Mobile Commerce: State of the Industry

These days mobile devices i.e. mobile phones are much more popular than PC’s or laptops. According to the research of The International Telecommunication Union in October 2010, there were more than 7 billion mobile phones, exceeding the number of PCs about 3.8 times. They say that in 2013 it’s expected to sell more than a Billion of various handheld devices. It’s hard to believe, but in the United States the most popular smartphone OS is Android – 43.7%, followed by – iOS with a share of 27.3%.

Mobile Commerce: State of the Industry

The next 4 years the number of mobile Internet users will surpass those who use Internet access from personal computers. Till 2015 Mobile Commerce market will grow up to 119 billion dollars of turnover (that’s about 8% of the whole eCommerce market).

So, what are we going to talk about in this blog post? We’d like to:

  • define the true picture of mobile commerce world;
  • try to understand major trends of mobile commerce;
  • describe the possibilities of using mobile commerce as a channel for increasing sales;
  • reveal the most interesting statistic data from mCommerce world.
So What’s mCommerce?

There are two global understanding of the term mCommerce as part of eCommerce. The first one is much wider – it’s any trading transactions initiated with the help of a mobile phone. The second definition is much narrower – it’s a transaction, made from an account of a mobile operator or bank account linked to a mobile phone, we call them mobile payments. Mobile payments are often associated with payment of virtual products, often quite limited by the size of the payment itself.

What’s Happening on the Market?

Number of Phones

instantShift - Number of Phones
The mobile phone via shutterstock.com

Mobile phones are the most widely spread electronic devices on the planet. According to The International Telecommunication Union in August 2012 there were about 7 billion mobile phones. This number exceeds number of PCs about 3.8 times.

mCommerce in the World

According to Abi Research mCommerce market is going to grow in progression. In the closest future (till 2015) an overall turnover will reach 119 billion dollars (it is about 8% of the eCommerce market). It’s not surprising, as more and more sellers understand that potential buyers do not leave home without their phone(s). The United States and Europe will show a giant growth – the amount of mCommerce in U.S. in 2009 was 9 times less than in Japan ($ 1.2 billion vs. $10 billion, the data Abi Research).

In U.S., according to the Forrester’s forecast mobile commerce turnover will grow from 6 billion to $31 billion in 2016, which will be 7% of eCommerce in the country.
Major product segments in mobile commerce in U.S. – are travel services (31%) including tickets and hotels, computers/electronics (20%), clothes – (13%), books/music/DVD (9% ), office equipment (7%), household goods (6%), tickets to the cinema, theater or some other events (3%).

Trends in Mobile Commerce

  1. The growth of mobile data traffic worldwide
  2. Mobile Advertising and Marketing
  3. Location-based Services (LBS)
  4. Applications
  5. Virtual wallets
  6. Mobile coupons and barcodes

The growth of mobile commerce in the nearest future is determined by rather small number of key trends, which we can only slightly affect, that is, we can talk about the “wave” effect.

1) The Worldwide Growth of Mobile Data Traffic

instantShift - Growth of Mobile Data Traffic

With the increase of mobile traffic, greater amount of retailers started paying attention to mobile commerce, increasing amount of mobile websites and apps, as the result – conversion grows, and the number of sales within mCommerce also increases.

Generally this is all because of social media networks that accelerate growth and quality of mobile platforms, becoming some kind of a “first step” that users make in mobile internet; today people spend most time social networking from their hand-held devices than from PCs.

2) Mobile Advertising and Marketing

instantShift - Mobile Advertising and Marketing

Mobile devices are absolutely different (comparing to PCs); using them user gets involved way deeper into the buying process. To make this work new technologies and approaches of mobile marketing are applied.

  • In mobile advertising, you need to consider the diversity of browsers (currently there are about 60 versions), speed limits, screen resolutions – all of these three play critical roles.
  • In SMS newsletter you need to keep in mind number of characters, keep track of the time zone, etc.
  • Video games allow you to use GPS, camera and augmented reality technologies (making it really complex to develop). All these are new, and sometimes unexplored steps in mobile marketing and promotion, but still you need to consider each of them and also implement and evaluate.

According FitForCommerce at least 41% of sellers got positive results from investing in mCommerce, 32% did not measure or did not know how to measure the ROI of their actions.

3) Location-Based Services (LBS)

instantShift - Location-Based Services

According to Google the most popular search queries are geographical. Users ask where they can get this or that product, doing it on a go. According to Pew Research location-based services are popular among 28% of all mobile web users.

This is a good way for offline stores to get some more customers. According to JiWire more than a half of customers are ready to share their location, in return they want to get some relevant content: coupons, discounts, stock data, routes and information about the products.

It was also discovered that among adults up to 34 years old, the number of willing to exchange their location with the content, that will “help save or make better buying decision,” was even higher and reached 60%. The most desired content was data about sales within a mile of their location – 29%.

4) APPs

App Store and Android Market have radically changed the paradigm of using mobile devices. Open SDK and integrated billing within iTunes enabled thousands of developers to compete creating mobile apps that turn phones into Swiss knives that are always with you. All in all everything above made it possible to reach a new level of using Internet via mobile device. According to 148apps.biz, in the end of 2012 the number of apps in App Store almost reached 1MLn, and the Android Market – 700000. According to Android’s official blog there are already more than 25Bln downloads.

5) Virtual Wallets

instantShift - Virtual Wallets

20% of smartphone owners have used their devices as a virtual wallet (we suspect many of these have done so with the Starbucks app) and 28% expect to do so more in the future. A quarter of tablet owners — consistently the most willing to experiment with new technologies — have used their tablets as a virtual wallet in stores; 39% plan to do so more in the future.

6) Mobile Coupons and Barcodes

instantShift - Mobile Coupons and Barcodes

Although virtual wallets usage is increasing, more smartphone and tablet owners expect to increase the use of mobile devices to look up more information about a product (between 55% and 57%) or use a coupon (between 53% and 54%). Nearly half of smartphone and tablet owners also said they planned to scan barcodes more often to get additional information about a product, suggesting that barcode scanning might indeed be poised to hit the mainstream in the next few years.

Top 20 Mobile Industry Stats You Need to Know

instantShift - Mobile Industry Stats

  1. Nearly all Generation Y consumers owned a mobile phone of some kind and 72% owned smartphones.
  2. Tablets to hit 100M shipments in 2012.
  3. Over three-quarters of Americans age 43 and under now use a smartphone.
  4. 53% of American consumers use their smartphones to access search engines at least once a day.
  5. Globally, 80% of consumers have used computers to access the Web within the previous seven days. Sixty percent used their mobile devices to do so.
  6. US mobile subscriptions officially crossed the 100% penetration mark in Q4 2010.
  7. The smartphone market is now larger than the PC market. Smartphones outsold PCs in Q4 of 2010 101 million to 92 million.
  8. Smartphones and tablet computers will increase mobile Web traffic by 26 times during the next four years.
  9. 86% of mobile internet users use their mobile device while watching TV with 37% of those browsing the internet for non-related TV material.
  10. The number of Smartphone users worldwide is predicted to exceed 1 billion by 2014.
  11. 25% of US mobile web users only access the web from their mobile phones.
  12. 74 percent of online retailers have already, or are currently, developing a mobile strategy.
  13. The number of available mobile retail applications has increased 350% since 2010.
  14. 7% of Internet Retailer’s Top 500 e-retailers have downloadable mobile apps available to consumers.
  15. The number of US mobile coupon users will rise from 12.3 million in 2010 to 53.2 million in 2014, driven by the rapid adoption of smartphones.
  16. 54% use or would like to use digital touchscreens in-store.
  17. 80% of smartphone owners want more mobile-optimized product information while they’re shopping in stores.
  18. 46% of showrooming shoppers still ended up making a purchase in-store, an 11-point increase from 2011.
  19. 65% of U.S. shoppers research products and services on a PC and make a purchase in-store.
  20. Nearly 50% of shoppers believe they are better informed than store associates.

Conclusion

Perhaps mobile industry in general will provide a steep turn and start moving in a completely unexpected direction. However, one thing is clear – despite the unstable economical state in a great amount of countries, mobile phone market today remains one of the most promising in the telecommunications sector. Undoubtedly, mobile industry in the upcoming years will bring more interesting products. Anyways time will show what will happen.

The Future Starts Today

Due to mobile commerce millions of users received new capabilities for running financial operations, thus saving precious time and nerves. This is all possible due to use of efficient and low cost tools accessible any time and any place.

Today Mobile commerce is much more close to every user due to such technologies as NFC (Near Field Communication), Mobile Wallets that allow users to make payments for goods directly from the phone and QR codes that make it easy for merchants to create offers to mobile users.

 

By the way, do you think mobile commerce will ever surpass eCommerce? Will these channels surpass in-store shopping sales? Share your opinion in the comments.

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5 Comments

  1. Dear Alex,

    LOVED this article! So very true. Would you be interested in speaking at the upcoming conference called Compulsive Purchase Marketing 2013?

    I’d be happy to send you more information. But this article is dead-on and what this conference is all about. Let me know if you’re interested and where to send additional info.

    Thanks!

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