A new study probing the behaviors of app-happy shoppers versus retail patrons who forego downloading a store app indicates how mobile apps can pad a business’s bottom line.
A pair of researchers hailing from Texas A&M University sought to explore how branded retail mobile apps influence not just digital behavior but offline activities as well, relative to consumers deemed app “non-adopters.”
In their paper titled “Mobile App Introduction and Online and Offline Purchases and Product Returns,” to be published in the September edition of Marketing Science — the journal run by INFORMS, the international association for operations research and analytics professionals — Unnati Narang and Venkatesh Shankar investigated 18 months of data in the period before and after a retailer of video games and electronics, with more than 4,000 stores in the U.S., deployed a branded mobile application.
The data dates back to a period from January 2013 to December 2015, framing the app’s arrival on July 1, 2014. The consumer landscape has shifted somewhat in the interim, but the implications for retail still are worth considering.
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The bottom line: App users purchase more often and more items than their non-adopting peers — and their total dollar-value spend trends higher, too. Even the downside — that they also return products in store more frequently — comes with a silver lining, too.
The researchers discovered that consumers who’d downloaded the retailer’s app in the 18 months following its launch not only were buying 33% more frequently than the sample group, but also purchased 34% more products with average order values 37% above the control sample. People who shopped using the branded app spent 19.25% than they did before downloading the mobile software, with average purchases rising from $63.60 to $75.84 per month, INFORMS noted.
Moreover, the net monetary value of app-using consumers equates to a 36% boost over non-users, despite app users’ 35% more frequent returns, in which they nix 35% more items for a dollar value 41% above non-adopters.
Turns out, though, that when lured to a brick-and-mortar store to return unwanted products, app users often make new purchases — at a higher value than non-app adopters, INFORMS noted. Across all shoppers, return transactions averaged $57.79, lower than the $66.78 they spent acquiring new goods in store. But app users outspent their counterparts 3.81 to $2.97, “suggesting higher incremental gains from returning adopters,” the study said.
Perhaps the branded app’s greatest value is in exposing users to more of a retailer’s product catalog. Consumers using the app purchased nearly twice as many unique SKUs relative to those who hadn’t downloaded the retail software — 16.4 to 8.98 — and bought less popular items, prompting the researchers to deem access to product information as “a key benefit of the app.”
“Overall, we found that retail app users are significantly more engaged at every level of the retail experience, from making purchases to returning items,” the authors said in a statement. “Interestingly, we also found that app users tend to purchase a more diverse set of items, including less popular products, than non-app users.” They described this last finding as particularly helpful when selling “long-tail products.”
App users tend to access product details, loyalty rewards and notifications when interacting with the retail application. “For the retailer, the lesson is that having a retail app will likely increase customer engagement and expand the range of products being sold online and in store,” the researchers added. “We also found that some app users who make a purchase within 48 hours of actually using an app tend to use it when they are physically close to the store of purchase.”
Editor’s Note: This story was reported by FN sister magazine Sourcing Journal. For more, visit Sourcingjournal.com.