Does your business need a mobile app?

Dec 16 2020 | PayPal editorial staff | 5 min read

With more than 2.1 million apps available to download worldwide and increasing consumer expectations for a seamless mobile experience, is developing an app is the right move for your business.
If you’re thinking about building an app for your business, you’re not alone. According to the 2019 PayPal mCommerce Index, 16% of Australian businesses have an app and 44% project they will have an app within the next 3 years. In the 2017 mCommerce Index, we found that Australian businesses are reactive rather than proactive when it comes to app development. They’ll start to consider it when their online offering is established (24%), when customers demand it (20%) or once they can afford it (17%).

App-centric businesses (like Uber and Menulog) aside, here are some key considerations for eCommerce businesses thinking about taking the plunge.

What does your business look like?

If you have an online business and you’re thinking about an app as a possible next step, first ensure your website is mobile-optimised and works flawlessly from browsing through to checkout. A well-defined mobile commerce strategy is critical before even considering an app.

Your business model and the industry you’re in is another factor in determining whether an app could work for your business. There are certain categories where customers prefer to use a native app experience rather than a mobile-optimised site. These include services such as online banking, bill payments, food and drink, tickets and clothing and accessories.

As well as your business model, start thinking about your current and future target audience. In 2017, younger shoppers (18-34) purchased via apps most frequently, with 39% making app payments at least once a week. So, if your business is targeting younger shoppers, an app might be something to consider.

“There are capabilities that exist within an app that you will find difficult to build on mobile experience, say for example, animation. There are categories where the fundamental technology will steer you one way or another, for things like gaming,” says Peter Santiago, Director, In-Store and Engineering at PayPal.

Understand the upfront and ongoing costs

The upfront investment of building an app is only the beginning, and that in itself is a time consuming and costly process (in the many thousands). Then, an app requires constant maintenance, much like a website, to ensure experience, functionality and return on investment is as strong as possible. Seriously consider the costs and benefits by undertaking thorough research online. If you’re not giving consumers a better option than the mobile site, perhaps think twice.

Are you adding value for your consumers?

When establishing an app, it’s crucial to create a seamless and functional experience for the end user. The 2017 mCommerce Index shows that 56% of Australians would use an app if it was easier than using the mobile site. An app also needs to have extended value. Can extra personalisation be offered using geo-targeting? Can you offer clothing in personalised sizes and styles? Does your business have systems and capabilities to manage special app-only offers and promotions? 40% of Australian consumers would choose to purchase via an app if they were offered exclusive promotions.

While consumers want improved ease and functionality, 80% delete apps after downloading them for a specific purpose. 56% said this was because apps clutter their mobile device, while 32% deleted apps because the user experience was worse than the mobile browser.

Building an app and encouraging your customers to download it must add value for them.

“From a consumer point of view, there must be inherent value in you (the business) knowing who I (the consumer) am,” says Robin Patrick, Senior Manager of Small Business at PayPal Australia. “Think of Uber. There’s value in having a logged-in experience so that location, payment and review is a seamless process. Think of Qantas: there’s value in having a logged-in experience so the customer can book flights but also use it as a boarding pass so there’s value in that brand knowing me.”

Refine the checkout experience

If done well, apps can be a strong driver of mobile transactions, with 68% of consumers paying via apps and 39% making app payments at least once a week in 2018 (up from 29% in 2018). However, the checkout experience needs to be frictionless.

For example, with Uber and many of the food delivery apps, the payment process occurs almost invisibly; it’s simply the background element of an overall frictionless experience. Payments in apps need to be seamless and secure to attract customers and then keep them coming back for more.

“Cart abandonment is a real issue for retailers, especially when customers are at the payment stage,” says Casey Gannon, Vice President of Marketing at Shopgate. “The logistics of entering payment information is a huge barrier to conversion. A one-touch system or credit card scanner can help simplify the payment process and provides a seamless mobile transaction for customers purchasing on the go. Which, let’s face it, is most people today.”

Consumers can also be more lenient in allowing their data to sit within an app because of higher expectations of personalisation. Security is also a crucial factor. In 2017, 67% of consumers said that if they were going to transact via mobile, they expect their details to be secure. At the same time, 34% worried about having their personal details in too many apps. These are all important points to consider when it comes to data collection and personalised marketing.

Go where your customers already are

If a native app isn’t the best fit for your business model, customers and industry, one option is to look at ways to leverage already implemented and successful apps. Marketplace apps like eBay or Gumtree, or food delivery apps like UberEats and Menulog mean there’s no reason to make an app when your business could be in a position to go into an existing one. That way, customers can be acquired through these channels with the anticipation that they return and purchase directly through you in future. Even still, it could be a whole new source of untapped customers to market to.

Just because everyone else is doing it doesn’t mean building an app is right for your business so think of ways to tie in with existing networks and technology.
Developing an app should always come down to the “why”.
  • Why would customers download your app?
  • Why would they purchase through your app?
  • Why would an app be better than a mobile site?
  • Why would it be beneficial for your business?
If you’re creating an app just to transact, are you putting in unnecessary steps on the customer’s path to purchase? These are all valuable questions worth asking in the pre-planning stage.

Thinking about building an app is a serious and natural consideration in today’s digital world. Deciding to implement one is a whole new ball game; one where value and promise needs to be proven before you start. If your business is going to have an app, it absolutely must have a unique and differentiated mobile experience. Consider your business, your customers, the investment, as well as any existing opportunities to determine if an app is right for your business.

The contents of this site are provided for informational purposes only. The information in this article does not constitute legal, financial, IT, business or investment advice of any kind and is not a substitute for any professional advice. You should always obtain independent, professional accounting, financial, IT and legal advice before making any business decision.
The contents of this site are provided for informational purposes only. The information in this article does not constitute legal, financial, IT, business or investment advice of any kind and is not a substitute for any professional advice. You should always obtain independent, professional accounting, financial, IT and legal advice before making any business decision.