Mobile Commerce. The Rising Giant.

The explosion of mobile devices in the last couple of years has been astonishing. By 2017 there will be more than 20 billion (!) mobile phones sold. A milestone to acknowledge.

However, if we would look at the smartphone penetration, there is still rather a lot of space to grow. According to the data compiled by the Pew Research Center, which surveyed 40 nations, the average percentage of population owning a smartphone is about 43% with the median equal to 45%. The top 3 countries among surveyed ones are South Korea, Australia and Israel, having smartphone penetration of 89, 77 and 74 per cent respectively. Smartphones are the least popular (we should question the availability here) among African countries – Uganda and Ethiopia has 4% each, while in Tanzania only 11% of its population own a smartphone.

Despite relatively reasonable numbers (of course, they will grow), there is one other thing that we have to pay attention to. And it is the usage of mobile devices. Many times earlier I have stressed that nowadays we are becoming more and more dependent on the new technologies. And smartphones are probably one of the best example illustrating this. Today our phones are not only the gadgets for calling or texting our beloved ones – they are now our eyes and ears: social networking tools, gateways to banking, ride-sharing etc. Hence, it is not surprising at all that 9 out of 10 consumers in the US keep their phones within reach 24/7.

This brings us directly to the retail sector, or in particular – online commerce. When I have overviewed the drivers of this industry, I have stressed the importance of smartphones and going digital (Online Shoppers – To Buy or Not To Buy?). If at the moment shoppers are using their mobiles mainly for researching, in the near future it should be the main channel for making a final purchase decision. According to estimates, mobile commerce is expected to grow 300% faster than usual e-commerce. And that is something traditional retailers should pay a special attention to.

Taking this into consideration, let us take a look at 3 trends that will be prevalent in the future of mobile commerce.

Social commerce will gain more power. Social media and social networks are important players in our lives, and often people tend to spend more time building virtual relationships while forgetting to maintain their real ones. A large fraction of our day time is consumed by social media, and overall, 60% of it is being spent on mobile. In the last year, top 500 retailers earned nearly $4 billion from social shopping. These numbers are expected to increase since social shoppers are spending more money online than ever before. Also, the introduction of buy buttons on Facebook, Twitter, Instagram and Pinterest made a huge impact, and will continue to drive the retail sales.

Brands will strive to enhance checkouts. In my last post (Forget the New iPhone – Apple Pay is the BIG Thing) there was stressed that probably the biggest problem in e-commerce is the conversation. If we would look at the numbers, it is calculated that retailers are losing about $20 billion each year due to shopping cart abandonment. More important here is the fact that checkout rates on mobile are about 70% lower when compared to already low desktop rates (about 3-5%). Therefore, with the growing mobile traffic merchants must ensure seamless checkout experience in order to retain customers and thus revenues.

Mobile payments should gain more traction. As it was noted previously (How Mobile Payments Are Doing?), mobile payments are experiencing a new wave of popularity. However, despite of the fact that there is an increasing number of m-payment service providers (for instance, just recently PayPal and Venmo announced that they are going to allow in-store payments with their apps), m-payments are not going to dominate the market unless there will be a sufficient point-of-sale terminals supporting these transactions. Only then consumers will form a habit. Apart from that, one more important thing needs to be considered. And it is retailers themselves, since recently they have contributed quite a lot for driving the mobile payments forward. For example, Starbucks already drives more than 16% of its total transactions from payments via its mobile app. To add, Walmart also not so long ago launched its own payment system Walmart Pay, which looks quite promising. Hence, the retailers influence should give some major force for the further mobile payments adoption.