How Mobile Shopping Affects Customer Purchase Behavior: A Retailer’s Perspective

Abstract

Shopping or buying with a mobile device (M-shopping henceforth) has become an increasingly important topic that has drawn much attention in both industry and academia. Forrester Research (Husson 2014) predicts that media companies and retailers receive more than 50 % of online traffic from mobile devices. M-shopping is also expected to grow substantially compared to the rest of the retail space. Deloitte Consulting (2012) predicts that $31 billion worth of retail revenues will be transacted using mobile devices by 2016. While the overall retail revenue annual growth rate is forecasted at 4 % for 2015 through 2016, mobile commerce is estimated to grow at 21 %–29 % (Mulpuru et al. 2013). The growth in M-shopping provides ample potential for marketers and advertisers to leverage the channel. Using a unique dataset from an Internet-based firm, we are able to compare customers’ behavior based on whether they use mobile devices, i.e., smartphones, tablets, and/or personal computers (PCs) when composing, modifying or placing orders online. We find that purchase probability and order size, i.e., the size of the order in dollars, increase as customers become accustomed to M-shopping. In addition to the cumulative effect, orders that are made with one or more mobile devices are more likely to lead to shorter times-to-next-order than PC-only orders. However, not all mobile orders are the same. Orders made with two or more device types are larger than those that are made with only a single device, e.g., smartphone-only orders. Orders made with all three device types, i.e., smartphones, tablets and PCs, are the largest. We propose that customers utilize mobile devices because the technology provides ubiquitous convenience, which leads them to incorporate M-shopping into their habitual routines. Managerially, we recommend that firms should not only promote their mobile platforms, but also encourage their customers to engage through multiple devices, including PCs. Firms can increase their customers’ spending by leveraging anytime, anywhere access and customer engagement via multiple devices.