Retailers With Digital Wallet Capabilities Will Win This Holiday Season: ADI

While all retailers are hoping for a record year this holiday season, the savvy ones will open wide their digital wallets for customers. Analysis by Adobe Digital Index (ADI) has found that smartphone conversion rates are much higher when retailers offer digital wallet payment options, such as PayPal, Amazon Payments, Google Wallet, or Apple Pay.

“Most retailers are initially excited about Apple Pay’s implications for the in-store environment,” explained Tamara Gaffney, principal analyst at ADI. “In-store adoption of payment technology, however, typically takes longer because it means new systems at the store. So, as Apple Pay becomes more ubiquitous, its first win could very well be online.” In fact, according to ADI, cart completion rates increase by 10% when digital wallet payment options are available.

According to ADI, 23% of purchases on smartphones use alternative payment methods, while just 16% use digital wallets across desktops, and 19% use the payment option on tablets. Tyler White, an analyst at ADI, explained that digital wallet usage on mobile is higher because people find it convenient not to have to enter credit card information while on the go.

“People are also more wary of entering their credit card information on mobile devices,” White said. “They don’t feel as secure.”

ADI- Share of Sales via Digital Wallet

According to White, ADI predicts Apple Pay will soon become the default alternative payment tool for many consumers using Apple devices, because it enables easy transactions both off-line and online. “Mobile conversion rates are expected to increase as digital wallets become more commonplace for online shopping,” White said.

Bridging In-Store/Digital
Mobile applications are another way retailers are bridging online and in-store, and it seems to be working, with phone apps being used more than tablet apps. ADI research indicated that app usage growth on phones outpaced tablets by more than two times (70% vs. 35%).

ADI - App Launches Growth

 

When it comes to Android vs. iOS, Apple’s operating system represents 65% of app launches, and Android represents just 34%. The average iOS app is also used twice as long as is the average Android app per launch.

ADI - Share of App Launches by Device Type

According to ADI, Apple Pay will get a bigger push into the market as more retailers add it as an option for in-app purchases as well.

Local Personalization
According to Gaffney, the adoption of alternative payment options on mobile and the increased use of mobile apps in-store is phase two of an overall digitization of the retail environment. “Digital wallets are really changing the landscape for buying on mobile, and beacons and location awareness is adding another dimension to in-store digitization,” said Gaffney.

ADI shows high hopes for the use of location-based technology during the holidays. According to a survey of 400 U.S. consumers who own a smartphone or tablet, and plan to shop online during the holidays, 71% like having ads personalized, but opinions differ about the quality of today’s personalization efforts:

  • 20% like it, but say that such ads are “not done well enough today”
  • 30% like it and feel that today’s efforts are “as tailored to me as they need to be”
  • 20% feel today’s personalization efforts are too intrusive
  • 29% don’t think ads should be personalized at all
ADI - Survey_Marketing Promos by Location

Additionally, ADI found that 34% of respondents report having received a marketing promotion based on their location, and another 21% were unsure. Also, 53% noticed retargeting efforts aimed at them. The survey also found consumers are open to beacons, with 55% finding it useful to receive promotions on their mobile device while in a physical store.

“Beacons aren’t just changing the retail environment,” Gaffney said. “They’re being used in other venues as well, such as travel and hospitality and sports stadiums. Location awareness is coming from everywhere, since people have their phones everywhere they go.”