The Mobile Commerce Landscape: Interview with Peter McLachlan (Part 1)

Peter McLachlan

Peter McLachlan

Recently, we had the opportunity to sit down with the Chief Product Officer and co-founder of Mobify, Peter McLachlan. He sets the company's product and long-term roadmap, and ensures Mobify is solving the most important problems for commerce on mobile. We discussed trends and key drivers in the mobile commerce landscape. The following is Part One of a two-part series and contains excerpts taken from our wide-ranging discussion.

Mobile traffic continues to soar, but mobile revenue has yet to follow. What is the reason for this gap and what can retailers do to take advantage of the opportunity?

I think there are a few explanations.

First, recognize that mobile behavior is organic and is changing fast. So many of these challenges are evolving organically.

Most mobile interactions happen in what I call “found moment” transactions much of the time. Anytime a customer is on the go and pulls out their phone to interact with a piece of physical or digital advertising, you may have a few minutes to engage them, but most of the time, you only have five or ten seconds. We can’t predict when they’ll be interrupted by a person walking into the conference room, or their elevator or train arriving. Sometimes, a mobile transaction will not be completed, no matter how fast or great the experience is, just because people are interacting with these sites on the go.

Second, the stats we’ve seen about how people are using mobile suggests that at this point, for many brands, the majority of pre-shopping activity and research happens on the phone. This makes a lot of sense when you consider the freedom that people have with their own device. A lot of times, people use work-provided computers and may be hesitant to use the device for non work-related things. Instead, they’ll do pre-shopping research on the phone with the intent to purchase in store. Retailers should look at things like location and marketing analytics to better understand the customer journey between ecommerce and brick & mortar.

Friction in the checkout flow, including payment, continues to be a primary pain point in the mobile experience. What are some strategies and best practices to address this?

You want to make checkout fast. Ideally, try to get it down to a single page. Remove every unnecessary field and distraction. If you still have a menu or other navigational elements on the page, review your user experience and just focus the user on doing one thing, which is getting through the payment process.

On the technical side, conversion rate problems are often due to payment friction from overly long checkouts. That friction contributes to why, at Mobify, we see clients come to us who are experiencing a 40 to 60 percent customer drop-off in the payment funnel during their checkout flow. There are a few payment methods and solutions now that can address that. Google released a Web Payment Request API, which is the web standard equivalent of Apple Pay and makes payments as easy as a thumbprint.

These payment technologies have only been out for a few months now, so it’s too early for definitive data. By the end of the 2016 holiday shopping season, we had collected some pretty interesting data about changes in conversion rates from the retailers that were able to implement these native payment methods on the web before their peak trading season.

With Mobify’s Progressive Mobile, you can implement the recently mentioned native payment methods such as Apple Pay for the web or payment request’ API.

You should try to keep your users signed in on the web, if possible. I’m always signed into Uber, I’m always signed into Facebook, so it doesn’t make a lot of sense for websites to sign me out on mobile either.

Last but not least, take a look at some of the new APIs coming to the web around federated login, such as the Credential Management API. If your site supports social sign-in, this will enable automatic sign-in for any user who is signed into any other site using social credentials. You can even prepopulate that data in the checkout field to make it more seamless.

Are there other players in the payment industry who are poised to take a leading position?

The Payment Request API is an agnostic web standard and is becoming more common. Although it’s been implemented in Google Chrome first, the functionality will soon be available in other browsers. It works like a wallet for your payment card information, similar to an auto form fill. It is a powerful tool, and it’s not tied to any single service provider. The Payment Request API really provides access to a totally standard, neutral approach to solving the payment problem. In the future, there will be integrations (called “Payment Apps”) with payment providers we’re all familiar with such as PayPal.

What does the rise of Progressive Web Apps mean for the native app ecosystem?

It’s sort of funny, I think everyone is almost hoping for a war or rivalry between web and apps. A lot of retailers got burned by going into the native app ecosystem without a concrete business goal for their app and a go-to-market plan to achieve that goal. The web is easier for retailers because it’s better understood by their teams and Progressive Web Apps have a tremendous amount to offer in terms of a “best of both worlds” approach. They are a huge step forward for the web. Making the web app-like is a big change. I do think there’s going to be a shift in that more brands will recognize that they should stay web-first, but I also don’t think that native apps are going anywhere especially for multi-channel retailers and larger brands.

Apps are still great for creating an enriched experience, driven by location, contextual content, and even augmented or virtual reality – none of which is going to be immediately suitable for Progressive Web Apps in 2017.

The web is going to continue to provide the biggest reach. For the vast majority of retailers, this is where most of the digital equivalent of foot traffic is going to be coming into their website. Only a small percentage of that traffic is loyal users who are installing or regularly using their native apps.

If you’re a large enough retailer, it makes sense to continue to have an app to serve that loyal, maybe small, group of regular buyers with the app installed. For everyone else, why shouldn’t they have a fantastic app-like experience on the web that includes fast performance, native payments, and seamless sign-in?

Given the low adoption for native retailer apps (with the exception of a very few major brands), do retailers who embrace Progressive Mobile still need to create separate native apps?

I would encourage those retailers to see whether they can do both by leveraging one code base using a platform solution. If you do have to pick or choose, you absolutely should do web first. It comes back to reach and how you acquire customers. If you developed an app first, how would you acquire customers? You’re probably limited to paid activities to drive app downloads, and even then, in your checkout funnel you’ll see quite a lot of friction and drop off in the ‘install the app’ chunk of the funnel.

Web is where you’ll get organic as well as paid traffic, and it’s where efforts around social are going to bear through with people sharing your brand and your products online and providing URLs. All of this is going to drive traffic to your website.

When you’re ready to extend that experience, in an ideal world, you’ll be able to leverage the same code base to extend into an app at an incremental cost, and you won’t need to build a huge chunk of custom code from scratch. Sometimes, even if you do need to, and you’re a large enough retailer, it can still make sense. If you crunch some numbers - for instance, let’s just say 5% of the customers of a retailer like Nordstrom Rack install the app, and the conversion rates of those people is 1½ times the normal conversion rate, then it still makes sense to have a transactional app.

Even if you intend for your app to be used primarily for experiences, customers will be confused and frustrated if you don’t offer transactions. Transactions aren’t a compelling reason to justify an app investment, but they are the minimum. Compelling business reasons include loyalty, in-store mode, and enriched experiences.