Target’s Commanding M-Commerce Share

Breach, what breach? What a difference a year makes.

Whatever hit to the bottom line Target experienced last year in the wake of the 2013 breach – and it was a big one — seems but a distant memory today. Target posted better-than-expected fourth-quarter earnings yesterday (Feb. 25), and its executives cited the retailer’s digital channels — specifically citing mobile growth — as a key contributor to that success.

Target reported Q4 sales that increased 3.8 percent from the year prior and fourth-quarter revenue of $21.75 billion, an increase of 4 percent from the year prior. While digital sales and mobile commerce aren’t tipping the revenue scale in their favor just yet, Target’s executive team spoke to analysts about how mobile commerce is playing a larger part in Target’s digital channel growth.

As reported in last week’s PYMNTS.com Mobile Transaction Tracker, mobile commerce growth is set to outpace e-commerce by three-to-one in the next five years, and it appears Target’s path is syncing up with that pattern. Here are a few stats that document the state of Target and mobile commerce.

40 Percent | Percentage Of Target’s Digital Orders Done Via Mobile (In Q4)

While a recent eMarketer study shows desktop/laptop e-commerce growth outpacing m-commerce three-to-one, Target’s statistics reveal the degree to which mobile is driving Target’s digital consumer engagement.

“In our digital channels for the fourth quarter overall, we saw a high single digit increase in visits — driven entirely by growth in mobile, which includes both tablets and smartphones,” Kathee Tesija, Target’s chief merchandising and supply chain officer said during the company’s earnings call. “Orders were up well over 50 percent, driven from strong conversion increases on both the conventional site and mobile. Mobile is becoming increasingly important to all digital retailers, and given the profile of our guests, it’s particularly important for Target, as mobile accounted for more than 40 percent of our digital orders in the fourth quarter.

According to a Fortune article, 2014 brought a mobile and e-commerce overhaul for Target as it “rewrote 75 percent of the code in its e-commerce platform, and now its website is considered by e-commerce experts to be up to par with its rivals and in some areas, namely mobile shopping, leading.”

50 Percent | Growth In Target’s Mobile Traffic (In Q4)

Mobile commerce is like the chicken and the egg. You can’t have mobile commerce without mobile traffic. But what’s important is turning that traffic into dollars. And at least in Q4, Target’s chickens (or eggs) seemed to have come home to roost.

“Mobile experience needs to make commerce as easy as possible,” said Jamil Ghani, Target’s VP of enterprise strategy — who noted that Target’s mobile-engaged customers make four times as many store visits per year. “We call it bricks-and-mobile, and we’re really excited to see how far we can take it.”

Target is seeing an increase in its mobile traffic each quarter. In its third-quarter earnings report, Tesija said digital sales were up 30 percent, and digital traffic growth from mobile grew more than 50 percent. Conversion was also up on mobile; Tesija didn’t indicate by how much, but suspected it would grow in fourth quarter due to the launch of Target’s upgraded mobile app to make purchases easier using a smartphone.

10 Percent | Percentage Of Consumers Who Bought In Store But Shopped Online While There On Black Friday

Score one for omnichannel! Not only has Target’s investments in digital channels helped bring more customers in its store, according to Kesija, but consumers are actually using its mobile app to shop while in the store (and then buy there too). Combining mobile commerce with its traditional retail is giving Target’s commerce revenue a larger digital share.

“Notably on Black Friday, 10 percent of our iPhone app revenue was from guests purchasing on their phone while they were simultaneously shopping in stores. Our flexible fulfillment efforts play a key role in supporting our digital growth and we’re pleased with the results from our store pickup program and our recent rollout from ship from store capability,” Tesija said.

Target launched its new iPhone app for the holiday selling period, and shoppers used the app’s product-locating function more than 400,000 times before the end of the year. The next place the retailer will take it is likely to be its Android app, which hasn’t yet been upgraded with the new features for driving store traffic and sales.

Target may be onto something with its mobile app, as research from PayPal shows that consumers are more likely to make a mobile purchase through an app than a Web browser. In fact, in its survey, 64 percent of smartphone users reported using an app for purchases as opposed to the 52 percent who used mobile browsers.

Not Many | The Number Of Wal-Mart Customers Who Browse On Mobile And Then Buy

While Target was able to produce hard stats about its mobile commerce revenue (at least percentages), Wal-Mart’s report on its mobile commerce are a bit more undefined. While mobile traffic is the gateway to producing more mobile commerce, Wal-Mart is still seeing a gap in it delivering mobile commerce.

“Mobile continued to be a big investment and area of high growth, nearly 70 percent of our walmart.com traffic during the holidays was from mobile devices,” said Neil Ashe, Wal-Mart’s President and CEO of Global eCommerce, during Wal-Mart’s earnings call earlier this month. “Those people used the app in a lot of ways to do their shopping online, to find a store, or to use the new store search tool we added late last year. This search tool allows customers to find product details and the aisle location of a specific item.”

For Wal-Mart, the mobile commerce market is still very much focused on encouraging mobile browsing and it hasn’t quite translated into mobile buying — at least not from the stats they’re releasing publicly. Wal-Mart’s executive team recognized, like many retailers, that there is still a gap between mobile browsing rates and mobile buying rates.