App economy is exploding
Mobile spending in Western Europe is expected to increase eleven-fold to €19.2 billion (£16.2 billion) by 2017. Currently, 66 per cent of payment processes attempted with mobile phones are abandoned before completion, with 46 per cent of people failing to complete a purchase because the process "takes too long" – that is, more than 60 seconds to complete a payment. Meanwhile, 41 per cent fail to complete a purchase because it is "too difficult to enter card information."
Established companies using traditional business models are often reluctant to take m-commerce seriously. According to Deloitte, 81 per cent of retailers state that the prime objective of mobile for their company is to drive revenue to their website, as opposed to providing a revenue-generating tool.
But why are apps consistently failing to meet consumer expectations and how can we realise the full potential for the app economic boom?
Research carried out by Judo reveals that businesses that are most sensitive to the very real prospects of m-commerce as a separate phenomenon from e-commerce will rise above the competition - but only if they are able to deliver the innovations that customers are increasingly coming to expect.
Web developers vs m-commerce growth
Recent data reveals that 90 per cent of people shift devices to accomplish a goal – such as moving from phone to desktop in order to complete a purchase. This is put into context when one considers the fact that 71 per cent of global mobile web users expect websites to load as quickly or even faster on their mobile phones than on their desktops at home.
This indicates a clear gap between what consumers are demanding and what the market is currently able to supply. This is fuelled by the prevailing attitudes among established businesses that refuse to take the potential of m-commerce seriously, or fail to see m-commerce as a distinct entity to e-commerce. This is partly because 60 per cent of app developers currently fail to break even on their apps - App Promo claims the figure is actually closer to 90 per cent. Figures such as these re-enforce the prejudices of developers and encourage businesses to forgo app development altogether and opt for a mobile site instead. They claim the advantages to a mobile site are as follows:
- It can be developed in sync with the main site
- It often requires less maintenance
- There is no revenue sharing with an app-store
A predominant trend amongst established businesses is that if they decide to develop an app, they do so somewhat begrudgingly. Also, a "hybrid" app is often developed more with the app developers' convenience in mind rather than what kind of app is right for their customers and business model. The apps produced in such conditions are often little more than browsing tools, and considering that 81 per cent of smartphone users agree that spontaneity plays a major role in mobile shopping, this demonstrates a significant failure on the part of businesses to understand modern shopping habits.
Native apps vs hybrid apps
A native app is an application that has been developed for use on a particular platform or operating system, capable of taking full advantage of the operating system's features and technological upgrades. Hybrid apps, on the other hand, combine elements of both native apps and web apps and are generalised for use on multiple platforms. The previous section is concerned with what established businesses are comfortable with and what they are prepared to try, regardless of the frustration caused to consumers. Indeed, it has been found that 57 per cent of mobile customers will abandon a site if they have to wait three seconds for it to load, while Amazon reports that every tenth of a second in loading time results in a one per cent loss in sales.
In addition, native apps are up to 10-15 per cent faster than hybrid apps, so if something takes four seconds to load in a native app, it could take six seconds in a hybrid. This kind of delay is responsible for many mobile cart abandonments. Any kind of lag in loading time for the consumer hinders a business' ability to convert browsers into buyers. Yet established businesses still refuse to address these figures, to the extent that by 2016 half of all apps are predicted to be hybrid. From a business perspective, based on existing market opportunities, this makes sense: hybrids are often cheaper to produce and take less time to develop for different platforms. However, while they help the business in the short term they prevent the customer from having the kind of user experience they expect, thus risking damage to the business in the long-term.
The success of Facebook and LinkedIn
When we add the stories of Facebook and LinkedIn to this mix, the argument for the development of native apps over hybrids becomes very strong. Both firms recently switched from hybrid to native apps but why? Plenty of reasons have been given for this change, but the common theme is that the companies are much more concerned with user experience than with their development teams' woes.
One major reason for the switch is speed. A native app will always be faster and smoother to use than a hybrid app. Native apps are also noted for their responsiveness. When you move your finger across a screen a native app will respond almost instantaneously. The same applies to smoothness. Animations and movements in native apps look better and feel less clunky than on mobile websites or hybrid solutions.
LinkedIn has spoken publicly about its decision to change and has gone some way to debunking many of the arguments that developers use to support web-apps (hybrid apps) or mobile sites. LinkedIn director of engineering Kiran Prasad said "A few things are critically missing (for hybrid apps). One is the tooling support – having a debugger that actually works, performance tools that tell you where the memory is running out."
Another distinct advantage of native apps lies in their local storage capabilities, meaning you don't need an Internet connection in order to use them. You can save your work locally and then the app will connect or upload it once you regain Internet access. This is particularly useful for professionals on the go, as they could perform tasks like updating their LinkedIn profile during that rare spare time while travelling to and from business engagements.
Prasad contrasts this with the burgeoning support available for native apps, saying "If you look at Android and iOS, they are two very large corporations that are focused on building tools to give a lot of detailed information when things go wrong in production." He also believes that with mobile websites and hybrid apps, similar kinds of tools are often difficult to find and ineffective.
Somewhat surprisingly, there are some serious objections to the adoption of native apps. Many of these have been put forward by app guru Jacobi Nielsen, who suggests that developing applications - already a costly undertaking - will become more and more expensive, with the rising costs of the platforms for which they have to be developed, citing the fact that iOS has already forked into iPad vs iPhone and that Kindle Fire has effectively forked Android.
Again, these hurdles are business-centric and can only be overcome by businesses choosing to tackle them for the benefit of their customers. Nielsen might be correct about increasing app development costs, but evidence suggests that the rising use of mobile apps to make payments will more than compensate for any increase in development costs. According to ACCORD Research Consultancy, making mobile payments appeals to 42 per cent of Brits. These represent some of the highest levels of interest recorded by the firm when testing the appeal of new concepts.
Matthew Baxter-Reynolds, an independent software developer in the UK, can sum up the pros and cons for users when considering native vs hybrid, saying "If you look to connect with your customer via a mobile web app (a 'handshake') and your competitor offers them a 'cuddle' with a better native app experience, you will lose, regardless of the eloquence of your argument or the sophistication of your engineering."
Aligning business and customer needs
Established businesses are the major barrier to the proliferation of m-commerce. Like Facebook and LinkedIn, they are able to capitalise on the positives m-commerce can bring to their customers, yet unlike Facebook and LinkedIn they are lazily unwilling to do so. The most successful apps will be those that operate under the old adage, "the customer is king." These apps will be produced by businesses that correctly recognise the app as a unique entity, and therefore an unrivalled opportunity to reach out to customers and deliver an exclusive experience.
Securing app success
App success depends on a number of factors, such as discovering opportunities in existing and new situations and creating business solutions that are app-specific. Innovation also plays a vital role. If businesses and entrepreneurs bear this in mind, they could find themselves significantly altering the state of the market and unsettling the giants of the industry. As Simon Khalaf, CEO of Flurry says, "Wake up and disrupt something."
However, if apps merely remain the younger siblings of the desktop website, they will not fulfil the predictions of the app economy and businesses will likely fall behind as a result. The most popular and effective apps will be those designed as individual entities which directly address customer needs and offer a unique experience unavailable anywhere other than through that app itself. j
We can learn an important lesson from Facebook and LinkedIn's decisions to switch from hybrid to native: businesses must clearly understand the wider importance of the app and recognise its unique position and potential in the modern marketplace. Most importantly, however, businesses must be willing to make the right decisions to drive and ensure future success.
Whether your business is currently developing an app, thinking of doing so, or just standing on the sidelines wondering what all the fuss is about – m-commerce affects you.
This article has been penned by Lewis Mills, Business Analyst, Judo Payments (opens in new tab). Judo is a provider of simple, secure payment solutions for mobile apps. Our patent pending technology is built specifically for native apps, which allows for faster transactions, higher completion rates and lower checkout abandonment. We combine technology and design to deliver a flawless mobile payments experience to thousands of customers across the UK.
Image credits: Flickr (IntelFreePress, DASPRiD, .niels)