Online Retailers and the Mobile App Profit Dilemma

by Holly Shoemaker

A recent report from research2guidance reported that in 2012 most online stores made less than five percent of their revenue from a mobile app. 

Numbers at a Glance

The company surveyed more than 600 mobile-commerce companies and found the following:

• Almost 19 percent of e-commerce companies made more than 25 percent of revenue via mobile channels. 
• One third reported that they expected to generate more than a quarter of their revenue from mobile within the next five years. In addition, 15 percent of those companies reported that they planned to generate half their revenue from mobile apps.
• For online retailers to profit from mobile apps, they need to achieve downloaded numbers of more than two million. At this time, many online stores only achieve a few thousand downloads. 

Mobile Ad Spending to Grow

eMarketer predicts that U.S. mobile ad spending will reach $7.19 billion in 2013 and more than $20 billion in 2016. Despite those numbers, mobile only entails a small percentage of total ad spending. It comes in at just 2.4 percent. If the number increases as expected to $20 billion in 2016 that will bring the percentage to 11 percent – that means it will rank higher than radio, but will not overtake print.

Hope for Online Retailers?

The future for online retailers and revenue from mobile apps depends on the goods or services sold. Stores that sell virtual goods perform well. Companies that sell game apps and upgrades or virtual goods inside them also have a better chance at becoming part of the exclusive five percent.