Why Groupon and LivingSocial are Flexing their M-Commerce Muscle

While mobile is still considered a rounding error for many digital businesses, there is broad acknowledgement that it is rapidly increasing in importance. But I think many would be surprised to see just how quickly it has become central to some big companies and what that tells us about the changing shape of digital business today.

In examining data from Comscore’s recently introduced behavioral mobile measurement service Mobile Metrix, we saw evidence that was consistent with what Mason reported during Groupon’s earnings call. We were surprised to find that Groupon – and its top competitor LivingSocial – are already attracting larger audiences on mobile devices than via the traditional desktop web. Groupon’s July 2012 mobile web + app audience (age 18+ on iOS, Android and RIM platforms) was 17.8 million visitors, while its comparable desktop audience was 12.4 million. LivingSocial had a total mobile audience of 8.8 million visitors vs. 7.3 million via desktop. If we just look at Groupon’s mobile web or mobile app audiences in isolation, they are each on par with its desktop audience, and the same can be said of LivingSocial’s mobile web audience.

Groupon and LivingSocial are two great examples of strong players in the m-commerce market, but it is worth examining why they fare particularly well in this channel. After all, not every e-commerce player maintains such an established mobile presence – and some are almost nowhere to be found.

There are several key factors that can make an e-commerce company more likely to perform well in the mobile environment, and to some extent each of the following advantages apply in some way to Groupon and LivingSocial.

• You own app real estate – for most mobile consumers, there is scarcity in the amount of app real estate they will allocate. Similar to one’s web bookmarks, not every site will make the cut. So while a person might visit 20 or 30 different retailers over the course of a year on the web, they might only download 3 or 4 retailers’ mobile apps. You need to have a strong brand and be a regular shopping channel in order to make that cut. For many consumers, Groupon and LivingSocial check that box.
• Time is of the essence – when a purchase experience is time-sensitive (daily deals, flash sales, auctions, etc.) consumers are more likely to want an app to stay keyed in. eBay is one of strong leaders in m-commerce because people want to stay on top of their auctions, and the ‘daily deal’ phenomenon also helps explain why many consumers see Groupon and LivingSocial as must-haves on their app list.
• Your info is already inputted – m-commerce transactions are facilitated immensely when a customer already has his/her payment information inputted to the retailer. It’s hard enough to type in payment info via the web on a small screen computer or tablet, but the smaller screen of mobile devices make this process significantly more tedious. Consumers will click the “buy” button a lot more readily if they don’t need to go through this process each time.
• You have regular communications with the customer – email remains an important marketing channel for retailers, and many customers find near daily emails in their inbox from their favorite ones. When people are on-the-go – perhaps on their way to work every morning – they often check these types of emails and will sometimes click-through to the retailer’s website. This action can drive a significant amount of mobile web traffic, and as we can see with Groupon and LivingSocial – and their daily emails – their mobile web traffic is nearly equal to their desktop web traffic.
• Location Matters – Both Groupon and LivingSocial play in the local commerce market, and when “local” is an important part of your value proposition it tends to drive more mobile behavior. Groupon Now enables customers to search for deals within a certain radius of their current location, which provides more incentive to engage with the brand via one’s mobile device.

Because Groupon and LivingSocial can boast several of these advantages, we should not be surprised to see them attracting large audiences via mobile. What is surprising is that we are seeing strong evidence that for some companies mobile might soon be a more important sales channel than desktop given its ability to generate a higher audience.

I suspect that as smartphone penetration soars past 50% of mobile devices this year, we will begin to see more businesses – and perhaps the industry as a whole – take mobile commerce much more seriously. The questions businesses must be asking themselves is whether or not they’re prepared to take advantage of mobile technology, and if the answer is ‘no’ will they be left at a permanent disadvantage in one of the most important commerce transitions we have seen in recent memory?