If Mobile Retail Is So Big, Why Is It So Small?

This year's back-to-school season posted some puzzling results for mobile retail. Surveys from IBM and Placed both said mobile-commerce sales jumped during the second-biggest buying season of the year, though they disagreed on the pattern for that jump. And yet for many big retailers—who are, of course, also some of the biggest users of mobile commerce—sales were down. What happened?

The conflict between IBM's and Placed's results can probably be written off as a difference in how they did their surveys. IBM's Digital Analytics Benchmark, which wires up retailers' websites to collect its data, reported that mobile-commerce sales were up 38 percent in July compared to 2012.

Placed, which uses apps on customers' phones to do its measurements, concluded that most customers held off until a month or less before the first day of school to start their back-to-school shopping, which matches what many top retailers including Walmart (NYSE:WMT), Nordstrom (NYSE:JWN) and Macy's (NYSE:M) reported, with slight drops in their overall sales for July.

Did IBM just get it wrong? Maybe. But it's also possible that the websites IBM tested were simply from a different slice of retail than Placed's mobile panel. For example, Gap (NYSE:GPS) and Target (NYSE:TGT) did see overall sales go up in July—in Gap's case, by 6 percent. We don't know whose web (and mobile) sites IBM instrumented, so it's hard to say exactly what happened. But it's still a useful reminder that measuring overall mobile retail success is more complicated than it might seem.

Another thing that muddies the measurement waters is the size of mobile commerce—and for most brick-and-mortar chains, it's very small. How small? All of e-commerce taken together is about 6 percent of total U.S. retail sales. Mobile commerce is usually no higher than one-quarter of that. That puts mobile at well under 2 percent of all U.S. sales—and in some product categories, a fraction of 1 percent.

As a result, even a big jump in mobile sales might be barely visible as a share of any retailer's overall sales. It's just too small.

Maybe that sounds depressing. It shouldn't. Mobile retail sales are small at this point. Mobile retail's impact is much bigger.

Consider the fact that, according to various surveys, something like 40 percent of smartphone owners use their phones in-store while shopping. Since more than half of U.S. adults now have smartphones, a little back-of-the-napkin calculation puts close to a quarter of shoppers in that in-store-users category. That's a huge group, and one that's well worth retailers' pursuing with in-store mobile efforts—even if the vast majority of those customers won't close the deal on mobile.

But we're not getting conversions! you might be thinking. Sure you are. You're just not getting pure mobile conversions. If you're Amazon or eBay, that's a problem. It's also a problem if you're a small mobile-only retailer who may be losing business to "reverse showrooming." But if you're a brick-and-mortar retailer (which is where the vast majority of back-to-school shopping is done, for purely practical reasons) you're getting omnichannel conversions—mobile marketing that generates a brick-and-mortar sale.

As mobile's impact continues to increase, actual sales via mobile will continue to lag. If you're in mobile retail, you'll have to learn to live with that—and to sound optimistic when executives ask you where the ROI from your mobile efforts is. The fact that you're not cannibalizing in-store sales isn't a bad sign. The more traffic you can drive to any sale, no matter how many times it switches channels—from phone to tablet or tablet to store—the bigger mobile gets in retail.

And as long as sales are showing up somewhere, mobile commerce is doing its job.