Notable Views: Mobify CEO on Mobile Commerce

Editor’s Note: “Notable Views” is a series where we ask leading experts to address critical, ecommerce-related topics. For this installment, we corresponded with Igor Faletski, a mobile-commerce authority and CEO of Mobify, a mobile development firm.

“Retailers Retool Sites to Ease Mobile Shopping” is the title of the recent New York Times article on the reality of mobile commerce. In that piece, The Times reports what many ecommerce merchants already know: Mobile commerce — for physical goods — has yet to materialize.

But the growth of Internet-enabled portable devices — such as tablets and smartphones — continues, and few observers doubt that consumers will use portable devices to at least browse, if not purchase, physical products. The question then becomes how merchants should utilize those devices, and how much money should they spend in the process.

Igor Faletski

We posed those questions recently to Igor Faletski. He’s the co-founder and CEO of Mobify, a Vancouver, Canada-based mobile ecommerce firm with a decidedly partial view on the future of mobile commerce. Mobify has received increasing attention for its mobile web platform, which is used by high-profile ecommerce and publishing companies like Wired magazine, Conde Nast (magazines), GAP, Threadless (an ecommerce apparel company), and the Kiwi Collection (a high-end hotel and resort booking company).

What is a mobile device?

“A mobile device is one that a person has with them nearly all the time. Traditionally it’s been a cell phone, but recently smartphones and smaller tablets took over. Having access to a personal computing device that is permanently connected to the Internet changes the way we communicate (and shop).”

Do certain devices capture more sales online?

“The same devices that drive mobile web growth today — especially iOS and Android models – strongly contribute to mobile ecommerce revenue. In general, creating mobile storefronts for legacy devices is hardly necessary – there’s no ROI. New smartphones ship with WebKit or comparable mobile browsers and will continue to quickly gain market share. There are still plenty of web-capable legacy devices out there, but users often don’t see them as secure and effective enough to be used for online shopping.”

Are there differences in how various types of items (merchandise, music, apps) are purchased on mobile?

“Mobile shopping is all about instant gratification. Metrics show that many mobile users come with intent to purchase a particular item, rather than browse the entire product catalog. Therefore lower priced items that require less research — books, T-shirts — will sell in more quantities than expensive items. Apps and music are in a category of their own on mobile – relatively cheap and available in just seconds, digital downloads already drive billions in sales. One of the interesting barriers to mobile ecommerce adoption is that shipping might take weeks, even if the purchase itself takes a minute. Whoever solves that problem will revolutionize commerce in general.”

How can retailers determine the return on investment on mobile development?

“By looking at their analytics – specifically, the mobile revenue lift. In many cases, mobile audiences of desktop websites exhibit bounce rates of over 80 percent with extremely low conversions. Launching a mobile website or a transactional app can fix this. Return on investment can be determined by doing a simple ‘before and after’ comparison on core mobile metrics. Many retailers will be pleasantly surprised to see their initial costs recouped in just a couple of months; most of Mobify customers double their mobile revenue during the first 100 days after launch. There are other effects of mobile initiatives (such as desktop or retail revenue increases), but they’re hard to measure objectively. At the end of the day, a mobile-facing storefront is quickly becoming a necessity and something consumers expect.”

Are mobile apps better for ecommerce than mobile-optimized sites? Or does a retailer need both?

“Apps and mobile websites are simply different channels for reaching the audience. Ideally, the retailer should determine user preferences prior to doing any research and development on mobile. Apps can be expensive, especially when considering cross-platform development and ongoing maintenance.

“In contrast, the web provides a way to reach the entire audience, which is crucial. Mobile websites are becoming standard in ecommerce. Without one, a retailer ends up wasting a growing portion of its pay-per-click spend — upwards from 10 percent in some cases, according to Google — email and organic traffic. At Mobify, we recommend starting with mobile web and develop apps for complementary rich functionality.”

How has the iPad changed ecommerce?

“iPad is introducing a new interaction model. It is displacing the desktop for home and office users, while providing an alternative to smaller mobile devices. Tablets have capable web browsers and the users are favoring high quality, app-like visual experiences. It is not uncommon to see iPad listed as number 1 or 2 on a retailer’s mobile device traffic chart. But we recommend evaluating tablets separately. 2011 should bring a lot of growth in ecommerce transactions from tablets, primarily at the expense of desktop purchases. Tablets are often used at home or in the office, where desktops used to be the dominant access points to the web.”

What makes iPad design different than desktop and smartphones?

“The first, crucial step in designing for the iPad is thoroughly testing the existing website. Due to a unique viewport, touchscreen and text input, iPad users can encounter unexpected issues. Tablet audiences prefer the full browser experience to mobile sites, so further design effort should focus on readability and improved touch handling. Hard-to-read fonts, interactions made for mouse clicks, as well as custom effects may interfere with the browsing experience on the iPad. A lot of gesture-driven user interface metaphors like ‘pinch to zoom’ and ‘swipe to update’ are also making their way from apps into tablet-ready websites. This would never be possible on a traditional desktop website.”

What about competing tablets?

“In 2010, iPad dominated the North American market. While that won’t change quickly, there were over 80 announcements of new tablets at CES 2011, the tradeshow, alone. In particular, new releases from Motorola (Xoom), BlackBerry (Playbook) and LG (G-Slate) are going to be interesting to watch. With so much variety in screen sizes, OS capabilities and hardware, tablets will bring more fragmentation to the online audience. Designing for the web browser is the only way to prepare for this – iPad apps alone are notoriously expensive to produce. Even Facebook doesn’t have one yet.”

Are conversion rates different on smartphone and tablet devices?

“Yes, and the difference is very pronounced. Tablet conversions are often 4 or 5 times those of smartphones for some retailers. Most desktop sites work well on the iPad and consumers prefer the ‘touch’ buying experience to clicking around using a mouse. It’s unfortunate that Google Analytics puts the iPad into its ‘mobile’ category together with smartphone devices. The average bounce rates and conversions for the mobile category are inflated, making it difficult to draw conclusions. However, as mobile and tablet websites become more advanced, we expect this gap to close.”

What’s the purchase conversion rate of visitors to a smartphone mobile shopping cart?

“It really varies, from fractions of a percent to low single digits. Desktop websites without mobile versions have the lowest conversion rates. Aside from that, purchases are affected by available payment methods – services like PayPal Express make checkouts easier for new customers. Finally, price of merchandise, current discounts and promotions, type of goods (physical versus digital) all have an effect on the conversions.”