Shopping on phones is a cumbersome task. Typing in lots of details on a small screen is often not worth the effort, and shoppers abandon their carts at significantly higher rates than on desktop. During Thanksgiving this year, 52% of online shopping traffic came from mobile, according to ChannelAdvisor, but just 37% of orders were made on mobile devices.
Amazon's Fire tablet became the company's fastest-selling tablet in history after a steep discount on Black Friday. Source: Amazon
Overall, mobile traffic converted at less than half the rate it did on desktop -- 2.16% versus 5.33%. But converting mobile traffic is harder for some retailers than others. Amazon (AMZN +3.51%) stands out as a big winner in the shift to mobile commerce, as its checkout process is just as easy on mobile as it is on desktop: One click and you're done.
Not just an online retailer, the online retailer
Even before mobile started taking over the world, Amazon was focused on removing friction from the online shopping experience. Amazon's one-click checkout system has been around in some form since 1997. (Side note: In the "post-mobile" world, Amazon recently rolled out Dash buttons, which allow shoppers to reorder household goods with a literal push of a button.)
Amazon's focus on delivering a first-rate online shopping experience on desktop computers has led to a substantial database of payment information. Amazon has leveraged that information to provide a low-friction shopping experience on mobile, while other retailers struggle. It's also been able to turn its desktop dominance into one of the most popular loyalty programs in the world with Amazon Prime, which also makes mobile ordering easier.
PayPal (PYPL +1.16%) recently began offering customers the option for similar functionality to Amazon's one-click ordering with a feature it calls One Touch. One Touch is available at all merchants that use PayPal and across all devices. It simply requires a user to log into PayPal once every six months, and it can be used across hundreds of merchant websites.
This type of technology should help other retailers catch up to Amazon, but Amazon still has more active accounts than PayPal. As of its last earnings report, PayPal had 177 million active users. Amazon says it has more than 244 million shoppers.
Is Amazon future-proof?
The thing that separates Amazon from other retailers is that it's a technology company on top of being one of the largest retailers in the world. That benefit of technology allows it to develop new ways to shop across platforms -- see the aforementioned Dash buttons -- and integrate its retail division deeper into the everyday habits of shoppers -- see Kindle Fire, Fire TV, and Echo.
Combined with its 244 million active shoppers and millions more of dormant shopping records, this gives Amazon a wide moat when it comes to online shopping. The e-commerce industry is expected to grow more than 50% over the next three years. With a significant portion of growth coming from non-desktop devices, Amazon is poised to capture an outsized portion of the estimated $2.5 trillion in online sales in 2018.
Saying Amazon is immune to market changes in the future would be reckless. But the company is better positioned than any retailer for the shift to mobile shopping, and it's better prepared to handle any future changes to consumer behavior. It even has its own brick-and-mortar store if customers decide they can't trust the Internet anymore.
