What’s the ROI of a mobile retail app? [includes calculation]

If you’re a retailer in 2020, you have to have a mobile presence that delivers brilliant purchasing experiences.

E-commerce has taken over shopping —and mobile has taken over e-commerce. If you’ve already invested in a mobile responsive website or taken steps to improve it, you probably think you’re done. 

But the truth is relying on a mobile website actually hurts your ability to convert. Mobile retail apps add power to your smartphone presence, giving you added capabilities that engage customers online, offline, on-the-go, or in-store. 

Big brands have been using mobile retail apps to grow mobile revenues for years, and now they’re accessible to retailers of any size.

If you need hard numbers to make the business case, here are key metrics that show how shopping apps deliver.

Top reasons why you need a mobile retail app

What will mobile’s impact be in 2021? It’s already leapfrogged desktop to become the top channel in e-commerce. As much as 70 per cent of all web traffic arrives on retail websites from mobile devices, and its bite of the e-commerce revenue apple is set to hit almost 68 per cent by 2022. 

That means more than 2/3 of your business could depend on mobile in the coming months. It’s the only place where growth is guaranteed. 

But shoppers haven’t warmed to mobile responsive websites. They lack straightforward m-commerce functions like saved customer profiles. Shoppers on-the-go can’t rely on one-click purchase, or autofill features that save them from having to type in address, shipping, and payment information. Only apps offer the types of time-saving tools that make it easier for mobile shoppers to click ‘confirm.’ 

Under Covid-19 that’s going to cost you sales.

Major retailers like Target are trying to strengthen their app offering and move more sales to mobile by adding functions like contactless in-store payment. Abercrombie & Fitch saw the number of visits to its app increase by 50% last year.

retail app revenue growth 2020 and retail app downloads

Independent retailers can afford them too

Shopping apps aren’t just for major brands. Easy app builders and SaaS solutions like JMango360 enable growing retail brands to build a premium mobile experience for a low monthly fee and set-up costs that are affordable for brands of any size. You don’t need a lengthy development process to integrate your e-commerce backend. Retail apps can be up and running within 30 days, with app marketing support available to drive more downloads. 

The numbers don’t lie. Senior eMarketer analyst Andrew Lipsman told Forbes recently that consumers have accepted mobile devices as a mechanism to purchase products. The time is right, he says, for retailers ‘to leverage new shopper behaviour by building apps, but not over-engineering them.’

People who have a negative experience on mobile are 62% less likely to purchase from that brand in the future

The business case for mobile retail apps

If your mobile presence has been a low priority, you might be leaving money on the table. Your mobile website — even if it has e-commerce capability —  can’t convert app-friendly smartphone shoppers at the rate apps do. The experience is inevitably slower and less seamless than what they’re used to on apps like Uber, Facebook, Netflix and Amazon. They’ll get frustrated and leave, probably for a competitor according to Google’s research. People who have a negative experience on mobile are 62% less likely to purchase from that brand in the future’, the research says.

Here are some suggestions for building the business case for investing in a mobile retail app. Both to win new revenues, and protect current income.

To work out your retail app ROI, consider these four variables: 

1. Your customers are mobile first

The rate at which your customers are adopting mobile is a good indicator of whether or not you should start thinking about a shopping app in the first place. Most retailers see 60-70% of traffic coming from mobile devices. But even if it’s 30-50% and growing fast, it’s a sure sign your customer base is comfortable shopping with a smartphone and ready to be drawn further in with better experiences.

ROI calculation tip: To justify the investment in an app, your mobile web traffic should have reached a point where you can confidently capture enough of it with the app so that it becomes financially viable. In our experience the mobile traffic threshold is 25-30%

2. You’ll improve conversion and AOV

The user experience is better on apps, that’s why they convert visitors to buyers at 3x times the rate a mobile responsive site can. With an average order value 50% higher than mobile sites, apps encourage bigger shopping baskets too. They also keep your catalogue handy when the customer is offline, enable one-touch payments when they re-connect, and use features like geolocation to trigger push messages that can prompt a sale. 

ROI calculation tip: Let’s say your current web traffic is 10,000 visitors per month, and 53% of those visits arrive from mobile devices. You’re currently seeing conversion of 2.4% (or ca. 127 orders a month), and an AOV of ca. 60 dollars, or $7620 in monthly mobile revenue. 

Assume app conversion will be 3x higher than your mobile site with a 50% boost to AOV.

At 5300 mobile visitors that leads to 7% conversion or 371 orders per month. AOV jumps by 50% to $90. The difference is $33,390 – $7620 = or lost opportunities equal to $25,777 a month. 

That’s $309,324 dollars extra revenues a year

3. App usage and increased lifetime value get better

Not everyone will use your app, but research shows that if a retail customer downloads a shopping app, it tends to stay on their phone. Your app becomes a permanent billboard on their home screen and you maintain the ability to include them in push message campaigns. 

Probably the biggest benefit of having a mobile retail app is the impact it has on customer lifetime value (CLV). All the options apps offer to engage — in-store, buy-now pick-up-later, support chat, etc. can all be significant drivers of customer loyalty.

ROI calculation tip: Our data shows that apps initially attract 20%  of your most loyal shoppers, and that gives app traffic a higher cash value. App visitors stay longer, view more products, come back 2x times faster, and spend more when they do make a purchase.

4. Making great retail apps is faster and cheaper than ever before

Apps used to be the province of big brands with big budgets. With today’s SaaS app building solutions, creating a full-featured shopping app is fast, easy, and affordable. Development costs effectively disappear, so you can focus on creating offers, push message marketing, and leave any catalogue changes or updates to the platform, which handles all that in the background. 

ROI calculation tip: Building a retail app with bespoke development can cost $60,000 for the initial setup plus monthly to quarterly development costs required for updates and maintenance. With an SaaS app-building solution like JMango360 the cost starts from $2,000 for the initial setup and monthly plans starting from $300 per month thereafter. 

ROI retail app calculation

Who will launch a retail app first, you or your competitors?

Want more advice on building the business case for mobile retail app development? Get in touch with JMango360 today.

JMango360 enables retailers and agencies worldwide to build premium e-commerce and retail apps. Simple, fast and for affordable monthly plans thanks to our SaaS app platform. Plus, we’ll support you all the way: from building and designing the app to monthly app marketing support and new features to grow revenues. Check out our Mobile Retail App Solutions or White label Reseller App Program

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