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Why tablets are a third platform with a huge ecommerce upside

by Tom Tunguz

December 30 2012

Tom Tunguz is a principal at Redpoint Ventures, and previously a Google product manager who worked on social media monetization.

"Tablet-first companies will have a huge advantage," says Tom Tunguz.

It’s easy to think of a tablet as a larger mobile phone or a replacement for a notebook or ultrabook. But to dismiss tablets as scaled clones of their bigger and smaller brothers is a mistake.

Tablets are the third type of device: the one with the most revenue potential for ecommerce and developers alike. Tablets drive greater volumes of traffic, that convert to paid at better rates, and drive better qualified and less expensive leads through advertising.

Despite the fact that tablet penetration is less than half of smart phone penetration in the U.S., tablets' share of traffic to websites outpaced the mobile web in Q1 2012.  And with tablet penetration doubling year over year, that trend is certain to continue.

More impressively, overall tablet users' conversion rates are twice as strong as mobile and 20% better than PCs. And because the ecosystem is young, tablet ads' costs-per-click are low, generating much better ROI for advertisers, a winning combination for marketers.

Reading through EF’s report, the ROI metrics are even more favorable for merchants. Longer session times during non-working hours drive this higher propensity to convert. 

In addition, tablet demographics are much more attractive. According to Flurry, tablet owners also skew disproportionately older and wealthy with an 18 percentage point skew towards households with income exceeding $50k and a nearly 10 percentage points skew towards 55 and older users, compared to smartphones.

Not every application category will benefit from pursuing tablets. But the form factor, usage patterns, customer acquisition economics and demographics will confer tablet-first companies a unique advantage that isn’t yet evident in the market.

(A version of this column originally appeard in Tom Tunguz'  blog). 

Tom Tunguz is a principal at Redpoint Ventures, and previously a Google product manager who worked on social media monetization.
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