tablets as online money machines
Yesterday’s Wall Street Journal has an article about tablets and online spending. Its conclusions:
–9% of online shoppers own tablets and half use them to shop.
–conversion rates (that is, the percentage of site visitors who actually buy something) for tablet users are typically 4%-5% vs. 3% for PC or cellphone users. One site mentioned reported a whopping 10% conversion rate from tablets.
–tablet users spend 10%-20% more than PC or cellphone users when they buy.
–tablet users don’t like apps. They use browsers to visit retail sites.
–retailers are starting to tailor their sites to make them more enticing to tablets. This means more slideshows and videos. Because virtually all tablets are iPads this implies using alternatives to Adobe Flash.
A bit of arcana: a huge amount of web design time and effort goes into designing attractive buttons on websites (strange, but true). All of that needs to be revamped so buttons are big enough for fingers to use them.
Retailers don’t seem to know why tablet-wielding visitors are so much more attractive customers. That they are seems to be enough to spark a website gold rush to attract them.
It may be that tablet owners are more affluent than the general online population. That might explain the higher average purchase. On the other hand, the article mentions that QVC, which doesn’t attract a wealthy demographic, is particularly enthusiastic about its tablet business.
It could be that, because they’re instant-on and portable, tablets encourage impulse purchases. That might explain the higher conversion rate. If so, the tablet edge should vanish as solid state memory laptops, like the MacBook Air or ultrabooks become more common. Given that the latter two are significantly more expensive than tablets, that may take some time, however.
(By the way, conversion rates are a bit more complicated than bigger-is-better. It’s generally agreed that a conversion rate below 1% is bad and that 5% or higher is unusually good. But if traffic is directed to your site through search engines, the cost of keyword purchase has to be factored in as well.)
It’s also possible that there’s something addictive about the tablet experience, sort of like that way people spend a lot more when they use a credit card than when they use a debit card. If so, big spenders may end up getting unsolicited gifts in the mail of tablets with retailers’ catalogs and URLs pre-loaded.
It seems to me this phenomenon is a mild positive for AAPL, but nothing to run out and buy the stock for. For retailers, the quality of their websites may become more crucial in their sales efforts.
Anyone with a Flash website may find his popularity diminished–although I understand this is a much bigger problem in Europe than elsewhere.
This isn’t a positive for ADBE, but it remains to be seen how significant a negative it is.