Black Friday 2016: $300M in Revenue Risk for Mobile Retailers

By Andrew Levy, CSO of Apteligent

Last year $1.73B or 39% of “Black Friday” sales happened the day before, on Thanksgiving Day itself. The remaining $2.72B in sales occurred on Black Friday. According to Adobe, mobile accounted for $1.5B of the $4.45B in sales, about 34% of the total. Over 74 million people will show on those two days, spending an average of $60 per person.

In a recent data report from Apteligent, it calculated the impact of app crashes on both “hard churn” (basically losing customers) as well as the impact that crashes have on customers returning the next day.

Key takeaways from the Crash and Churn report:
Crashes increase churn by as much as 534%: This represents a 6x increase from your “average” churn rates.
Crashes decrease next-day app opens by almost 8x the normal open rate.
The data shows that “light” users, or users with fewer app opens per day, tend to churn at higher rates based on crashes.
The impact of crashes on churn also varies by app store category: Shopping & Finance apps in particular are vulnerable to lose users when the app crashes, while users of Games & Travel apps are much more resilient and more likely return despite crashes.

 apteligent1

 

 For Black Friday 2016 this is an interesting exercise. If one assumes that Black Friday shoppers generally look for deals the day before to buy on Black Friday itself, one can calculate the amount of money retailers could potentially lose because of poor app performance.

 apteligent2

The best-case scenario is that an app experiences 0 crashes. Even then only about 80 percent of consumers will return the next day. That number falls to 55 percent as the crash rate for an individual approaches 100 percent. Which means if they load the app once and it crashes once, then only 55 percent of those users will return the next day. Below, is a graph of the user crash rate distribution for all consumers that experienced a crash.

apteligent3

 

Assuming the worst-case scenario occurs, than every retail app user experiences at least one crash the day before Black Friday (with users experiencing crashes in the manner described by the above graph), it can be expected that the following will happen:
About 5M people will abandon Black Friday shopping (⅓ of mobile shoppers)
This represents almost $300M in lost revenue ($299,875,140.90 to be exact)
At least 700,000 people will never return to the aforementioned apps

Of course, the expectation is for better performance from shopping apps, but this an interesting exercise nevertheless to consider the potential consequences of crashes.

The total 2015 mobile spend on Black Friday was $2.72B * 34% = $925M. This came from over 15M mobile shoppers. A recent report by PWC says that mobile shopping is set to grow by 25 percent this year. This is great news for those in the space but it only increases the need to invest in performance and user experience tools for the holiday season.

How that number was calculated:
Based on 2015 data: 15M mobile Black Friday shoppers, $60 spend / person.

apteligent4

Andrew Levy HeadshotAbout Andrew Levy:
Andrew has been co-founder and CSO of Apteligent since 2011. Prior to starting Crittercism, Andrew Levy was the co-founder of AdThrow, a Y Combinator company that built a data processing pipeline for real-time ad targeting. Before YC, Andrew worked at HP Software where he led teams specializing in agile programming methodologies and advocating rapid product iterations. Andrew also worked for several companies in defense and intelligence, such as Silicon Graphics Federal, Northrop Grumman, and Computer Sciences Corp. He has a B.S. in Computer Science from Johns Hopkins University.

Other exclusive Point of sale articles:

 Retail Advice that Sticks: Focus on What You Can Affect
How Much Does The Macy's Thanksgiving Day Parade Cost?
Election To Screw Up Retail Sales Says Survey
World’s First Pizza-By-Drone Commercial Trials, Delivers Domino’s Pizza
Seven Payment Trends to Watch in 2017
The Serious Seven: A Strategic Framework for Digital Transformation & Unified Commerce
Top Features of a Solid Retail POS System On-premise vs Cloud
How To Use The Pointofsale.com Website

 

 

 

Get The Point of Sale News once a month, once a week or once a day. Subscribe here.