Global Mobile Shopping Industry to Grow by 32% In 2016 [REPORT]

content consumption pattern in US

The billowing of eCommerce having changed shopping habits is no secret. With eCommerce stated to cross $2.489 trillion by 2018 (excluding travel and event ticketing) and the travel and tourism industry alone having reached $7.58 trillion of total contribution to global GDP in 2014, what we see seems just the tip of the iceberg. Add to this the expected 2 billion consumers globally shifting to smartphones by 2016 and over half of mobile phone users globally touted to have smartphones in 2018 and we are already expecting a surge of shoppers going mobile, very soon.

Where it all began

The first ever commercial service delivered through a mobile device was back in 1997 when CocaCola vending machines in Finland accepted payments through SMS. A giant leap in the technological advancement of this magnitude was sure to revolutionize the industry. In the same year, the first banking service on mobile was launched by Merita Bank of Finland (which was also through SMS). Fast forward to the present day and these facts seem laughable. With the deep penetration of smartphones, even SMS have become a thing of the past. The market today has been embedded in the touch screens of our smart devices (phones and tablets). The complete shopping process right from viewing inventory to making payment can be carried out at one’s own convenience without even getting out of your house (and this is applicable to almost all categories of items).

M-commerce Industry in US 2015

A recent report by Millennial Media analyzed the way users access digital content across various devices. The community of mobile users, in the USA alone, grew by about 32%, at the cost of desktop share falling by 34% in 2015. With 25 million mobile-only users, the combined strength of mobile and tablet users was close to 185 million in January 2015. The preference for device usage showed a shift when compared between two age groups; first comprising of individuals below 55 years of age and the second with individuals above 55 years of age. Almost 80% of the first age group (as compared to only 65% of the second age group) were on multiple devices. While, the senior citizens had maximum desktop users (30%) as compared to only 6.5% of the junior ones, the juniors were most active on their smartphones (48% of the time) as compared to only 31% of the seniors. Tablets, meanwhile, surprisingly, showed an increase in the older group (20%) as compared to 12% in the younger group.

Looking at the consumption based on the content type, mobile devices ruled over desktops in categories like food (82%), games (88%) health (67%) and weather (83%). Both form-factors had almost the same share in news (mobile at 52%), retail (mobiles at 50%), sports (mobiles at 48%) and TV (mobiles at 44%) based content consumption. Business finance (desktop at 68%) and travel (desktop at 71%) were the categories in which desktop ruled over mobile devices. These trends show that most of the daily services and graphical content are preferably accessed on mobile devices. One of the probable reasons behind this might be the increase in users with devices having bigger screens. The year 2014 saw a 161% increase in the 5” – 6” category and a 3% increase was registered in the 4” – 5” category while the smaller screens (3” – 4”) category had a 49% drop. With 55% of the smartphones being in the 4” – 5” category; text, m-commerce and media content is extensively viewed on smartphones.

Proposed growth

Looking at the growth in the American sub-continent, is a testimonial to the fact that the rest of the world is not far behind. PayPal in its recent report has indicated that the growth rate of m-commerce is going to be thrice that of e-commerce by 2016. The estimates project a $291 billion market by 2016 as compared to $102 billion in 2013. This, roughly, is about 32% increase YOY as compared to 11% for the e-commerce market. On the other hand, eMarketer’s first-ever forecast of the global retail market has projected the retail eCommerce sales worldwide to swoop up to $1.592 trillion by the end of 2015. Again not including travel and event ticket sales.

The spending on m-commerce appeared to be highest in UAE (24%) and China (21%) followed by Turkey (18%), whereas the density of mobile shoppers seemed highest in China (68%) followed by UAE (57%) and Turkey (53%). These figures in the USA are only 31% which is well below the global average of 33% (recorded for the UK). This might be attributed to the fact that consumers in the USA use multiple devices for shopping as compared to other regions where a single device (mostly a smartphone) is used for several purposes (socializing, shopping, emails, etc.). Looking at figures across the globe, mobile shopping (64%) is found to be more popular than mobile browsing (52%).

Major hurdles

With several factors in favor of the rapid m-commerce growth, few key issues need to be sorted out before the giant leap can be taken. In this light is a recent report by Barclays (for the UK region) pointed out that security concerns over online transactions were cited as the major deterrent (22.3%) followed by ease of use (16.5%). Mobile compatibility of retailer websites and transactions emerged to be a concern of the highest priority. It was found that only 16% of the retailers had a mobile optimized website or app. While 18.6% of the retailers felt that mobile is adding value to their revenue, only 12% thought that it is efficient in attracting new customers from a diverse demographic. Howsoever promising this sector might appear, it seems to have failed to convince the retailers of its true potential still. Only 10% of retailers have serious plans of investing in m-commerce. Given the fact that mobile users (for shopping purposes) in the UK are aligned to the global average, the restraint parameters mentioned above could be extrapolated worldwide. It might be true to a great extent that these factors, also pose challenges for the global m-commerce growth.

In recent years inclusive shopping (app based) has seen the light of the day and is well accepted among the user community. One touch payment methods like PayPal, Paytm, and several others have created an ecosystem for m-commerce to flourish. Though the climax of the story is still heavily dependent on the flexibility of the retailers to adapt to the new norms, the fact remains that this industry is surely going to flourish in the near future. What is left to be seen is only the extent of impact and how long it would take for the revolution to occur.

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