Sales From Smartphones up 53%, but Online Retailers Struggle to Find Growth

Jan 07, 2016 8:25 AM  By

Retailers said sales from smartphones grew 53% year-over-year, according to the State of Retailing Online 2016, conducted by Shop.org, Forrester Research, and Bizrate Insights.

Specifically, retailers surveyed report smartphone sales accounted for 17% of their total online sales in 2015, edging ahead of the 14% generated via tablets. Overall, retailers said sales from smartphone devices grew 53% over the previous year, while sales from tablet devices grew 32%.

According to the report, retailers continue to keep their mobile investments at a more moderate level: 30% of those surveyed say they invested less than $10,000 on smartphone platforms in 2015, and 17% kept budgets between $10,000 and $50,000. Mobile commerce investment will continue to grow in 2016: The survey found that one-third of retailers surveyed plan to grow their smartphone investments more than 20% in 2016, and another 34% will grow their investments between 1% and 20%.

But there’s a catch: According to the SORO 2016 report, written by Forrester Research’s Sucharita Mulpuru. While ecommerce continues to grow more rapidly than physical store sales, more web merchants than ever before are reporting tepid growth.

Seventeen percent of retailers surveyed are now reporting flat year-over-year growth figures, up from 3% from SORO 2015. Much of this is due to more retail competition than ever before. Mulpuru wrote that more than 800,000 online stores in the U.S. alone are now vying for recognition, market share, and relevance with assortment.

But competition is only part of the story, Mulpuru wrote. That’s because conversion rates are low, merchants are still running to catch up with their competitors, and consumers are spending less and depend more on promotions.

While 65% of merchants do report gradually improving conversion rates (orders divided by sessions) overall, the truth is that 59% of ecommerce retailers surveyed still have conversion rates under 3%.

And while there is no shortage of “new” initiatives that merchants can pursue, many retailers are simply diving into “old” and established best practices, Mulpuru wrote. Large and very large retailers said they would focus on newer initiatives like same-day delivery, in-store innovations, and alternative payments, while smaller retailers said they will continue to tackle the tried-and-true tactics.

While a better economy and lower gas prices should equal greater success for online retailers, the opposite trend is happening. Many consumers report still being financially troubled, and many consumers are as reliant as ever on deep discounts before they buy.