December 29, 2015
The US mobile commerce segment accounted for somewhere between 15% and 17% of retail e-commerce sales in 2014. The value of commerce transactions conducted via mobile handsets/tablets is expected to exceed US $120 billion by 2017 with 150 million users. Mobile commerce growth in the US is driven by the increasing convenience, value & security available to consumers via smart devices. Retailers are developing efficient mobile websites/apps and even delivering omnichannel experiences. But what’s trending in mobile commerce are the powerful Buy Now call-to-action buttons within social media platforms and other websites.
Studies on mobile commerce indicate that a significant disconnect has emerged between the amount of time and money users spend across platforms. According to a Q1 2015 comScore report, technology users spend 59% of their time on mobile devices, but only 15% of virtual dollars (compared to the roughly 41% of time spent on desktop computers that bring in 85% of the digital profit). This 44% disparity—the difference between usage time and conversion to sales via mobile—is what industry experts are calling the m-commerce gap. Broken down differently, Web shoppers are spending roughly $2 per minute online. Mobile shoppers are only spending 25 cents per minute.
M-commerce has been slow to bring in the sales, but its power as a platform is no less than significant. Its popularity among consumers, shorter time in the marketplace and mobility forecast a bright future for mobile buying. The m-commerce gap, in fact, has served as an opportunity for retailers to introduce the not-very-new mobile commerce trend of Buy Now call-to-action buttons on social media platforms and shopping websites. The average online shopping cart abandonment rate is 68.55%; retailers have been trying hard to reduce this. Integrating the Buy Now call-to-action buttons within social media has been one of the recent actions taken by retailers. But who facilitates this feature? There are four main stakeholders in the m-commerce Buy Now trend:
2. Social media platform/website
3. Payment processor
The Buy Now call-to-action button is facilitated by payments processing companies like Stripe and PayPal. They are the ones who take care of the coding in the back-end while retailers use social media platforms like Pinterest or their own website to integrate the Buy Now button. About 80% of shoppers reference a social media site while (or prior to) making a purchase according to Selz.com, and a Times Trends study found millennials are a staggering 247% more likely to make a purchase after consulting blogs and social networks compared to other age groups. A research from Millard Brown on Pinterest found that 93% of Pinners use Pinterest to plan purchases and 87% of Pinners have purchased something because of Pinterest. These research points suggest why social media is the best to place these Buy Now buttons.
So, who are the big players actively participating and bringing up this trend?
Stripe: Stripe’s Relay API is becoming the most popular payment processing feature for Buy Now button integration. Many retailers and FinTech companies—like American Express and Amazon—have tried selling their products through social media sites such as Twitter and Facebook, but the practice was not successful as the companies failed to provide a seamless experience to their customers. However, this California-based payments processing company is doing it just right. Stripe has in fact been chosen by Facebook and Twitter for their recently introduced in-stream payments feature, which is discussed further below.
PayPal/Braintree: PayPal’s Buy Now buttons have long been present in the e-commerce world. In 2013, PayPal released its payment integration APIs for third-party applications first in 2009 while it launched its payments integration for website (the Website Payments Pro suite) a couple of years before that. However one needs to have a PayPal account, unlike Stripe which doesn’t favor any card network or payment type. However as PayPal bought Braintree and Braintree is just similar to Stripe, it is a direct competitor to Stripe.
Pinterest: Pinterest introduced Buyable Pins in July 2015. Wherever a user spots a Pin with a blue price, he/she can buy it right from the app. If the user is searching for something specific, he/she can use the price filter for the right Pin. Pinterest doesn’t take any commission from sales driven through Pinterest; merchants can still handle shipping and customer service the way they’ve always done it. However, buyable pins are free of cost. But how does Pinterest make money? Pinterest charges companies to promote Pins referencing their articles for sale to users, in the form of advertising. Advertisers are more likely to spend if they believe that it would lead to sales. The buyable Pin would do exactly that.
Facebook: Facebook began testing the Buy Now payments feature back in July 2014. Facebook has partnered with Stripe to enable auto-fill of payment information for third-party apps. Facebook’s Buy Now button completes the entire purchase flow within Facebook which boosts conversion rates and attract more retailers to the social network. Facebook could eventually earn money by charging a fee in exchange for processing payment. To complement this, Facebook also introduced a Shop section to brand pages in October 2015. The Shop section will allow owners to showcase their products and improve users’ experience with seamless and smooth browsing through products and brands.
Twitter: In September 2014, Twitter also started testing the Buy Now button and partnered with Stripe to facilitate the same. In Twitter’s in-stream payments, an entire purchase can be completed in just a few taps. After tapping the Buy button, one will get additional product details and be prompted to enter shipping and payment information. Once that’s entered and confirmed, order information is sent to the merchant for delivery.
Google: In July 2015, Google introduced Purchase On Google feature, which lets users buy products directly from mobile search ads. Purchase on Google intends to make converting browsers into buyers simpler because they are already searching for the item. Google is also working on integrating Buy Now buttons within YouTube ads in the next few months.
Card Networks: Visa, MasterCard and Amex have been following the trend too. Amex introduced Amex Express Checkout in July 2015. Merchants who use Stripe, a technology that lets businesses accept online payments, will also be able to integrate AmEx Express Checkout using Stripe’s existing technology. Amex Express Checkout lets a shopper complete the purchase without him or having to enter the contact details or card details again. Visa and MasterCard also have similar checkout buttons.
There are other platforms similar to Pinterest like Fancy, which is an interest discovery platform and is following the Buy Now button trend as well.
What is the big picture: Big data and retargeting?
As payments companies and ad tech companies are introducing this new trend, Let’s Talk Payments looked at the big picture behind this—something called data. Imagine how powerful data can be for someone like Facebook who has the card data information from customers, their purchasing behavior and conversion rates. This data can then be related to the popular marketing strategy called retargeting. Buy Now buttons and retargeting ads can be a very powerful combination in e-commerce. In fact, studies suggest that website visitors served with retargeted ads are 70% more like to get converted and retargeting can lead to a 147% conversion rate if coupled with prospecting. In this case, Buy Now buttons will do the job of prospecting in the mobile commerce world.
A lot of these big companies made some big announcements to advance the mobile commerce industry. The so-called FinTech unicorn, Stripe, looks like the most successful player in 2015 amongst the ones mentioned above followed by Pinterest. However, it is unfair to predict within six months of introducing the new feature. Dominance of one in the trend will be determined in 2016 and Let’s Talk Payments will definitely keep an eye on each of them. Tweet @letstalkpaymnts and @abolirg to further this discussion.