Why do big US companies take mobile less seriously than Chinese companies?
If you want to know how seriously any public company takes mobile, then take a look at the annual/quarterly reports.
If you want to know how seriously any public company takes mobile, then take a look at the annual/quarterly reports.
If you want to know how seriously any public company takes mobile, then take a look at the annual/quarterly reports.
While top Chinese retailers, banks and internet companies are keen to share their mobile success with their investors, their US equivalents are often shy to reveal their numbers… especially the biggest US retailers.
While researching a series of in-depth m-commerce reports for ClickZ Intelligence, I needed to establish which of the world’s biggest countries are really making headway with mobile. The results are worth sharing.
1) Use Forbes’ Global 2000 as a guide.
2) Stick to US and Chinese companies (as they dominate the Forbes list).
3) Concentrate on consumer facing businesses where mobile isn’t the core business, but should be a very significant sales channel, so retailers, restaurant chains, banks and internet companies are in; but mobile companies and oil companies and manufacturers are out.
4) Then check the latest annual (2015) and quarterly statements (Q1 and Q2 2016) to see which detailed mobile performance – only hard numbers; PR fluff was ignored.
The US retailers were a big shock – especially Amazon. In 2016, you have to ask: why we couldn’t find any indication of mobile performance in financial reports of the US top retailers?
And, more importantly, you have to ask: why aren’t investors and analysts asking the same thing?
The more financial reports you look at the more you come to the conclusion: Chinese companies – and their investors – take mobile more seriously.
They saw the mobile opportunity earlier; they made it a priority to re-engineer their companies to take full advantage; and now they want investors to benchmark them on their impressive mobile performance.
This month the Chinese ecommerce retail market place Alibaba redefined what it means to be “mobile first” announcing that it has 427 million mobile monthly active users (MAU) – out of a total of Alibaba’s 434 million total users.
In the latest quarter (Q2, 2016), mobile accounted for a stunning 75% of value of all goods bought and sold on the platform and 75% of its revenues.
Just to put Alibaba’s 427 million mobile users into perspective:
Financial investors and analysts loved Alibaba’s results. On announcement of the Q2 results, the stock leaped to its highest level for 18 months.
This is the carrot: impressive mobile performance is increasingly a factor (one of several) that encourages investors to purchase stock.
The question is: when will US investors / analyst start to use the stick to punish (US) companies that keep their mobile numbers a secret?
US investors are becoming well acquainted with, and increasingly attracted to the Chinese retail and internet companies such as Alibaba, JD.com, Baidu and Tencent (all of which detail impressive mobile performance in their financial reports; all of which saw their share price improve on the latest results.
Three out of four are quoted on US markets: Alibaba is listed on the NYSE; JD.com and Baidu on Nasdaq (Tencent is listed on HKSE), which means they’ll remain front of mind.
For share price performance, see: BABA; JD; BIDU; and 0700.HK (Tencent).
Any US company that doesn’t believe how seriously US investors take mobile needs to look at Facebook’s recent financial history.
One of the main reasons Facebook’s share price went into freefall post its 2012 IPO was that investors were very unimpressed with its mobile story. One of the main reasons they love it now is because they are impressed with its mobile numbers.
As recounted by Fortune in 2015:
Facebook used its weakness on mobile as a motivator. When the company went public it had no meaningful revenue from mobile. Within 18 months, Facebook delivered a magnificent about-face on mobile, quieting the haters in the process. By the end of 2013, more than half of Facebook’s revenue came from mobile ads. “You want mobile revenue? We’ll show you mobile revenue!” the company seemed to say. Wall Street rewarded the company by trading up its stock.
Today Facebook wants to be measured on its mobile record. In its Q2 2016 results statement it couldn’t shout louder about its mobile success:
Second Quarter 2016 Operational Highlights
Second Quarter 2016 Other Financial Highlights
The phenomenal rise of Facebook’s stock price, see FB, from mid-2013 tells you everything you need to know about investor attitude to mobile.
By way of research we looked at the recent annual and/or quarterly reports and earning statements of relevant companies from the world’s biggest public companies according to Forbes, which is dominated by Chinese and US companies, to see to what extent (if at all) mobile performance is displayed.
The Forbes rankings are based on a mix of revenue, profits, assets and market value.
Three Chinese banks occupy the top three Forbes rankings, with a fourth in sixth ranking. All four appear to have made mobile banking a priority over recent years and the numbers are staggering. At the end of 2015, they have 590 million mobile banking customers between them. That’s 1.8 times larger than the population of the United States.
Three of the top four US banks share mobile banking numbers. Although mobile customers are dwarfed by the vast numbers of their Chinese counterparts are a significant proportion of their total user base.
Brian Moynihan Chairman and CEO, Bank of America explains to shareholders why mobile banking is so important:
Why are we tripling our investment in 2016? It is simply because this is how customers want to do business with us. Our customers deposit 250,000 checks a day through their mobile devices, reflecting 15 percent of consumer deposit transactions. We would need an additional 650 financial centers to handle the deposit activity that is currently being done on those mobile devices.
China’s highest ranking retailers on Forbes list are Alibaba (rank 174) and JD.com (rank 800). Despite their lowly ranks, compare to US companies such as Walmart (rank 15), these are no small fry.
Most interesting is the news that Alibaba now makes more money from each of its 427 million mobile user than from non-mobile customers. (Source Q2, 2016 results)
Unlike its rival, JD does not reveal what proportion of revenue or GMV is mobile or the number of mobile users. But it does declare that an impressive 79% of its orders placed on mobile. (Source: Q2, 2016 results)
Like its rival Alibaba, JD’s earnings were well received by investors.
Compared with the mobile details (and outstanding mobile performance) shared by the Chinese retailers, the details shared by US retailers is disappointing.
Searching through the 2015 annual report and quarterly earnings statements (up to August 18 2016), we were unable to find mobile performance numbers of any descriptions for the following US retailers and restaurants.
There were two US retailers/restaurants sitting outside the top 10 that revealed some details of mobile performance:
There are two prominent internet companies in China, Tencent Holdings (Forbes rank 201) and the Baidu (rank 349):
The two prominent Internet companies in USA are Alphabet, the company formally known as Google, (rank 27) and Facebook (rank 188). The contrast is remarkable.
Sundar Pichai, CEO Google, investor briefing Q2 2016:
“Q2 2016 earnings call: Our investment in mobile now underlines everything that we do today from search and YouTube to Android and advertising. Mobile is the engine that drives our present.”
We look forward to the time when US companies feel confident enough about their mobile numbers to share them in their financial reports; or the time when investors start to insist on it.
N.B. This study was not an in-depth research project, it was based on observations from the companies’ financial reports. If any of these retailers share numbers elsewhere / or would like to share their mobile numbers, please contact the author Andy Favell who will be very happy to update the ClickZ readers.
Read the reports:
This is Part 28 of the ClickZ ‘DNA of mobile-friendly web’ series. Here are the most recent chapters:
Andy Favell is ClickZ columnist on mobile. He is a London-based freelance mobile/digital consultant, journalist and web editor. Contact him via LinkedIn or Twitter at Andy_Favell.