1.1 The Rise of Mobile Internet Retail
Transformations have been happening in all aspects of business since the introduction of the smartphone and with it the rise of the mobile Internet. Much of these transformations, centered on advertising and marketing products, have happened at an incredible pace over the last decade (M. Johnston, 2015), pushing businesses out of their comfort zone to adopt new strategies as a response to this ‘mobile uprising’. The speed at which businesses have had to adapt to both increasing market competition and demanding consumer preferences have rendered companies quickly irrelevant if they were unwilling or unable to keep up. In 2015, US retailer Radio Shack could no longer keep up with having too many brick-and-mortar shops and the quickly transitioning Internet shopping landscape saw them filing for bankruptcy (A. Gara, 2015) despite a brand name that resonated with technology enthusiasts across the country.
Industries across the board felt the effects as mobile Internet took flight, but perhaps none as strikingly as the retail industry. Before the introduction of the smartphone, consumers were already shopping online via desktop computers, and most major retailers had invested in e-commerce websites in a bid to capture a slice of the online shopping market. Then online shopping became a whole new ball game as consumers were opened to a world where they could browse, search and purchase directly from their smartphones. This presented retailers a new channel or avenue to reach out to their audiences and create meaningful, timely interactions (S. Levin, 2015) and at the same time consumers now had access to information while on the go, no longer being restricted to Internet cafes or home. This was the beginning of mobile Internet retailing.
1.2 Online Shopping in Asia Pacific
Online shopping presents a huge market opportunity in the APAC region, an average growth rate of 34% over the last 5 years Table 1.2.1 (Passport Stats, 2017) only served to encourage more new entrants. Last year in Asia Pacific alone, consumers have spent more than US$523’216 Million on Internet shopping, Table 1.2.2 (Passport Stats, 2017) and this number is expected to increase as developing nations such as Indonesia, Philippines and Vietnam catch up on the technology front.
Table 1.2.1 – Historical YOY Growth %
Table 1.2.2 – Historical Retail Value
What is interesting to note is that this growth in Asia Pacific is now being driven by mobile Internet shopping and the many new shopping apps that are used by consumers.
Having only begun with US$19’318 million in 2012, mobile retail has in a short span of 3 years closed the gap on desktop retail, reaching US$200’177 million in 2015 see Table 1.2.2 (Passport Stats, 2017). As illustrated below in Figure 1.2.1 (Passport Stats, 2017), we can clearly see that mobile retail has not only caught up to desktop shopping
but it has even overtaken it last year, now accounting for approximately 63% of online shopping in the Asia Pacific region.
Figure 1.2.1 – Market Split by Device
Such statistics may point towards a mobile-centric audience in the future, and some firms may be tempted to believe building a website retail presence is unnecessary, but many consumers have more than one device that they access the Internet with, and use multiple devices at different junctures of the retail journey. Based on a 2015 Q4 report of online sales, approximately 37% of transactions have consumers doing research on one device and then completing the purchase on another device (State of Mobile Commerce, 2015). Whether they finally make the purchase using their desktop or mobile, a notable percentage of consumers have researched or initially considered the item using the other device as shown in Figure 1.2.2 (H. Leggatt, 2016).
Figure 1.2.2 – Research vs. Purchase device
It is thus important also for companies to establish a strong Omni-channel strategy. By using various digital and physical Channels to provide a seamless shopping experience, retail stores are better able to differentiate themselves from competitors (E. Sopadjieva, M. Dholakia, B. Beth, 2017).
1.3 Online Shopping in Taiwan
As we turn our attention to the scenario here in Taiwan, it is also pretty similar in that many consumers own more than one device, 2.7 connected devices per person as shown in Figure 1.3.1 (Consumer Barometer, 2017) and 89% of Taiwanese use their smartphones just as often as their desktop computers.
Figure 1.3.1 – Taiwan situation Smartphone
Consumers have more devices and are spending more time on their smartphones, however, that doesn’t mean that mobile Internet retail has completely taken over online shopping here in Taiwan. In fact, if we dig deeper into online purchase behavior in Taiwan, only about 10% out of a group of people surveyed by Google in 2015 said that they made the purchase via their smartphone, Figure 1.3.2 (Consumer Barometer, 2015) while majority still made purchases via their desktop.
Figure 1.3.2 – Purchase Device
Other reports estimate that 70% of Taiwanese online shoppers have tried using their smartphones to make purchases (SP Ecommerce, 2015) and insist that Taiwan is a mobile ready nation. While the proportion of mobile to desktop purchase rates in Taiwan may lag behind the Asia Pacific overall proportion, Taiwan’s overall Internet retail market is in no way small, boasting an average growth rate of 10-15% annually over the last 5 years (M. Fulco 2017) and reaching sales of US$34 billion in 2015.
Taiwan’s high Internet penetration rate is only but one of the reasons why online shopping is such a success here. Fast Internet connectivity speeds, a unique consumer culture, a very wide selection of available merchandise, a comprehensive logistics infrastructure, and ease of payment with a solid convenience store network supporting (C. Quek, 2016) means the Taiwan market can only continue to grow larger in the future. There are many more articles and different opinions that dive further into the current state of online shopping in Taiwan, but the main focus of this paper isn’t to figure out the trending statistics or potential growth rates of mobile Internet retail.
1.4 The Unrealized Opportunity
As mentioned earlier, consumers in Taiwan own multiple devices and spend plenty of time on their mobiles, in fact most Taiwanese go online using their smartphones either more than desktops (39%) or equally (50%) as illustrated in Figure 1.4.1 (Consumer Barometer, 2015).
Figure 1.4.1 – Comparing other Countries
While Taiwan’s percentages may fall behind some others such as China, Korea, or Thailand, it is still a indicative sign that with the amount of time consumers spend on their smartphones the mobile platform is a huge unrealized opportunity for retailers. To put things in perspective, Singapore’s percentages show a somewhat similar trend to Taiwan, with 34% spending more time on their mobile and 55% equally distributing their time between mobile and desktop. We should thus expect Taiwanese consumers to have an almost similar likelihood to purchase using their mobiles when compared to Singapore. A quick statistical check with Google’s Consumer Barometer Survey reveals that even though Taiwan consumers spend more time on the smartphone, they actually
purchase less from this device, Figure 1.4.2 (Consumer Barometer, 2015). Singaporeans are almost twice as likely to purchase using smartphones.
Figure 1.4.2 – Singapore vs. Taiwan
It might perplex retailers as to why with the amount of time consumers are willing to spend on their smartphones that mobile retail has not been as prevalent here in Taiwan as it has in some other parts of the region.
Even before having to dive into researching the possible cause of this, it is fair to guess that consumers in Taiwan are spending plenty of time on their smartphones engaging in other activities. Most common guesses would include the use of Social Media such as Facebook, Instagram and YouTube, and Figure 1.4.3 (Consumer Barometer, 2016) shows a much clearer breakdown of how the Taiwanese are spending their time on their smartphones on a weekly basis. Bulk of those surveyed said they would be using search, Social Media and watching videos online, followed by checking email, checking for directions and doing product research. Even with this survey being slightly biased in that the time frame is too narrow and only considers a person’s weekly activities, as little as 12% said they would be using their smartphones for online shopping.
Figure 1.4.3 – Most Common Activities on Smartphone
1.5 Our Focus
Many have pointed out that Taiwan has the potential to be a strong mobile Internet retail ground, yet we observe a current mismatch between actual times spent on smartphones and the choice of where to make a purchase. Perhaps consumers in Taiwan are not ready for mobile retail, or perhaps there are some underlying causes as to why mobile shopping apps have yet to capture the hearts of the average online shopper.
What this paper hopes to explore and identify are some of the consumer preferences when shopping online using mobile and desktops. We will try to get an understanding of what considerations the Taiwanese online consumers have, and how both mobile apps and desktop websites have succeeded or failed in addressing those needs. By comparing how Taiwanese consumers feel about each platform, it will give us a slightly clearer picture of why there is a stronger preference for website retail over mobile app retail. At the end of this paper, perhaps we would have some basic consumer insights that would allow current and new, mobile or desktop online shopping platforms to find better solutions that centers on user needs and preferences.