failure or success for next-generation mobile commerce

Failure or Success for Next-Generation Mobile CommerceE-tailers Need New Ways to Accelerate Immersive Websites Before the Holidays

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TABLE OF CONTENTS

Executive SummaryPage 3

Recipe for Failure: SlowMobile Buying Experiences

Page 6

Speed or Quality: A Devil’sBargain for Publishers

Page 8

Speed and Quality:Web Application Streaming for

Fast, Premium Web ExperiencesPage 8

Requirements andNetwork Reliability

Page 9

Neither Visual Downgradesnor Slow Immersive

Experiences Will SucceedPage 8

Example: How BonfaireDelivers a Rapidly Immersive

Mobile ExperiencePage 5

The Rise of ImmersiveE-Commerce Sites

Page 5

On Mobile, It’s EvenMore Problematic

Page 7

ConclusionPage 10

One Second Can CostYou 7 Percent of Sales

Page 6


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Far more shoppers will make purchases with iPads and other tablet devices over congested wireless networks during the 2013 holiday season than ever before. Amazingly for such a new product category, in 2013 tablets will account for 65% of mobile commerce. This trend has been building throughout the year. In 2013 mobile commerce will approach $39 billion in total sales. That is nearly triple the amount spent in 2011.1 In addition, high-resolution tablet displays fuel the mobile consumer’sappetite for high-resolution imagery as part of their product selection process.

Luxury brands are showing much faster growth than the average online retailer. These brands often have been early adopters of innovation to improve their users’ online experience and increase sales. Their websites offer lessons for other online retailers. To entice and captivate their high-end clientele and create a close-to-showroom experience, luxury retailers have been shifting to more visually compelling, higher-fidelity immersive websites. These emerging premium sites feature large, high-resolution imagery and complex technology. They require more data and therefore take longer to load on users’ devices. This has already proven to be a recipe for failure, driving away frustrated customers. To overcome this slow-loading catastrophe, online retailers must take steps to accelerate load times and improve Web performance. This is particularly true on mobile devices, which account for the fastest growing segment of online retail transactions.

This white paper examines the imperatives for next-generation immersive websites and how to achieve better quality and website performance at the same time. It also introduces a new technology to efficiently deliver premium, immersive web experiences without making users wait: the Web Application Streaming Network.

Upgrading the MobileCommerce Experience:Emergence ofImmersive SitesMobile shopping – particularly on tablet devices – is having an outsize impact on the ecommerce world. According to a study released in April 20132, this year 15% of online sales will take place via mobile devices, up from 11% in 2012. By 2017, the percentage of online sales on mobile will rise to 25%. Mobile purchases – and tablets in particular – account for a bigger piece of the pie, and are the fastest growing segment of online shoppers.

US Retail Mcommerce Sales, 2011-2017billions, % change and % of retail ecommerce

Note: includes products or services ordered using the internet via mobiledevices, regardless of the method of payment or fulfillment; excludestravel and event ticket sales.Source: eMarketer, April 2013

154273 www.eMarketer.com

2011

$13.63

$24.81

$38.8482.0%

168.9%

$53.41

$71.16

$92.39

$108.56

7.0% 11.0% 15.0%

56.5% 37.5%

18.0% 21.0% 24.0%17.5%

25.0%29.8%33.2%

Retail mcommerce sales % Change % of retail ecommerce

2012 2013 2014 2015 2016 2017

Executive Summary


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Lessons from Luxury M-Commerce: Tablets Coming On StrongFor the online luxury market, the fastest growing segment is mobile and, in particular, shopping via tablet devices. The emergence of Retina-class tablets (primarily the Apple iPad) has further heightened the urgency for luxury retailers to bring their A-game online.

A survey by The Luxury Institute released in May 2013 found that over the past year, 20% of wealthy consumers reported using tablets to make a purchase.3 According to the survey this is a higher percentage than catalog purchases (17%), telephone orders (15%), or buying via smartphone Web access (14%).

The outsized impact of tablets is even more consequential for luxury brands because sales in that

sub-sector of online retail are growing far faster than the overall online retail sector. Consultancy Bain & Co. has tracked annual increases in global online luxury sales of 25% for the past two years, even as overall sales in the global luxury goods market have slowed.4 This is roughly 150% the total growth of global online luxury sales overall. As Bain’s analysts report, “Physical and digital storefronts are accelerating their arms race for offering more compelling engagement to wow the luxury shopper.”

In other words, luxury brands have understood the handwriting on the wall: make radical improvements now, or lose customers.

Not surprisingly, tablet users are more likely to make purchases online than smartphone or even laptop users. In fact, online purchase rates for tablet users are between 33% and 66% higher than non-tablet user, asreported by Forrester Research.5 E-commerce CEOs echo this fact. According to Fab.com CEO Jason Goldberg, more than 40% of Fab.com’s iPad customers make their first purchase within three months of joining, versus less than 10% of non-iPad customers. iPad shoppers also spend more.6 So by his calculation, while those buying with iPads are now about 15% of total purchasers, they are forecast to generate 25% of sales over the next two years.

The introduction of the high-resolution Retina display on iPads is changing the game for mobile retail. For the first time, mobile device owners can see granular pixel detail in online images. This heightened visibility pushes e-tailers to replace old images with newer, high-resolution images that cater to the tablet crowd seeking a “lean-back” browsing experience. This disproportionately impacts the online luxury retail market.

Affluent shoppers are far more likely to own a powerful mobile device. An April 2013 survey by the Luxury Institute of US Internet users ages 21 and older with gross incomes above $150,000 found that more than 8 in 10 owned a smart phone, while 56% reported owning a tablet.1

These penetration rates are well above those for the overall US population on smartphones or tablets. This likely explains why the propensity to buy with a tablet is even more pronounced among luxury goods shoppers, with tablet users roughly four times more likely to make a purchase than smartphone users, according to affluent consumer behavior research consultant Bob Shullman of the Shullman Research Center .1

Tablet Users Put Their Money Where Their Mouse Was

Retina Display Boosts the Importanceof Tablets for Luxury Brands


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The Rise of Immersive E-Commerce SitesTo meet the needs and desires of this discerning group of affluent online customers, a new generation of immersive sites is emerging. These sites deliver premium online experiences with large, high-resolution images and high-quality editorial content. Immersive sites aim to synthesize an experience that combines the ease of browsing through a glossy fashion magazine, and the visual richness of a physical showroom, with the ability to visually dive into the smallest detail of a product-and easily switch to exploration of other products.

To accomplish this, immersive premium sites typically deploy a set of complex engagement features such as multiple large images of a single item, 360-degree views of items, and granular zoom capability. These allow

shoppers to inspect in fine detail nearly any handbag, shoe, or haute couture jewelry – almost as if they are holding the item in their hands.

The rationale behind immersive sites is well established and well proven. Larger, higher-quality images draw higher click-through rates (CTRs), improve website “stickiness,” and boost conversions to purchases. A study by a research team at EBay Labs found7 that listings on the online auction and shopping site which adhered to basic guidelines for image quality (display of image against a white background, and use of higher-resolution images) enjoyed higher CTRs. Other case studies8 have found online retailers experience double-digit to triple-digit increases in conversions after increasing the size and quality of original images.

A leader in the premium, immersive site category is online luxury retailer Moda Operandi, which curates a catalogue of up-and-coming designers of accessories and allows subscribers to buy these items before they hit the catwalks of Milan, New York or Paris. The site seeks to bridge the gap between fashion-hungry consumers eager to get exclusive access to hard-to-find items and designers who need a reliable, high-margin channel. Mode Operandi is growing at a triple-digit clip – one of the faster-growing luxury retail sites at present.

To provide Moda Operandi’s discerning users with a near-showroom experience, the company uses professional photographers to take high-quality images, which are then posted on the site at sizes averaging 1.5 megabytes each. This is five to seven times larger than the largest image sizes used most retail websites today and several times larger than the images used on the

p

average luxury retail site. Rather than use a single large image to show each item and a number of smaller thumbnails to show alternative views, Moda Operandi places on each page a half-dozen of these very large

Example: How Moda Operandi Delivers a Rapidly ImmersiveMobile Experience


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Showcasing high-end products – or any product, for that matter – with compelling, high-resolution images comes with a cost. While immersive site improvements drive usage, stickiness and purchases, these enhancements also “super-size” website and web applications. Larger images, 360-degree viewing, personalization features and dynamic construction of web sites targeted to individual users can boost the load factor – the amount of data contained in a web application – by 50% or more. Logically, this increases the amount of time it takes for a user to access the website, to see the improved images and functionality load on a page, and to begin interacting and purchasing.

When early generation immersive sites suffered from slow application load times, users were forced to wait, and they were frustrated. This not only reduced return traffic, but also damaged the bottom line and brand reputation.

One Second Can Cost You 7 Percent of SalesAccording to 2013 research by web performance measurement company Compuware , every one-second delay in page load time results in 11% fewer page views as well as a 7% decline in conversions. After an unsatisfactory web experience, Compuware found, 88% of people are less likely to return to a website, 78% went instead to a competitor’s site, and 42% discussed their bad experience with friends or in forums online. Aside from reducing user engagement and conversions, slow sites suffered reduced search engine rankings after Google began to include page load times in its ranking criteria. The accompanying chart, from a presentation by Walmart Labs , shows the impact of page load on conversions taken from real customer data at Walmart.com. Walmart Labs found that customers who converted on their website experienced page load times of 3.22 seconds while non-converting visitors experience page load times of 6.02 seconds. After Walmart optimized its sites to improve page load times, the Operations team

Recipe for Failure: SlowMobile Buying Experiences

images. Users can zoom in on items to observe stitch patterns and fabric density as well as specific aspects of cut and curve, from virtually any angle.

Moda Operandi provides the same high image quality and user experience to its customers on desktop, laptop, tablet and smartphone form-factors. This is rare in an industry where companies often maintain three completely different web applications to accommodate the three main display size groups. With 50% of its traffic coming from mobile devices and over 30% coming from iPads – both percentages that continue to grow – Moda Operandi must deliver a premium experience to mobile users. “We really look to perfect a high-end, high-touch luxury feel where our members can come and get immersed and drawn into the products and the collections. That’s why for us imagery and responsiveness of the site are so important. We put a lot of effort into technology that

makes page transitions very smooth and very, very quick,” says Moda Operandi CTO Keiron McCammon.

As a result of its ability to maintain superior web application performance while delivering a premium user experience, Moda Operandi enjoys conversion rates 25% to 50% above those commonly found among luxury e-commerce sites. Many other luxury retail sites are trending towards larger images – and more of them for each product – as well as granular zoom capabilities.

Innovative sites continue to add transactional capabilities and establish direct relationships with their customers for direct commerce as well as driving them to showrooms. These brands increasingly have to maintain performance through spikes in traffic and web usage resulting from customer promotions or new collection launches keyed to seasons and shows.

According to 2013 research by web performance measurement company Compuware , every one-second delay in page load time results in 11% fewer page views as well as a 7% decline in conversions. After an unsatisfactory web experience, Compuware found, 88% of people are less likely to return to a website, 78% went instead to a competitor’s site, and 42% discussed their bad experience with friends or in forums online. Aside from reducing user engagement and conversions, slow sites suffered reduced search engine rankings after Google began to include page load times in its ranking criteria. The accompanying chart, from a presentation by Walmart Labs , shows the impact of page load on conversions taken from real customer data at Walmart.com. Walmart Labs found that customers who converted on their website experienced page load times of 3.22 seconds while non-converting visitors experience page load times of 6.02 seconds. After Walmart optimized its sites to improve page load times, the Operations team


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recorded that every 100ms improvement led to a 1% increase in incremental revenue and every 1 second improvement led to a 2% boost in conversion rates.

Various remedies are available to improve performance. Until now these remedies have not offered a significant improvement in page load and site performance for mobile users. By deploying web performance improvement technologies, brands such as Rolls Royce, Prada and BMW succeeded in reducingload times and time-to-click for access over wired broadband networks.

However, the performance of immersive sites on wireless devices – the fastest growing segment of the online luxury retail marketplace – is generally inferior, and often painfully so. Download speeds over wireless and mobile networks remain far less predictable than over wired networks. All types of mobile networks, when accessed from public domains, regularly clog.

Think of access from the WiFi network at a coffee shop during the morning hours or a 4G network in a crowded city downtown during rush hour. This high variability and sluggishness creates a challenge for web performance engineers, who must optimize a high - quality site for a the full range of potential network conditions.

Regardless, mobile users expect their web experience to be just as fast as they experience on a desktop. A study by Equation Research11 found that over 70% of all mobile users expect sites to load quickly, up from 58% two years earlier. First impressions also matter. The study found that nearly half of all mobile users are unlikely to return to a website that was difficult to access from their phone and 57% are not likely to recommend the site to a friend.

Customers using mobile devices will punish brands that fail to deliver superior web experiences, by shopping and browsing elsewhere. Over the past decade, user

expectations on page load times have dropped dramatically from four seconds as an acceptable standard to three seconds – a number which has likely been decreased as speeds of home broadband networks have jumped.

While the majority of online shopping still happens on laptops and desktop computers over standard wired broadband connections, mobile shopping is quickly catching up. The adoption of smartphones has been several orders of magnitude faster than the adoption of PCs and laptops. The adoption of tablets, still nascent and led by Apple’s iPad, has been even faster than the adoption of smartphones. By 2013, retail transactions executed over mobile devices should eclipse $13 billion in the U.S. alone, according to Forrester.

Another game changing influence is Google’s announcement in the spring of 2013 that it would begin to factor mobile website response times into search rankings. The volume of mobile search queries is growing much faster than the volume of search queries over laptops or desktops. So e-commerce sites that fail to deliver fast response times to mobile users risk getting buried in the search results, even though they have done everything else right to rank high in organic rankings. And, as Shullman notes in his report, affluent users do not like to wait for pages to load and they won’t jump to page 15 to find your brand.

On Mobile, It’s Even More Problematic

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Load Time (Seconds)

Population (%) Conversion Rate (%)

Conversion Rate Vs. Load Time


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To date, online retailers with rich or complex websites have relied on legacy technologies such as content delivery networks (CDNs) to improve page load times. The fundamental acceleration technique with CDNs is to cache frequently used components, such as mages, and store them close to the user. However, these technologies were designed to solve 10-year-old problems of latency when the core of the Internet was slower and less reliable. Today, the core is far faster and more robust. Delivering large cached images over variable and often slow last-mile wireless connections – from the tower or the WiFi router to the device – still results in long wait times that can infuriate and annoy users. CDNs were not designed to solve this problem and cannot provide performance improvements over WiFi without a significant downside.

Speed or Quality: A Devil’s Bargain for Publishers

A new technology invented by Instart Logic, Web Application Streaming, allows online retailers to avoid having to choose between fast load times and premium web experiences. A growing number of luxury site publishers have deployed the Web Application Streaming Network.

Taking lessons from the client-server architectures pioneered for video streaming (Adobe, Real Networks), Instart Logic establishes a client-server relationship between end users’ devices and the delivery network. It

does this by injecting a lightweight (25KB) JavaScript hypervisor (called the NanoVisor™) into the browser on the end user’s device and connecting it to the AppSequencer™, Instart Logic’s intelligent streaming engine in the cloud.

The NanoVisor collects information on how web applications are loading and sends it to the AppSequencer, which then builds a prioritization profile for each page on a retailer’s website. The AppSequencer divides up web assets into smaller

Speed and Quality: Web Application Streaming for Fast, Premium Web Experiences

To minimize the time a user waits until they can interact with a luxury site, many brands have resigned themselves to a “visual downgrade” of their mobile or tablet sites by using lower-quality images, removing rich graphics and slimming down engagement techniques. To avoid this fate, some super-premium site owners have resorted to using adaptive image optimization. This technology allows publishers to optimize image quality for users depending on network conditions and send mobile device owners lower quality images when their network connections are slow.

Unfortunately, lower quality images result in diminished user experiences, lower clicks, reduced time onsite, and lower conversion rates. The damage extends to the actual brands; people with a less satisfactory online experience are less likely to visit a physical store or recommend the site to a friend. The damage caused by poor quality images is magnified on Retina-class devices with high-quality displays.

Neither Visual Downgrades nor Slow Immersive Experiences Will Succeed


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fragments, including images, HTML, and Flash files. Once this partitioning is completed, it streams the fragments out in order of priority to allow users to in-teract with a web page as quickly as possible. The end result is that after just a subset of data has down-loaded, the browser can display and allow “first interaction” with the web experience. The rest of the data then comes in the background, delivering the full experience only moments later.

For an immersive e-commerce site, the Web Application Streaming Network works in the following manner. From the first visitors to the site, Instart Logic’s network learns about their usage of the website.

As the AppSequencer gains intelligence about what the

e-tailer’s servers are loading and in what order, the Web Application Streaming Network prioritizes asset delivery.

The network identifies large images to be delivered on a page and shopping cart, and divides them all into smaller fragments. It prioritizes the information to allow for key components of a page to display and become clickable – with only a partial delivery of data. After this initial display, the network continues streaming the data so that while the user views it, the image quality quickly improves to full resolution. At the same time, in the background, the network streams in components of the other images on the page in order of prioritization. These two processes happen so quickly that users barely perceive the two stages.

This level of prioritization allows Instart Logic to cut load times for e-commerce web applications by 30% to 40% on a typical immersive site, and improve web performance by almost 2x on initial page and image loads. In fact, publishers of immersive online retail and travel sites regularly enjoy immediate improvements in page load times of one second to two seconds. As their product assortments expand or a site offers more personalized, dynamic content to end users, Instart Logic helps by delivering faster load times of this type of content.

It is worth noting that dynamic content can be streamed but cannot be cached, because personalization requires that each page be built on the fly with assets pulled from the origin server specifically fitting the profile of an individual end user. Caching of frequently-used page elements can help marginally, but not to the degree that web application streaming will.

Typical Results for a Rapidly Immersive Website

Instart Logic’s web application streaming does not require website publishers to modify any code, nor do end users download any plug-ins or extra software. Site publishers can deploy the Web Application Streaming Network with a simple change of DNS settings to redirect traffic through the Instart Logic cloud service. The Web Application Streaming Network works across all standards-compliant HTML5 browsers, including Google Chrome, Mozilla Firefox, Apple Safari, and Microsoft Internet Explorer. Instart Logic’s network is deployed globally across more than 30 locations covering all the major Internet peering points.

The network is built with no single points of failure and multiple levels of redundancy at every layer, from racks to cabinets to redundant load balancers to power supplies to ISP connectivity. To date, Instart Logic has delivered uptime of 99.9999% and has not experienced a single significant outage. Instart Logic is designed to be a drop-in replacement and significant improvement over CDNs.

Requirements andNetwork Reliability


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ConclusionOnline retailers have a sharp point at their backs, pushing them to improve website quality, to upgrade visually, and be faster as their customer base shifts to mobile access. Instart Logic’s Web Application Streaming Network constitutes a superior way to deliver their high-fidelity and rapid immersive sites to all e-commerce customers, particularly to users of mobile devices, and most especially to users of high-value tablets.

E-commerce sites will fall behind unless they radically improve both quality and speed, especially for mobile customers. Early attempts to boost quality failed and actually alienated customers, as speed lagged. A growing number of retailers have solved this tradeoff

with a new technology that replaces the traditional CDN: Web Application Streaming.

The accelerated, rich experience enabled by web application streaming avoids the slowdowns experienced by early publishers of visually upgraded websites, and is proven to boost user retention and conversation rates. There is a bevy of optimization techniques available to website publishers. Notwithstanding all those, replacing the traditional CDN with web application streaming is potentially the key to significantly faster, immersive website performance – and success with the next generation of mobile commerce.

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Sources1

http://www.emarketer.com/Article/Smartphones-Tablets-Drive-Faster-Growth-Ecommerce-Sales/1009835

2http://www.emarketer.com/Article/Smartphones-Tablets-Drive-Faster-Growth-Ecommerce-Sales/1009835

3 http://luxuryinstitute.com/blog/?p=2448

4

5

http://www.ipmark.com/pdf/lujo_2012.pdf

http://online.wsj.com/article/SB10001424052970204010604576597151983657300.html

6 http://betashop.com/post/19400841070/fab-custora-calculate-the-lifetime-value-of-an-ipad

7http://wwwconference.org/www2011/proceeding/companion/p45.pdf

8http://econsultancy.com/us/blog/62391-do-bigger-images-mean-improved-conversion-rates-three-case-studies

9

http://www.webperformancetoday.com/2012/02/

http://www.compuware.com/content/dam/compuware/apm/assets/whitepapers/WP_Web_Load_Testing_is_Good_Business.pdf

10

http://www.gomez.com/wp-content/downloads/19986_WhatMobileUsersWant_Wp.pdf11

failure or success for next-generation mobile commerce

Technology

mobile devices

mobile purchases

sites page

mobile consumersappetite

mobile commerce experience

publishers page

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