Mobile Commerce: Does Your Company Need It?
Also known as m-commerce, mobile commerce is about the explosion of applications and services that are becoming accessible from Internet-enabled mobile devices. It involves new technologies, services and business models unlike traditional e-commerce. And it’s disruptive.
Because mobile phones create entirely new experiences with very different behaviors, contexts and constraints, compared to the desktop environment of e-commerce, it opens up the door to a slew of new applications and services. Mobility allows consumers to go wherever they go, while performing tasks such as looking for a nearby restaurant, staying in touch with colleagues, or paying for items at a store.
In 2010, mobile commerce was only 3% of e-commerce. It has been steadily on the rise and is now at 11% at the end of last year’s holiday shopping season. That’s approximately $18.6 billion in consumer spending.
However, with a new ecosystem of retail and shopping apps, mobile-generated retail spending could rise to 15% of retail e-commerce by the end of this year. This is spawned by the overwhelming trend that shows two out of three new mobile phone purchases in development markets like the US, UK and Australia are for smartphones. m-commerce is quickly on its way to becoming a $31 billion market by 2015.
Mobile commerce has also had a transformative impact on some businesses, including Amazon, eBay and flash sales sites like Gilt. But, for the vast majority of retail companies, mobile represents only a negligible fraction of total sales, and it’s likely to rapidly evolve over the next half-decade, according to data from Forrester.
For businesses that are in the m-commerce space, there are four evolving key trends that command attention:
- Show-Rooming: Consumers are more likely to go in store to explore products through live-research on mobile devices (thank you, Amazon Price Check). This causes some headaches for retailers, but is also an opportunity for instant gratification or value-add experiences. A staggering 63% of smartphone owners check prices online while in-store.
- Tablet Proliferation: Used at the expense of the desktop, tablet-commerce can take digital sales away from desktops. This results in second screen buying, or ‘commute’ buying.
- Curation Over Selection: Users want a personalized and socialized purchase experience, not a catalog experience selected by the brand, turning the purchasing process into a curated buying experience. Some examples include Fancy, Gilt Group and Pinterest, and now with a new look, even eBay.
- Mobile Payments: Mobile purchasing is still painful in many countries, but the industry is quickly adapting to purchase/payment enablement from mobile devices. The King here is still Amazon.
So does your business need to adopt mobile commerce? To help us answer that question, let’s take a look at the numbers. According to a report by BusiessInsider, 54% of adults in the U.S. own smartphones and about 25% own tablets. In roughly three years, the number of tablets alone will outnumber PCs. By 2016, about 450 million tablets will be sold annually worldwide.
Clearly, statistics already show that a disproportionate share of mobile traffic to e-commerce websites comes from tablets. With only a 25% penetration rate, tablets account for well over 40% of mobile traffic to e-commerce sites.
Close to 50% of 12-17 year-old smartphone owners use their smartphones as their primary Internet access device. Therefore, engaging in mobile commerce is much less of a novelty than it is for the older consumers.
Mobile commerce is driving incremental e-commerce revenues that would not have happened without the availability of tablets and smartphones as new ‘real-time’ friendly shopping mediums.
So is mobile commerce worth investing in?
I say, YES. Make sure your mobile websites are responsively designed so that it is optimized for the wide variety of device screen sizes on the market. And above all, invest in creating a great tablet experience, as they are generating significant traffic and sales and will continue to grow in the years to come.
Scott is a self-proclaimed extrovert who has meshed his fascination with people and what motivates them, with a raw enthusiasm for technology. Scott is a founding member of Moven, the mobile-centric payments business that helps customers to spend, save and live smarter. He is a founder at Next Bank, a mentor to Entrepreneurs throughout world with Lean Startup Machine, sits on the Board of Care Pakistan and holds advisory positions at Fastcash, Our Better World, One Cent Movement, HUB Singapore and Apps 4 Good.
When not in a boardroom or on centre stage, you’re likely to find Scott devouring, tweeting, and blogging on the latest and greatest in the world of mobility, serendipity, user experience and entrepreneurial leadership, an outlet that landed him a contribution to Brett King’s best-selling book, Bank 3.0.