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Mobile commerce to make up 24pc of online sales by 2017: study

July 31, 2012

Mobile commerce is on the rise

Showing the expected quick uptick in mobile commerce, almost one-quarter of all online sales will be from smartphones and tablets by 2017, according to a new report from ABI Research.

ABI Research’s “Mobile Money and Shopping” report outlines key factors that will drive mobile commerce, primarily attributing the growth to smartphone adoption in both developed and emerging countries. Mobile is also increasingly being seen as a viable sales channel for bricks-and-mortar store to compete with online retailers.

“Smartphone adoption was the over-riding trend, and not just device penetration but the availability of more capable applications from leading retailers,” said John Devlin, practice director at ABI Research, London.

“The retailers are looking for greater consumer engagement and interaction, and for a way to differentiate themselves in highly competitive times, and mobile apps provide a great way of achieving this,” he said.

“Ecommerce in general continues to grow, but mobile is outpacing this as user behavior transfers to mobile since the typical patterns of use lend well to mobile.”

Small growth
By 2017, ABI Research expects for mobile to contribute towards 24.4 percent of online sales.

Although mobile commerce is still relatively small compared to Web sales, the medium is gaining traction as consumers become more comfortable buying both every day and higher-priced items from their devices.

The report points to findings from 2011 when mobile commerce raked in $65.6 billion as proof that mobile will continue to contribute to the revenue from digital sales.

Additionally, many bricks-and-mortar retailers are tackling mobile from a multichannel perspective, which helps educate consumers about the technology. A multichannel approach also helps retailers roll out mobile as an extension of other mediums.

Since it is still relatively new, many retailers have been slower to adopt mobile commerce without an in-place strategy that also drives ROI. Compared to other digital marketing, mobile commerce often requires that retailers make substantial investments such as point-of-sale technology.

With consumers proactively using their mobile devices to comparison shop while in-store – called showrooming –  some retailers are making a stronger mobile push to overcome online competition.

For instance, retailers such as Z Gallerie are using in-store tablets to help sway consumers away from researching on their own while shopping (see story).

Additionally, Canadian retail chain recently began using in-store tablets in 74 locations to help consumers find reviews and compare prices (see story).

The report points to technologies such as HTML5, augmented reality, near-field communication and visual search as tactics that will play an increased role in showrooming in the future.

“I think that there are some retailers who are definitely at the forefront of mobile usage and adoption, some bricks-and-mortar retailers even going as far as installing WLAN to guarantee that consumers can access a reliable data signal to make use of the advanced features that retailers are now adding to their brands,” Mr. Devlin said.

“However, it is only a small proportion that are going to these levels and investing in such in-house development capabilities,” he said.

“Overall I think that consumer demand and interest is outstripping the retailers’ ability to serve these markets and this is where we will see third-party service providers and platform developers being able to find their place in the market.”

Groupon effect
The rise in mobile commerce can also be attributed to consumers expecting to find deals and offers when they shop with their devices.

Mr. Devlin attributes this to the similar business model behind Groupon where every consumer wants to find a deal.

Additionally, retailers are forced to find ways to make their brands stand out while still offering value to consumers.

Retailers are also looking for ways to enhance consumer engagement and interaction, which mobile helps with.

However, the true value of mobile differs by market, per Mr. Devlin.

“It is able to provide a simple, low-cost means of accessing online products and services, as well as the means of paying for them – mobile outstrips banking and broadband penetration and the breadth of epayment services is greater too,” Mr. Devlin said.

“Beyond this, in mature markets, mobile is now the battleground between online and traditional bricks-and-mortar retailers, and it is a leading component of the latter’s multichannel service offering,” he said. “Greater choice is available now, with evidence of new platforms and services coming through for those retailers without the skills or financial means to develop such capabilities themselves.”

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

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