Though even if large retailers’ mobile commerce matched consumer mobile adoption, they can’t avoid some additional costs.
Mobile shoppers in the US have demonstrated a strong preference for free shipping and speedy delivery, which favors Amazon and ecommerce markets that don’t have the overhead of a massive store footprint.
“For a while free shipping and returns was to get people over the hump of shopping online,” said Amy Koo, principal analyst for Kantar Retail. She said to expect the costs of ecommerce fulfillment to even out for retailers, as has happened in Europe where online buyers see more flexible pricing based on whether they want standard delivery, store pickup or a rush order.
“I think you’ll see more differentiation moving forward around how the costs of fulfillment are paid for,” Koo said. “But in America Amazon did an effective job setting an expectation that shipping is free.”
Ecommerce also “increased the cost of business for physical goods retailers, since it demands investments in mobile and paid marketing programs,” Mulpuru said.
Now-common retail tech assets include apps, redesigned sites, social teams, beacon networks, consultants, mar tech point solutions, digital vendors and new talent. For the largest department stores the costs are especially burdensome.
Domino’s Pizza pivoting into online ordering or Starbucks processing pickup orders through its app can easily tie those tech investments to sales. Large department stores “are putting in processes so people can have a more efficient sales experience without associates everywhere, and generally are making investments that are more complicated and difficult to measure ROI,” Mulpuru said.
It’s a bitter pill to swallow for many in the retail space, where investments in apps, buy buttons, mobile wallets and beacons have fizzled out or seen slow returns, said Jacques van Niekerk, CEO of Wunderman Data.
“But smart retailers know how important mobile is and are willing to play the long game on that,” he said. “Consumers aren’t going to care if a retailer is cannibalizing its margin or not, so some old operating models will get hurt and change.”