarketer Mobile Commerce Roundup

COMMERCE

OCTOBER 2013

sponsored by

US retail mcommerce sales growth has been dramatic over the past few years, albeit from a small base. But sales of products and services made to digital buyers using mobile phones and tablets will reach nearly $41 billion this year, or 16.0% of total retail ecom-merce sales. eMarketer has curated a roundup of key trends, statistics and information relevant to retailers who can no longer ignore the mobile lives of digital shoppers.

Page 2: eMarketer Mobile Commerce Roundup

Mobile Commerce Roundup Copyright ©2013 eMarketer, Inc. All rights reserved. 2

Mobile Commerce Roundup OCTOBER 2013

Mobile Commerce Roundup Overview

US retail mcommerce sales will reach nearly $41 billion this year, up a dramatic 68.2% over 2012 levels—and that represents a drop in growth rates since 2011 and 2012. Continued robust double-digit growth will lead to more than $113 billion in retail mcommerce sales in the US by 2017, eMarketer estimates.

Mcommerce already accounts for a sizeable share of retail ecommerce sales in the country, at a projected 16.0% this year, up from 11.0% in 2012. By 2016, one-quarter of all retail ecommerce sales will be conducted on mobile devices, including mobile phones and tablets.

Rising sales are being propelled by a growing population of mobile buyers, which will number 79.5 million strong this year. That means more than half of all digital buyers will make a purchase on a mobile device this year, up from less than one in four in 2011. By 2017, the vast majority of digital buyers will be purchasing via mobile devices.

Purchasing via tablet has already become even more popular than smartphone-based mcommerce: Nearly nine in 10 mobile buyers this year will buy something from their tablet, compared to about two-thirds who will buy via smartphone.

billions, % change and % of retail ecommerce salesUS Retail Mcommerce Sales, 2011-2017

2011

$13.57

171.7%

7.0%2012

$24.78

82.6%

11.0%2013

$41.68

68.2%

16.0%

2014

$56.72

36.1%

19.0%

2015

$75.00

32.2%

22.0%

2016

$96.81

29.1%

25.0%

2017

$113.57

17.3%

26.0%

Retail mcommerce sales% change % of retail ecommerce sales

Note: includes products or services ordered using the internet via mobiledevices, regardless of the method of payment or fulfillment; excludes traveland event ticket sales; includes sales on tabletsSource: eMarketer, Sep 2013162464 www.eMarketer.com

US Mobile Buyers, by Device, 2011-2017

Mobile buyers(millions)

—% of digital buyers

Buyers onsmartphone (millions)

—% of smartphone users

—% of mobile buyers

—% of digital buyers

Buyers on tablet(millions)

—% of tablet users

—% of mobile buyers

—% of digital buyers

2011

34.0

23.7%

26.2

29.0%

77.2%

18.3%

15.4

50.0%

45.4%

10.8%

2012

57.0

38.2%

41.3

35.0%

72.3%

27.6%

49.8

58.0%

87.3%

33.3%

2013

79.5

51.1%

52.3

38.5%

65.8%

33.6%

71.1

63.0%

89.4%

45.7%

2014

98.9

61.1%

63.5

41.0%

64.2%

39.2%

83.7

68.0%

84.7%

51.8%

2015

115.0

68.6%

74.0

43.0%

64.4%

44.1%

93.7

72.0%

81.5%

55.9%

2016

129.0

74.1%

83.2

44.5%

64.5%

47.8%

104.4

77.0%

80.9%

60.0%

2017

140.8

78.3%

91.0

45.5%

64.6%

50.6%

109.7

78.0%

77.9%

61.0%

Note: ages 14+; mobile device users who have used their mobile device tomake at least one purchase via web browser or mobile app during thecalendar yearSource: eMarketer, Sep 2013162477 www.eMarketer.com

Page 3: eMarketer Mobile Commerce Roundup

Mobile Commerce Roundup Copyright ©2013 eMarketer, Inc. All rights reserved. 3

Mobile Devices to Boost US Holiday Ecommerce Sales Growth

Mcommerce to increase its share of total ecommerce retail sales

Mobile devices account for a rapidly growing share of US retail ecommerce sales, and are expected to contribute to strong ecommerce sales growth this holiday season, according to eMarketer’s latest estimates.

eMarketer projects that retail ecommerce holiday sales in the US will rise about 15% again this year, matching last year’s gains. In total, US retail ecommerce sales for the holiday season—defined as November and December—are expected to reach $61.8 billion, up from $53.7 billion last year.

Mcommerce is expected to play an important part in overall digital holiday retail spending. This year, mobile devices will account for a larger-than-expected share of total US retail ecommerce sales, according to the newly revised forecast. eMarketer expects that mobile’s share will reach 16% in 2013, up from our previous prediction of a 15% mcommerce share this year.

The revision comes as data sets from multiple research sources showed mcommerce as a percent of retail ecommerce sales reached record highs earlier this year. In addition, large retailers, such as Best Buy and Home Depot, continue to invest heavily in smartphones and tablets, building out their mobile app and website offerings, and increasing spending on digital advertising in an effort to drive more conversions across devices and compete with companies with strong mobile infrastructure like Amazon and eBay.

In total, eMarketer predicts retail mcommerce sales will reach $41.68 billion this year, and by 2017, retail sales made on mobile devices will climb to well over $100 billion.

eMarketer believes mobile devices contribute to overall commerce sales growth in two ways, both as a driver of total sales, as more consumers make purchases on their smartphones and tablets, and, increasingly, as a shopping research tool, driving consumers into stores or back to desktops where they complete transactions.

billions and % changeUS Retail Ecommerce Holiday Season Sales, 2011-2013

2011

$46.6

16.8%

2012

$53.7

15.2%

2013

$61.8

15.1%

Retail ecommerce holiday season sales % change

Note: eMarketer benchmarks its retail ecommerce sales figures against USDepartment of Commerce data, for which the last full year measured was2012; includes products or services ordered using the internet, regardlessof the method of payment or fulfillment; excludes travel and event tickets;sales are for Nov and Dec of each yearSource: eMarketer, Sep 2013162437 www.eMarketer.com

billions, % change and % of retail ecommerce salesUS Retail Mcommerce Sales, 2011-2017

2011

$13.57

171.7%

7.0%2012

$24.78

82.6%

11.0%2013

$41.68

68.2%

16.0%

2014

$56.72

36.1%

19.0%

2015

$75.00

32.2%

22.0%

2016

$96.81

29.1%

25.0%

2017

$113.57

17.3%

26.0%

Retail mcommerce sales% change % of retail ecommerce sales

Note: includes products or services ordered using the internet via mobiledevices, regardless of the method of payment or fulfillment; excludes traveland event ticket sales; includes sales on tabletsSource: eMarketer, Sep 2013162464 www.eMarketer.com

Page 4: eMarketer Mobile Commerce Roundup

Mobile Commerce Roundup Copyright ©2013 eMarketer, Inc. All rights reserved. 4

Mobile Devices to Boost US Holiday Ecommerce Sales Growth (continued)

Tablets are particularly significant for mcommerce sales growth. As more consumers have embraced these devices for lean-back browsing of potential purchases, retailers have made greater efforts to make sure their tablet retail sites and apps are particularly rich and responsive. This year, eMarketer predicts, tablet retail mcommerce sales will hit $26.05 billion, or 62.5% of US retail mcommerce sales overall. That’s up from last year, when tablets took a 56.2% share of mcommerce retail sales.

That will leave smartphones with a 35.0% share of mcommerce sales, a percentage that will continue shrinking throughout the forecast period as sales on tablets maintain far higher growth rates. In 2017, smartphones will account for 27.0% of retail mcommerce sales, eMarketer predicts. But actual sales dollars spent on purchases made via smartphones will continue growing at healthy double-digit rates. This year, retail sales made on smartphones will total $14.59 billion, and that figure will more than double to $30.66 billion by 2017.

For the full-year 2013, total US retail ecommerce sales are expected to reach $262.3 billion, growing by 16.4% during the year. eMarketer predicts growth in the fourth quarter will reach 15.5% over the same period last year. That’s compared to Q4 2012, when the US Department of Commerce reported a retail ecommerce gain of 15.73%.

eMarketer bases its retail ecommerce, mcommerce and holiday sales figures on analysis of data from its benchmark source, the US Department of Commerce, estimates from other research firms, historical trends, reported and estimated revenues from major online retailers, consumer online buying trends, indicators of macro-level economic conditions and eMarketer interviews with executives at retailers, brands, ecommerce vendors and other industry leaders.

In this case, eMarketer evaluated more than 300 datapoints collected from over 60 research sources—analyzing methodology, definitions and historical accuracy of each—before building its model for US retail ecommerce, mcommerce and holiday sales.

billions and % changeUS Retail Mcommerce Sales, by Device, 2011-2017

Tablet

—% change

Smartphone

—% change

Other mobiledevices

—% change

Total

—% change

2011

$5.43

352.8%

$7.47

119.8%

$0.68

69.8%

$13.57

171.7%

2012

$13.93

156.5%

$9.91

32.8%

$0.94

38.8%

$24.78

82.6%

2013

$26.05

87.0%

$14.59

47.1%

$1.04

10.6%

$41.68

68.2%

2014

$37.32

43.3%

$18.15

24.4%

$1.25

19.8%

$56.72

36.1%

2015

$51.00

36.7%

$22.50

24.0%

$1.50

20.2%

$75.00

32.2%

2016

$68.06

33.5%

$27.11

20.5%

$1.65

9.7%

$96.81

29.1%

$81.20

$30.66

2017

19.3%

13.1%

$1.70

3.5%

$113.57

17.3%

Note: includes products or services ordered using the internet via mobiledevices, regardless of the method of payment or fulfillment; excludes traveland event ticket salesSource: eMarketer, Sep 2013162465 www.eMarketer.com

billions and % change vs. same quarter of prior yearUS Retail Ecommerce Sales, Q1-Q4 2013

Q1 2013

$58.1

16.3%

Q2 2013

$60.2

18.4%

Q3 2013*

$60.7

16.0%

Q4 2013*

$83.2

15.5%

Retail ecommerce sales% change vs. same quarter of prior year

Note: eMarketer benchmarks its retail ecommerce sales figures against USDepartment of Commerce data, for which the last quarter measured wasQ2 2013; includes products or services ordered using the internet,regardless of the method of payment or fulfillment; excludes travel andevent tickets; *eMarketer estimateSource: eMarketer, Sep 2013162449 www.eMarketer.com

Page 5: eMarketer Mobile Commerce Roundup

Mobile Commerce Roundup Copyright ©2013 eMarketer, Inc. All rights reserved. 5

US Mobile Payments to Top $1 Billion in 2013

Limited adoption by consumers and merchants

Despite slower growth than previously expected, proximity mobile payments will top $1 billion in the US this year, according to new figures from eMarketer, before expanding rapidly to reach an estimated $58 billion by 2017.

eMarketer defines mobile payments as transactions for goods or services made by scanning, tapping, swiping or checking in with a mobile phone at the point of sale. Often characterized as a proximity or contactless payment, mobile payments occur in real time in the real world, and are functionally different than mobile commerce—the purchase of digital or physical goods on a mobile device.

Driven by consumers buying items like daily coffee via closed-loop payment systems, as well as an increase in in bigger-ticket purchases made via smartphones, mobile payment transactions more than tripled from 2011 to 2012 in the US, eMarketer estimates, reaching $539 million last year.

Still, the market is growing slower than previously expected, as evidenced by eMarketer’s scaled-back estimates of user adoption and transaction value from initial projections in October 2012. Delays and adoption issues facing numerous mobile wallet initiatives, as well as a congested landscape of competing technologies, materially affect eMarketer’s outlook on mobile payment transaction values, which will not top $20 billion until 2016. The previous forecast predicted mobile payments would top $20 billion by 2015. Additionally, low-value purchases will still comprise the majority of transactions in 2013, causing a dip in the growth rate.

These estimates are based on the following key assumptions and variables:

■ In the near term, light users experimenting with low-dollar purchases will dominate the mobile payment audience; a smaller segment of heavy users who habitually buy their daily coffee, for example, with a mobile payment system will increase over the forecast period.

■The significant jump in total and per-user spending over the forecast period will be driven by consumers adopting mobile payments for a wider array of products and services constituting an equally broad gamut of price points. eMarketer views this diversification as critical to driving habitual consumption, which is crucial for moving mobile payments into the mainstream.

billions and % change

US Proximity Mobile Payment Transaction Value,2011-2017

2011

$0.17

2012

$0.54

225.6%

2013

$1.04

93.4%

2014

$2.59

148.6%

2015

$9.69

273.8%

2016

$26.45

173.0%

2017

$58.42

120.8%

Proximity mobile payment transaction value % change

Note: point-of-sale transactions made by using a mobile device as apayment method; includes scanning, tapping, swiping or checking in with amobile device at the point of sale to complete transaction; excludespurchases of digital goods on mobile devices, purchases made remotely onmobile devices that are delivered later on, and transactions made via tabletsSource: eMarketer, July 2013

159492 www.eMarketer.com

US Proximity Mobile Payment Forecast, 2011-2017

Proximitymobile paymentusers (millions)

—% change

—% ofsmartphone users

—% of mobilephone users

Proximitymobile paymenttransactionvalue (millions)

—% change

Average spend per user

2011

2.7

-

3.0%

1.2%

$166

-

$61.00

2012

7.1

160.7%

6.0%

3.1%

$539

225.6%

$76.20

2013

10.9

53.6%

8.0%

4.7%

$1,043

93.4%

$95.95

2014

17.0

56.7%

11.0%

7.3%

$2,592

148.6%

$152.24

2015

29.3

71.9%

17.0%

12.4%

$9,688

273.8%

$331.09

2016

41.2

40.7%

22.0%

17.2%

$26,452

173.0%

$642.35

2017

54.1

31.3%

27.0%

22.3%

$58,415

120.8%

$1,080.65

Note: ages 14+; includes point-of-sale transactions made by using mobiledevices as a payment method; excludes transactions made via tabletSource: eMarketer, July 2013159490 www.eMarketer.com

Page 6: eMarketer Mobile Commerce Roundup

Mobile Commerce Roundup Copyright ©2013 eMarketer, Inc. All rights reserved. 6

US Mobile Payments to Top $1 Billion in 2013 (continued)

■ Increased activity among these regular users is contingent on the assumption that more mainstream merchants will accept mobile payments of some kind. For example, near field communication (NFC) adoption remains a wild card. On the one hand, NFC-enabled hardware continues to proliferate. On the other hand, US mobile payment platforms reliant on NFC have, so far, failed to gain traction among consumers and merchants, even as other methods and technologies have picked up steam. The failure of large-scale mobile payment schemes to take root in 2012 put many merchants and consumers in a “wait and see” mode, resulting in lowered estimates.

■Consumers will also need to find the experience of using a mobile payment platform sufficiently convenient and valuable enough to encourage repeat use. Integration of proximity payments with other mobile commerce activities will contribute to increased consumer awareness and use, encouraging uptake, while concerns about security and smartphone battery life will gradually ebb as consumers grow more familiar with the different systems available. Absent these conditions, the market may not develop as predicted in the model.

■While the number of transactions and users have increased, a fragmented mobile wallet landscape could stifle the path to more rapid adoption. In contrast, if hardware and infrastructure impediments are resolved in a shorter timeframe, and adoption clusters around specific mobile wallets or payment mechanisms, allowing large-scale mobile wallets to make inroads with consumers and merchants, the proximity payments opportunity could accelerate at a faster rate.

Numerous forecasts tracked by eMarketer attempt to quantify the global mobile payments opportunity, although estimates vary widely based on the scope of how each research firm defines what constitutes a mobile payment, as well differing methodologies and assumptions of what will drive market growth. Players in the mobile payments value chain currently operate at a country-specific level due to local regulations and infrastructure considerations, meaning that regional perspectives can be more insightful than a global aggregate view.

Most researchers expect global mobile payments will reach transaction volume in the hundreds of billions of dollars by 2017. Despite these generally optimistic projections, discrepancies in scope, as well as downward revisions of past forecasts, underscore just how much the market is still in its early stages.

eMarketer’s estimates are based on an analysis of the market presence of major mobile payment players; estimates from other research firms; and consumer smartphone, mobile payment adoption and retail spending trends.

In this case, eMarketer evaluated more than a hundred data points from over 30 research sources—analyzing the methodology, definitions and historical accuracy of each—before incorporating them into our own model.

billions

Comparative Estimates: Mobile Payment TransactionVolume Worldwide, 2011-2017

Gartner, June 2013

Yankee Group**, April 2013

Gartner, May 2012

NPD In-Stat*,March 2012

IE Market Research, Feb 2012

Informa Telecoms &Media**, Sep 2011

Yankee Group**, Sep 2012

Juniper Research,Aug 2012

2011

-

-

$105.9

-

$47.2

$2.4

-

-

2012

$163.0

-

$171.5

$1.1

-

-

-

-

2013

$235.0

$60.7

-

-

-

-

-

-

2014

-

$126.2

-

-

-

-

-

-

2015

-

$230.3

-

-

-

$71.0

-

-

2016

-

$371.0

$617.0

$9.9

$998.5

-

$366.7

-

2017

$721.0

$531.2

-

-

-

-

-

$1,300.0

Note: *NFC/barcodes only; **NFC onlySource: various, as noted, 2011 & 2012160232 www.eMarketer.com

Page 7: eMarketer Mobile Commerce Roundup

Mobile Commerce Roundup Copyright ©2013 eMarketer, Inc. All rights reserved. 7

Affluent Shoppers Make Mobile an Essential Stop in the Purchase Funnel

Discounts get affluent mobile shoppers to buy

The wealthy consumer is highly likely to own a smartphone or tablet, and the devices are becoming critical shopping tools for these high-income individuals. In April 2013, the Luxury Institute surveyed US internet users ages 21 and older with gross incomes above $150,000 and found that more than eight in 10 owned a smartphone, while 56% reported owning a tablet. These penetration rates are well above those for the overall US population on smartphones or tablets.

As affluent consumers become increasingly comfortable with their smart mobile devices, they are turning to them throughout the purchase process. The Luxury Institute found that the most common smartphone mcommerce activity was looking up store information. After this came product research and comparison shopping.

On tablets, consumers were most likely to look up product images and read user reviews and recommendations. This points to the increasing importance for luxury retailers to make sure they have an attractive, interactive tablet showcase for their products, as tablets serve as “lean-back” devices, which consumers often use to get to know potential purchases.

When it came to making actual purchases, the store still won out as the most common place to make a purchase among affluent consumers, cited by 78% of respondents. Purchasing via the desktop web was right behind, however, cited by 77%. Women were 6 percentage points more likely than men to make a purchase through this means, while men showed a greater proclivity to buy on mobile.

Mobile websites on tablets were the place where the greatest percentage of shoppers made mobile purchases, at one out of five affluent consumers. Another 11% used a tablet app to make a purchase. Fourteen percent of affluent consumers used the mobile web on a nontablet device to buy and 12% used a mobile app.

And even if affluent shoppers have plenty of cash at their disposal, that doesn’t mean a deal won’t help them convert. On tablets, special deals or price discounts were the No. 1 reason respondents would purchase via these devices, with 43% indicating that would sway them. On smartphones, special deals tied with ease of use, at 45%, as top reasons to complete a purchase on the device.

% of respondents in each group

Mcommerce Activities of US Affluent Smartphone vs.Tablet Users, April 2013

Search for store information (times, directions, etc.)

Look up product details while on-the-go

Compare prices while shopping in-store

View product images

Receive special deals or discounts

Compare prices while on-the-go

Look up product details while shopping in-store

Read user reviews and recommendations

Check the status of an order

Check availability at other retailers

Opt-in to receive marketing messages

Watch product videos

Smartphone(n=889)

49%

33%

29%

28%

28%

27%

27%

26%

23%

20%

11%

10%

Tablet(n=634)

41%

18%

13%

42%

22%

15%

11%

42%

36%

24%

10%

21%

Note: ages 21+ with a minimum gross annual income of $150,000Source: Luxury Institute, "Luxury Institute WealthSurvey: Multi-ChannelPurchase and Behaviors," May 9, 2013157081 www.eMarketer.com

% of respondents in each group

Shopping Channels Used to Make Purchases AmongUS Affluent Internet Users, by Demographic, April 2013

Gender Age Income

Stores

Websites usinga computer

Websites usinga tablet

Mailers or catalogs

Telephone customer service rep

Websites using amobile device

Mobile app

Tablet app

Other

Male

78%

74%

20%

13%

17%

16%

14%

11%

2%

Female

78%

80%

20%

22%

14%

13%

10%

11%

2%

<50

78%

78%

26%

13%

15%

25%

20%

15%

2%

50+

78%

76%

16%

20%

16%

8%

7%

8%

2%

$150K-$199K

83%

80%

17%

18%

15%

11%

9%

8%

1%

$200K+

74%

75%

22%

17%

15%

17%

14%

13%

2%

Total

78%

77%

20%

17%

15%

14%

12%

11%

2%

Note: n=1,205 ages 21+ with a minimum gross annual income of $150,000;in the past 12 monthsSource: Luxury Institute, "Luxury Institute WealthSurvey: Multi-ChannelPurchase and Behaviors," May 9, 2013157083 www.eMarketer.com

Page 8: eMarketer Mobile Commerce Roundup

Mobile Commerce Roundup Copyright ©2013 eMarketer, Inc. All rights reserved. 8

Tablets Give Beauty Brands a New Canvas

Shoppers most often use tablets for product research, though buying via the device is on the rise

Tablets’ touchscreens create opportunities for hands-on experiences for consumers, and a platform for brands to showcase products. The content that beauty consumers devour in magazines—such as tutorials, product reviews and diagnostic quizzes—are ripe for the interactive opportunities that tablets can provide.

A survey from the Online Publishers Association compared product research with product purchase by category among tablet users in March 2013. OPA found that while the percentage of those who purchased personal care and beauty products was only 17%, that number was higher than in other categories, such as food and beverage, and health, healthcare and pharmaceuticals. In addition, the gap on tablets between the percentage who researched vs. the percentage who bought was among the narrowest for the personal care and beauty category.

Although the number of tablet shoppers is rapidly increasing, and mcommerce sales are also rising fast, it is important to keep the numbers in perspective. A March 2013 study from marketing companies SheSpeaks and Lippe Taylor found that just 8% of surveyed female internet users most often made purchases through a mobile device or tablet.

Purchasing via tablet may be nascent, but beauty industry experts say that ecommerce is just one function offered by the device.

Research via tablets is becoming more ingrained for many users, even as sales remain relatively small. “We see this every time we launch a new product,” said Alessio Rossi, vice president of digital marketing for ecommerce and customer relationship management (CRM) at Lancôme. “There is a lot of engagement, and there is a lot of [tablet] traffic that occurs online, but not as many transactions.” Customers are more likely to make replenishment beauty product purchases via the tablet.

Beauty consumers crave content: the how-tos, the reviews, the before-and-afters, the “What is my best lipstick color?” quizzes. This type of content is being consumed increasingly often on tablets.

“The tablet is becoming the ecommerce tool,” said Caroline Grange, international digital and ebusiness director for cosmetic brand Makeup Forever. “For us, it’s an investment in our future buyer.”

% of respondents in each group

Select Tablet Advertiser Categories to Which USTablet Owners Are Most Likely to Respond, byGender, Jan 2013

Food/restaurants52%

43%

Apparel40%

29%

Beauty37%

14%

Leisure activities/events32%

27%

Female Male

Note: n=1,000Source: Mojiva, "Tablets Rule: A Consumer Snapshot on Tablet Use andTablet Advertising," April 10, 2013157132 www.eMarketer.com

% of respondents

Products Researched and Purchased via TabletAccording to US Tablet Users, March 2012

Purchased

Consumer electronics 19%

Restaurants/fast food 16%

Media and entertainment 22%

Retail and apparel 21%

Food and beverage 15%

Sports/recreation/hobbies 11%

Travel service 13%

Personal care and beauty 17%

Automotive (including parts) 7%

Health, healthcare and pharma 9%

Financial services, insurance, real estate 10%

Telecom, B2B/B2C services 9%

Home furnishings

Researched

37%

36%

35%

35%

30%

30%

30%

28%

25%

24%

23%

22%

21% 10%

Note: n=710 ages 8-64; in the past 6 monthsSource: Online Publishers Association (OPA), "A Portrait of Today's TabletUser - Wave II" conducted by Frank N. Magid Associates, June 18, 2012141686 www.eMarketer.com

Page 9: eMarketer Mobile Commerce Roundup

Mobile Commerce Roundup Copyright ©2013 eMarketer, Inc. All rights reserved. 9

Mobile Becoming Moms’ Daily Shopping Companion

Clothing and beauty were top mobile shopping categories

There is no question that mobile is becoming an essential shopping tool for many US moms. According to a March 2013 survey from retail solutions company Alliance Data, more than half of surveyed mom internet users reported using their smartphone or tablet at least weekly for some aspect of shopping, whether it be research or buying. And 35% of respondents said they used their device daily for shopping purposes.

Mobile’s usefulness for shopping is easy to see. Convenience and a better ability to price compare were the top reasons moms’ reported using their device as they moved through the purchase funnel.

Clothing and beauty ranked as the top product categories for which moms shopped on their smartphones and tablets, at 56% and 47%, respectively. Households products ranked third, researched by 42% of respondents, a significant figure for CPG brands, which have already moved quickly into the mobile advertising space.

Showrooming—the practice of going into stores to compare products and prices, often using mobile to shop around—is common among moms, as well. At both electronics and big-box retailers, half of mom mobile shoppers surveyed said they used their smartphone or tablet to look up product and price info. This was slightly less common at clothing, grocery and shoe stores, but more than one-third of respondents still had shopped at each of these locations using mobile devices.

However, mobile is not the primary method US moms prefer for shopping. Only 11% of respondents said this was the shopping method they would choose, if given only one option. And according to December 2012 research from parenting app company Alt12, about two-thirds of moms said they did less than half of their shopping on mobile.

But as mobile browsing becomes more common, and retailers improve their multichannel efforts, there is no question that more moms will favor smartphones and tablets for their shopping and buying.

% of respondents

US Mom Internet Users Who Use a Smartphone/Tabletas Part of the Shopping Process, by Frequency, March 2013

Daily35%

Weekly16%

Once a month4%

Only every few months, or just a couple times a year6%

Never use mobile device to shop28%

Don't havea mobile

device11%

Source: Alliance Data, "The Mobile Mom," April 11, 2013156984 www.eMarketer.com

% of total

Amount of Shopping Conducted on Smartphone orTablet According to US Moms*, Dec 2012

All (90%-100%)3.0%

Most of (60%-90%) 12.3%

About half (40%-60%) 18.6%

Some (10%-40%) 34.7%

None or very little (0%-9%) 31.4%

Note: n=1,362; *internet or mobile phone usersSource: Alt12, Jan 9, 2013150984 www.eMarketer.com

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Majority of US Mobile Consumers Use Devices to Comparison Shop

Shopping-specific apps see heavy use

Mobile commerce is grabbing an ever-growing slice of the overall ecommerce pie. eMarketer estimates that 15% of all US online retail sales in 2013 will be made on a mobile device, an increase from 11% in 2012.

Those projections correspond with an April 2013 survey of US mobile internet users conducted by AYTM Market Research that demonstrates just how common mcommerce has become for mobile internet users. According to the poll, 55% of respondents had ever made a purchase on their mobile device, although only 9% did so with great frequency.

Researching products and prices on mobile was an even more popular shopping activity. In fact, 72% of respondents said they had used their phone to research product prices or seek a better deal online, with 22% saying they did so often.

Apps, in particular, appear to be playing an important role in leading shoppers down the path to purchase. Just more than one-third of respondents said they had downloaded an app specific to a particular store, making it the most popular type of shopping app used by consumers. That was followed by local store/shopping locator apps (26%), general coupon apps (25.5%) and daily deal apps (22.5%).

Figuring prominently in the mcommerce landscape are tablets, the ownership of which correlate strongly to digital purchases. eMarketer estimates that 63% of US tablet users will make a purchase on the device this year, with that percentage growing to 78% by 2017.

% of respondents

US Internet Users Who Use Their Mobile Devices toPurchase Products Online, April 2013

Yes, often9%

Yes, sometimes27%

Rarely19%

Never45%

Source: AYTM Market Research as cited in company blog, May 1, 2013156705 www.eMarketer.com

% of respondents

Types of Shopping Apps that US Internet Users HaveDownloaded on Their Mobile Devices, April 2013

Shopping apps for particular stores 34.0%

Local store/shopping locator 26.0%

General coupon apps 25.5%

Daily deals apps 22.5%

Other shopping apps9.5%

Source: AYTM Market Research as cited in company blog, May 1, 2013156707 www.eMarketer.com

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College Students Deal Hunt on Mobile

Mobile plays a role in more of everyday life for college students

College students have a voracious appetite for mobile apps that help them socialize and communicate. And a November 2012 online survey of 689 US college students conducted by Study Breaks and Campus2Careers finds that they are also committed mobile deal hunters.

Nine out of 10 respondents reported using their phones to scour for deals, coupons and specials; just 10% said they “never” did so. Moreover, 20% of surveyed college students were self-professed mobile deal addicts, saying they “always” checked their phones for the latest deals—another 31% checked their phones for deals “often.” In other words, over half of college students, 51%, were committed mobile deal aficionados.

As one might expect, the large numbers of students looking for purchases with phones in hand translates to large numbers of students making purchases through their phones. The study found that 70% of sampled college students made mobile purchases, and 52% did so at least once a month.

But the fact that students are focused on shopping and buying via mobile doesn’t mean they’re neglecting their social lives. When asked to name their most frequent mobile activity, other than talking or texting, fully 25% of respondents said accessing Facebook, while another 14% cited rival social network Twitter. Email was a close second overall, with 23% citing it as their No. 1 mobile task.

Taken together, 62% considered some form of digital communication to be their top mobile priority. The only other categories to crack double digits were music (11%) and “other” (12%).

Additionally, college students are using mobile phones increasingly for classwork, a sign that the devices really have penetrated nearly every aspect of student life. Over half of respondents said they used their mobile phone for school-related tasks every day.

% of total

Frequency with Which US College Student MobilePhone Owners Use Their Mobile Device to Find Deals,Nov 2012

Always20%

Often31%

Sometimes25%

Rarely14%

Never10%

Note: ages 18+; coupons, deals, drink specials, etc.Source: Study Breaks and Campus2Careers, Feb 14, 2013152571 www.eMarketer.com

% of respondents

Most Frequent Mobile Activity Among US CollegeStudent Mobile Phone Owners, Nov 2012

Facebook 25%

Email 23%

Twitter 14%

Music 11%

Maps 5%

Search 5%

Games 4%

Other 12%

Note: ages 18+; other than talking or texting; numbers may not add up to100% due to roundingSource: Study Breaks and Campus2Careers, Feb 14, 2013152575 www.eMarketer.com

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How Mobile Affects the Path to Purchase for adidas

Kerri Smith

Director of Mobility

iProspect

adidas and iProspect, its digital agency, initiated a mobile campaign in fall 2012 to measure device impact on in-store conversions, resulting in a 683% incremental lift in revenues. Kerri Smith, iProspect’s director of mobility, spoke with eMarketer’s Danielle Drolet about the adidas effort and iProspect’s overall mobile search strategy when working with brands, including implementation of Google’s new AdWords enhanced campaigns.

eMarketer: What formula are you using to see how mobile is driving in-store conversions?

Kerri Smith: With mobile, there are a lot of direct responses that indicate a specific level of intent and/or give the advertiser an ability to influence that consumer at different stages. In traditional desktop, direct response typically means a conversion. With mobile, we have to pay attention to the responses, including store locator clicks, click-to-call or downloading an application. All of those indicate a certain level of intent from our consumers and may influence and affect their ultimate decision to purchase.

It is similar in theory and concept to Google’s idea of the full value of mobile, the big difference being in how we are applying these different concepts to different brands, as well as the amount of credit we’re willing to give them. For us, it’s not so much trying to claim that these responses are conversions because we understand that they’re not. It’s more about understanding the role they’re playing in that consumer’s path to purchase. And what ability we have to not only evaluate those but also influence them.

“The goals for mobile are pretty similar to desktop in terms of proving out a direct response, an ROI or looking for traffic and engagement advantages.”

eMarketer: How do your mobile goals differ from your desktop goals?

Smith: The goals for mobile are pretty similar to desktop in terms of proving out a direct response, an ROI [return on investment] or looking for traffic and engagement advantages. But we do have some clients that are specifically leveraging [mobile] to drive consumers to the store. The main goal for most of our brands, which are in the performance and ecommerce categories, is that they want to drive revenues and return. The bigger difference is in how we are evaluating the performance of these.

eMarketer: To what degree are your clients invested in mobile search engine optimization (SEO) and search engine marketing (SEM)?

Smith: Ninety-five percent of our brands that are running desktop pay-per-click (PPC) with us are also running mobile PPC with us. [For most of them] it’s basically a company directive in that they need to be there and understand the space. If they’re doing work with iProspect, it’s going to mean that there will be mobile optimizations.

The majority of our brands are invested at least somewhat in mobile. Some brands may be minimally invested—around 10%. For others, we’re seeing that mobile is taking up 30%-plus of their budget, based on the results that they’re seeing and driving from the channel.

eMarketer: What impact will Google’s AdWords enhancements have on mobile SEM?

Smith: The changes will be massive. It’s almost as if Google is punishing advertisers that were advanced enough to really understand the idiosyncrasies of the different devices. A lot of what Google is stating as their reasons for making this change is to make it simpler for advertisers. I actually think it works against a lot of what they had been promoting for the past two years in that they’ve been promoting a specific experience because it is different—the needs of those consumers are different, the devices are different.

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How Mobile Affects the Path to Purchase for Adidas (continued)

“It’s almost as if Google is punishing advertisers that were advanced enough to really understand the idiosyncrasies of the different devices.”

With enhanced campaigns, they’re taking away the control that we have to create unique experiences for those consumers. Not only will we be less able to see where the performance is coming from and to optimize our budget to be efficient as an advertiser, but it will hurt the consumer as well. Essentially, you’re telling the advertiser that there’s nothing special or unique that they have to do for those users. It’s almost like advocating against creating a mobile-specific site or really working to leverage the channel the best way that you can.

eMarketer: What are your clients’ biggest concerns? And what are you doing to ease their fears?

Smith: The majority of our brands are really not happy about the changes. They are mostly nervous that their cost-per-clicks are going to go up dramatically.

Right now, in preparation for the June migration date, we’ve got several test brands in beta across multiple verticals so that we can help brand marketers understand campaign structure, as well as bid, ad copy and landing page strategies. The concept of redefining direct response is extremely important, especially in the next couple of months, as enhanced campaigns take away our visibility in understanding campaigns. We want to make sure that we can optimize that experience and evaluate it in a way that is holistic—to understand the impact to the brand’s bottom line vs. that one-to-one media spend to drive revenues.

Page 14: eMarketer Mobile Commerce Roundup

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Page 15: eMarketer Mobile Commerce Roundup