What you need to know about m-commerce and how you should measure the value of the mobile consumer
Along with the emergence of smartphones, a revolutionóWith the emergence of the smartphone there has been a revolution in the wayóin the Internet. Currently, users are more active in the mobile channel than in the desktop channel. However, the most significant change, also in business terms, has been mobile applications, whichóThe development of the m-commerce market has been based on these principles, and digital goods distributed over the Internet have become the subject of trade on an unprecedented scale.
Rozwój mobile application market
What contributed to the rapid growth of the mobile app market was not only the technological change, but more importantly the systemic support that Apple and Google took by creating market ecosystems – offering not only a place to sell, but also formal facilitations, e.g. in terms of payments. It quickly became apparent that the model of making money from unit sales of apps was a simple but insufficient. DetailsóIn the case of this application, the online sales function is not even the primary oneóThe scan option is the most popular option for Polish usersóin the smartphoneóin reluctance to pay for apps. In addition, the growing intra-market competition, difficulties with customer loyalty and the relatively high cost of production dóThe digital bricks and mortar industry was reducing monetization opportunities. There was a need to create new business models, which would help to solve the problemóThe application would be more flexible and would be tailored to the needs of the smartphone user. The first segment of the mobile market, whichóThe fastest to respond was the mobile gaming segment, where subscription and freemium models were created. Both solutions apply the principle that the basic version of the application is free, while additional features or full access are paid for. There is no clear answer here, whichów hich model is more effective. In our opinion, they are róThe first segment of the mobile market that KekemekeóWe would like to draw your attention to the market, on which the application is locatedóin which products are offered.
The opposite situation can be observed in the segment of sales apps dóThe introduction of such a mechanism required changes in the functioning of the. Projects involving the replication of the functionality of theóThe first segment of the mobile market, which Kekemeke has been operating in. This is due to a misunderstanding of the specific needs of the mobile customer, whoóThe user does not necessarily care about making purchasesóWe can do shopping on a smartphone when it is more convenient and safer to do it on a laptop screen. Another factor limiting the development of applicationsóThe first segment of the mobile market that KekemekeóThe need for new business models has emerged. in terms of mobile payments. In addition, the cost of developing and promoting the application remains relatively high compared to the cost of developing and marketing itóIn comparison, for example, with building a mobile website. Many shopping applications also do not bring any added value from the user’s point of view, which makes it even more difficult to maintain. This is a phenomenon known from information applications, where a mobile user, having a choice between a mobile website (not taking up space on a smartphone) and an application presenting the same content, has no reason to install the application. That is why many publishersóMany publishers are struggling with the problem of looping their recipientsów – having an app does not increase ogóThe most important is the ability to create a detailed database of recipients, which would be more flexible and in line with theóin the content.
New shopping experience
However, the mobile market offers something that desktop e-commerce is unable to match, namely the possibility of combining the offline and online worlds and creating new shopping experiences. The application market in the broadly defined category „Shopping” The market of applications in the broad category of purchase timeóAnother factor limiting development is the use of voucher/gift applications (such as Qpony, Blix), loyalty applications (e.g. Kekemeke). Here, the user would receive added value in the form of access to promotional offers and limiting the number of loyalty/club cards in the wallet. Another example próto solve the problemóThe most important application in the consumer market is the Multikino application. Its task is to reduce queues at cinema ticket offices – The implication of this is that the level of service has been raised by skrópurchase time price. DetailsóThe main attention should be paid toóThe customer only has to choose the right productsóThe problem can be solved by the use ofóAnother example of a new shopping experienceóin stationary stores. The application, of course, presents the current promotional offer, has loyalty features, social shopping mechanisms or gamification solutionsóThe projects involving the replication of the Carrefour application. Nonetheless, the most important issue is toóThe main component of the application is the scan option&The application is a new approach to shopping, allowing for queueless shopping. Introducing such a mechanism to the application required changes in the operation of the storeóin physical. We can móe want to talk about the stores of the future with minimum purchase formalities – The customer only has to choose the right products. In the case of this application, the online sales function is not even the primary.
The possibility of combining twoóworldóOnline and offline games are first and foremost a great opportunity to gain new knowledge about the customerów. Mój Carrefour can create new streams of unique data. Let’s imagine such a situation: the application has a mechanism supporting BLE, and the store itself is equipped with a network of beacon devices. Not only will we know what the shopping cart looked like, but we will also be able to identify the map of the user’s movement through the store. If the consumer used a code scannerów to check prices and descriptionóin the productów, then we’ll extend our knowledge to include changes in shopping cart content. On this basis, it will be possible to create individualized offers for a specific customer.
A frequent criticism of the mobile channel is the low sales effectiveness. This statement seems too radical, as the e-commerce market is still looking for the best sales models in this channel. It is undoubtedly wrong to replicate 1:1 desktop solutions. In my opinion, an important success factor is the ability to create added value which is an impulse for the user to chooseóin this and not another mobile application. It does not necessarily have to be manifested in sophisticated technical solutions. For example, Empik, by creating an application, found added value in building dedicated offers for the mobile channel. Rossmann, in turn, has trained its store personnel in an exemplary manneróin, whichóof users who have been reminded to use a mobile application or who have been able to provide information when problems arise.
Analytics and mobile sales channel management
A critical skill is managing the mobile sales channel. This is possible only on the basis of qualitative research tools. Currently, there are many tools available on the market taking into account the needs of m-commerce analytics e.g.Apsalar, Count.ly, Localytics. The features which should beóThe tool of choice is:
– analysis of user trafficów, including eventów;
– monitoring of acquisition campaigns, including fraud detectionów;
– data export with user IDsów ;
– push and in-app communication;
Measuring the value of the mobile consumer
Okay, we have the tool, but what indicator should we use to assess the value of the user. This is CLTV, or Customer Life Value, a compilation of three róratioów „success” applications: revenue valuesóuser traffic analysis, retention rate and virality. CLTV is an indicator for business planning. Thanks to it we are able to estimate the value of each new user and plan the budget for gaining more.
The first step to determine CLTV is to examine what revenueód generated by an average user in a selected time range. This indicator is commonly referred to as ARPU (Average Revenue Per User). The easiest way to calculate it is to take the ratio of the sum of revenues to the number of active usersó(REV) to the number of active usersóof those using the application in a given time. The time interval most often used for calculations is one month. The problem we may face is the definition of an active user. In the case of applications in the freemium or m-commerce model, it will be easiest to assume the number of usersóin paying for products in our app in one month. Such useróin defines the skrótem MAU or Monthly Active Users.
The next step in calculating CLTV is to determine the average time that elapses from the moment of installation to the complete abandonment of the use of our application. Even more important for the calculations will be to determine the percentage of peopleób churn (CHURN). Many tools offer automated tools to measure retention. For the calculations to be reliable, it is best to use a monthly time frame. We can use a simple counting formula to determine retention:
#UR – means the number of usersów resigning during the study period
#UI – means the number of usersóat the beginning of the analysed period
By determining retention, we are able to estimate the time during which users will use the application (Life Span) – as follows:
For example, with a monthly retention rate of 80%, the life of an average user is 1.25 months.
The third and at the same time the most difficult to measure element of CLTV is app virality. App virality (K) is directly related to user acquisition costsów. The higher the value of this indicator, the lower the total acquisition cost. The difficulty in calculating the virality is due to the imperfection of the systemóThe difficulty in calculating the viral load is due to the imperfection of the systemódeles of installation. In Just Run App, we assume that this is the ratio of useróin organic to those obtained through promotional activities.
Here it is worth mentioning that organic users are definitely more loyal, in cfóas compared to organic usersóThe revenue generated by the advertising campaigns.
Ultimately, the CLTV calculation can be based on the formulaór:
CLTV = ARPU * LS / K
For an example of a crewóLet’s assume that an average user generates revenue during one monthód at 7 PLN, retention was 60%, while virality rate is 0.5. Using the above formula, we obtain:
CLTV = (7 * 1/0.6) / 0.5
It follows that the average user from the time of installation, to the time of abandoning the use of our app, will generate us revenueód at the level of PLN 23.33.
In a healthy business CLTV must always exceed CAC (Customer Acquisition Cost).
Shopping apps category analysis
Finally, some information about the presence of shopping apps in Google Play and App Store. As can be seen from the analysis, apps containing sales features do not constitute a compact category. They are very often scattered around the róThe most important element of CLTV is the number of applications in various thematic areas. Unlike Google Play, the App Store lacked categories until 2016 „Shopping”. Hence, many applications with coupons, newsletters and even purely shopping apps are still in the category „Lifestyle”. For an example of a part of the so-called. Internet pharmacies was placed in categories „Medicine” or „Health”.
Currently in Google Play there are approx. 3.5 million apps, and category share „Shopping” brand is 2.87%. Which, in absolute numbers, is 98 thousand. titleów. Very important information is that only 4% of them reached the number of over 50 thousand downloads. The category itself is currently characterized by a small growth dynamics at the level of 0.5% per month. Below we present the TOP30 apps from the following categories „Shopping”. Eight apps are distributed across all subject areasód of this group are applications belonging to sales network brands that have physical locations. Fromód them the most numerous group are food, clothing, drugstores, automotive, culture. Only three applications (Rossmann, OLX and AliExpress Shopping) made it to the list of the most popular free applications in Poland without division into categories. This is the first trójka from the category ranking „Shopping”.
In the case of the App Store, m-commerce apps are scattered among the ródifferent categories. A significant number of them are present min.: in categories „Lifestyle” and „Food & Beverage”. Currently, there are 2.2 million applications in the App Store. Share of the fourth largest category „Lifestyle” is 8.32%, in turn „Food & Beverages” 2,89%. However, the category itself „Shopping” has a share of 1.33%. This means about 29 thousand. applications. Below we present a summary of TOP30 apps from the categories „Shopping”.
Part titleóis repeated from the TOP30 Google Play list. In the list for App Store appear róOther brands, such as Joom, H&M, Zara, Nike Sneakrs, Smyk, Vitkac or Sephora. It is interesting to note that the strong e-shoe brand.pl does not appear in the Google Play listing. Rossmann, on the other hand, does not appear in the TOP30 App Store. This is possible due to the previously mentioned róThe content of the application of the categories „Shopping” in both app markets. Thirteen applications from the TOP30 list are applications belonging to sales networks. Fromód them the most numerous group is the clothing industry. Only two applications, Joom and OLX, were listed as the most popular free applications in Poland without division into categories.
The future is a combination of offline and online
Analyzing the shopping app segment, we come to the conclusion that we are entering a new level. Many companies are increasingly looking for added value for the user, who will be able to use the mobile phone in the futureóincome would be a decisive factor motivating not only to install the application, but also to actively use it. The most interesting trend in the coming years will therefore be the creation of new offline connections – online.