Has mobile commerce turned a corner? - Rob Garf reveals Salesforce's holiday retail data

When I last caught up with Rob Garf, we were busting through the retail AI hype at Shop.org. Since then, plenty has happened, including a vigorous holiday period that changed the retail apocalypse storyline.

But as Garf told me this week at NRF's "Big Show" 2018, there's plenty of disruption for retailers to grapple with.

Garf, who is Salesforce’s Commerce Cloud VP of Industry Insights, was able to share important data they have gleaned from the aggregate view of 500 million unique shoppers on a monthly basis. The highlights? It's a mobile retail imperative:

• Shoppers purchased on mobile phones in record numbers this holiday season. All told, shoppers made 30 percent more visits and 46 percent more orders on mobile this year.
• During Cyber Week, shoppers placed 41 percent of all orders on a mobile device - a 28 percent increase over last year.
• Mobile purchasing surpassed computers for the very first time on Thanksgiving Day, accounting for 46 percent of orders to computer’s 45 percent. Christmas Day represented the peak mobile day, as phones captured 68 percent of traffic and 50 percent of orders.

For digital shopping, Salesforce's customers exceeded the industry bump. Garf:

Across our client base, our customers grew at 18 percent year over year for the holiday season. That's around 3,000 web sites across more than 50 countries. I think NRF was showing that the industry saw an 11 percent [digital commerce increase] - so a very healthy increase any way you slice it.

Retails are finally making strides on mobile purchasing

Store traffic didn't keep pace with digital, but as per NRF, store traffic was also up between 4 and 5 percent. The storyline was really about mobile. Pre-sales mobile traffic has been growing, but this was a milestone for mobile purchases:

On Thanksgiving, we saw 46 percent of orders on mobile, and 45 percent of orders on computer, and then on Christmas day, for the first time ever, we saw a mobile majority, so 50 percent of orders were on mobile, and then the rest were divided between tablet and computer.

So what do we take from these numbers? Garf believes retailers have turned a corner with ease of mobile purchasing, a long-time bugaboo:

In recent years, you had to open your computer, put in your password, open up a browser, go to the website - the steps go on and on. In this case, with mobile there's a sense of immediacy. So on Thanksgiving day, put on your phone, it's already on of course. You just open up and you buy. On Christmas day, immediacy. You get a gift card, you buy something right away.

Holidays are shaping up as a boon to mobile sales. Who wants to be the dork that whips out a laptop to shop on Christmas morning?

Retailers finally made it easier to buy on mobile. Let's face it: as an industry, we have stubbed our toes quite a bit, in terms of making the mobile experience intuitive and seamless.

What about mobile buying has improved? Garf thinks it's all about improving checkout via integration with standard payment options like Apple Pay, Android Pay and Paypal. But Garf also credits that mobile purchase bump on "AI," or, more precisely, "personalization powered by artificial intelligence."

The power of AI-powered personalization - backed by numbers

Personalization is proving its purchasing weight. Garf says that across Salesforce customers, 5 percent of shoppers clicked on a product recommendation "that was powered by artificial intelligence." But there's a bigger number in play. Recommendations are not only driving sales, but they are drawing in a higher-spending consumer:

This translated into 30 percent of all revenue on the site. In fact, based on other research we've done from our data, consumers that click on product recommendations powered by AI are five times more valuable. Meaning they spend five times more on average than those that don't.

Perhaps this data will convince lagging retailers that recommendations belong in the prominent position that Amazon.com has been exploiting for years:

Retailers are figuring out that they shouldn't play hide-and-go-seek with their product recommendations.

Making sure visitors don't have to scroll and hunt for product recommendations is pretty obvious, but that doesn't mean online personalization is easy. For one thing, not all recommendation engines are created equal. I asked Garf: how should retailers grappling with digital tackle the data science part of this?

Our philosophy is that you shouldn't need to have to hire an army of data scientists to drive this personalization. So we really infuse this capability right in the platform, both for the merchant to make smarter decisions and automate their processes, and then also personalize the shopping experience.

In Salesforce product geekspeak, that's Salesforce Einstein product recommendations, running on the Commerce Cloud. But Garf believes that the AI-mobile connection runs deeper. Properly executed, AI can help mobile overcome limitations:

If you think about the form factor in a computer on a computer, you have more real estate to work with. Therefore you can put in more images; you can put more offers. When you're down to a small form factor, it's so imperative that you get, dare I say, the right product at the right price at the right time or location - to avoid the customer having to scroll all the way through.

Real-time personalization has a long way to go, but Garf says these factors, taken together, account for that whopping 18 percent mobile commerce increase. This doesn't mean retailers have figured out the online/in-store mix yet. Do we see any progress there? Garf:

The reality is retailers have been talking about the transformation of the store for a long time. Let's face it. But perhaps the online growth can kind of shoot out some cash for them to reinvest in the store business, because it is more than just throwing a can of paint on there, and throwing in some new light bulbs.

It's really about reinventing how the retailer fits into the daily life of a consumer and how do they create not only an emotional connection, but the convenience that will prompt a consumer to actually step into the four walls of the store. What's that moment of truth? What is that defining factor?

My take - personalization versus data privacy

Salesforce data shows that areas of higher population density have lower conversion rates online, implying that when consumers can easily get to a store to purchase, they'll do their research online, and make their purchases in the store.

But retailers still have a long way to go to get the mix right. At NRF, I heard plenty from retail experts about the problem of getting the in-store experience right for "pick up" shoppers.

It's not a simple thing to retrain store employees for the needs of shipping and pickup, and, more importantly, how to simulate online recommendations with a personalized type of store interaction. I found some interesting ideas to address this at NRF; I'll share in future pieces.

Personalization is near-impossible unless consumers are willing to share data. For companies with a European footprint, data privacy will be put to the test with GDPR. I asked Garf for his take:

That's probably an article unto itself. We have experts and product managers just focused on GDPR, Trust is our number one value at Salesforce, so we've got to get this right and as a cloud platform - that falls on our shoulders. If you're an on-premise vendor, that's totally up to the retailer to figure out how they're going to purge and how they're going to manage this information. We have to have the controls in place - similar to PCI back in the day - to make sure that our customers have the tools to do what they need to do.

I view GDPR as one more regulatory wave that will help to decide digital winners and losers. Google and Facebook have proven without a doubt that consumers will share shocking amounts of data (I include myself here) - IF they perceive the value exchange with that data to be acceptable. If retailers want to achiever personalization amidst regulation, they'll need to get the value exchange and opt-in transparency right.

Yes, mobile commerce has improved, validating retailers' efforts. But I don't believe consumers will install apps for every retailer they visit. And mobile browser shopping is woefully lacking. There may be some answers to this dilemma with "progressive web apps," a topic I'll return to in future NRF review pieces.

End note: Salesforce issued a series of announcements timed with NRF. Of those, I thought the most important was new integrations intended to unify shopping experiences across commerce, marketing and service.