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Digital goods’ sales drop as mobile subscription-based services gain traction: report

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December 5, 2013

Spotify's mobile app

Although more consumers are shopping from their mobile devices, sales of digital goods such as individual video and music downloads is down as consumers rely more on their smartphones and tablets as a primary way to access entertainment, according to a new study from MEF.

MEF’s third annual “13-Country Global Consumer Survey 2013” looks at the behavior of consumers when buying physical and digital goods via their mobile devices. According to the study, 65 percent of mobile media users have shopped for a good or service from their mobile device.

The mobile payment industry in developed markets has moved from digital economy to virtual and physical goods. Digital was predicated on the carrier bill-on-behalf of processing,” said Gary Schwartz, CEO/president of Impact Mobile, Toronto, Ontario, Canada. “This allowed for impulse, frictionless purchases.”

“As we move into an over-the-top economy we are allowing for higher value, physical purchases for good that are not limited by being consumed on the phone,” he said.

Mr. Schwartz is not affiliated with MEF. He commented based on his expertise on the subject.

MEF did not meet press deadline.

Purchase on mobile

While the number of consumers buying straight from their mobile devices continues to grow, the average purchase volume in digital goods dropped for the first time this year.

Forty-two percent of mobile media users bought digital goods in 2013, which is down from 54 percent last year.

The report highlights the increase of subscription-based applications as part of the reason why digital sales are dropping.

For example, the Spotify and Netflix apps let consumers access unlimited music or video content on demand in exchange for paying a monthly fee instead of downloading individual songs or video clips.

Mobile commerce grows

At the same time that the sale of digital goods is down, some experts say that eventually content sales will grow.

“We’re in the heyday for hardware with the sale and adoption of tablets and smartphones,” said Jeff Hasen, chief marketing officer of Mobivity, Phoenix.

Mr. Hasen is not affiliated with MEF. He commented based on his expertise on the subject.

“That’s where the money is going first,” he said. “Content sales will follow – Amazon, for one, is betting on it.”

At the same time that digital good sales are down, sales of physical goods are up.

The number of high-end purchases has increased 39 percent year-over-year. High-end purchases are items priced at $151 or more.

High-end mobile shoppers are most prominent in Kenya, Nigeria and Mexico. In many of these countries, mobile is the primary or even only way that consumers access the Internet.

The percentage of low-spend items – or products that sell for $15.99 or less – are down this year, too. Thirty-seven percent of the consumers surveyed bought a low-price item in 2013, down from 43 percent in 2012.

The study includes responses from 10,000 consumers in countries including Nigeria, Kenya and UAE, Brazil, China, India, the United States and Britain. MEF worked with On Device Research on the report.

Growing trust
Despite the increase in digital and physical items sold via their mobile devices, consumers are still wary of using their mobile devices to shop.

Forty percent of consumers surveyed said that trust was an issue when it came to shopping via their mobile devices.

However, there are small signs that consumers are becoming more comfortable buying via their mobile devices.

Thirty-five percent of consumers in 2012 and 27 percent of consumers in 2011 cited trust as an issue when shopping from a mobile device.

“One-click wallets with Visa, MasterCard and other credentials stored in the cloud is the harbinger of increased impulse checkout for a wide variant of purchases in 2014,” Impact Mobile’s Mr. Schwartz said.

“The key is that this eliminates the traditional path to purchase as all media is a CTA for a checkout. Now any intent to buy anything can trigger a purchase,” he said. 

Final Take
Lauren Johnson is associate reporter on Mobile Commerce Daily, New York 

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