What were the last few apps you downloaded?
Chances are they had something to do with food; delivery, freebies, ordering ahead, or reviews. As mobile has rocketed to the forefront of commerce, it has proven to serve as an additive function within the ecommerce space.
Since its infancy, the web has offered a new platform on which businesses can expand their operations. Electronic commerce is defined as “a type of business model, or segment of a larger business model, that enables a firm or individual to conduct business over an electronic network, typically the internet (1).” Such transactions can be between businesses (B2B), businesses and consumers, (B2C), consumers (C2C), and consumer to business (C2B). Relevant sales volume has trended upwards since 2006 and has yet to slow down. As a percentage of retail sales, ecommerce sales accounted for 7.4% in 2015 and are projected to grow to 12.8% by 2019 (3).
The significant growth in ecommerce can’t be mentioned without the recognition of mobile commerce’s (mcommerce) role. Mcommerce is defined as “the use of wireless handheld devices such as cellular phones and laptops to conduct commercial transactions online” (4).
More specifically, mcommerce has taken root in our daily lives whether realized or not. Why though? Companies have invested massive amounts of money into their mobile apps in the last few years not only for the wealth of data but the additive effect on customer orders. Of the industry leaders including Starbucks and Dunkin’ Donuts, Taco Bell has directly recognized 30% higher average order values via its mobile app than in-store. With over $9B in sales at Taco Bell in 2015, the opportunity for sales growth is tremendous when utilizing a mobile app.
Throughout this semester in #ISYS6621, we’ve mentioned the effects of mobile every single class. Snapchat, Facebook, Instagram – all of the advertising that comes with such apps; it is all in hopes of getting more customer dollars to businesses via the mobile phones that almost every one of us keep on our person throughout the day.
The benefits of a quality mobile-app provided by today’s fast casual restaurants such as Sweet Green are shared by both companies and consumers alike. With fast casual dining locations becoming ever more the rage – lines can be out the door.
This is where mobile-order ahead finds its allure. Customers can plan ahead while companies can boost sales and retain data within house to further innovate and locate new efficiencies.
Apart from fast-casual entities, QSRs (quick-service-restaurants) are also seeing major benefits to investments in mobile platforms. QSRs include what most consider “fast-food restaurants;” smaller transaction sizes, yet a much higher sales volume.
Starbucks and Dunkin’ recently released brand new rewards apps in the early weeks of this month. Starbucks dominated the transition to mcommerce when it first created its rewards app in-house, investing a great deal of capital, and making it a priority. As of last September, all 7,400 stores were capable of mobile-orders and the company reported over 8M mobile transactions per month as of this April (5). Dunkin’ severely lagged in the app space with its clunky, low-quality Dunkin’ Rewards app. The dominant reason for such a belabored entry into the rewards space is that Dunkin’ Donuts relies almost entirely on franchisees. While it is one of the company’s strengths, it was also its weakness in getting franchise owners to recognize the benefits to THEM (vs. the company) of partaking in the rewards program. Starbucks on the other hand does not utilize franchising, whatsoever, and was able to push its rewards program quickly and without the same resistance.
Almost a third of the way into the 2016 fiscal year, be on the look out for even more apps targeted at mobile-order ahead functions. While you as a customer see a benefit, so do the companies providing these new perks. The next time you order food via a mobile-app, be cognizant of that subconscious 30% increase in order size!
- Statista Graph: http://www.statista.com/statistics/239372/us-b2c-e-commerce-volume-since-2006/