Mobile Shopping Trends Point to More Growth Ahead
Bangalore: It's no secret that mobile shopping and payments have experienced staggering growth over the last five years, rewriting the entire retail playbook. But how much room is left for growth? Plenty is the answer, according to new market research on mobile trends. Meanwhile, mobile shopping and payments competition is growing like gangbusters, forcing much more innovative mobile technology development.
Room at the Top
Mobile technology continues to radically change the way people shop and pay. This paradigm shift is leaving a lot of room for market expansion and high demand for product innovation. In Silicon Valley, Kleiner Perkins venture partner Mary Meeker is widely followed for her insights on the growth trajectory of mobile technology. At the end of 2012, she gave a presentation at Stanford University (online slides are available), where she noted that despite rapid adoption of smartphones and other mobile technologies, there is still room for much growth.
Meeker's presentation emphasized these critical data points:
• Morgan Stanley Research notes that single users increasingly have multiple mobile devices, and predicts that billions of mobile subscribers without smartphones will convert to them in the next several years
• Newer mobile platforms are growing faster than established ones, with Android adoption ramping up at six times the rate of iPhone adoption
• Pew Research Center reports that 29 percent of U.S. adults own a tablet device, up from two percent less than three years ago, with much more growth to come
• Statcounter reports that global mobile traffic is only 13 percent of total Internet traffic, and that is up from one percent three years ago
Add to these trends the fact that smartphone penetration remains low in heavily populated regions, such as India, and it becomes clear that opportunities for growth in mobile technology usage stretch as far as the eye can see.
Where the Competition Will Be in 2013
Hockey great Wayne Gretzky is famous for saying: "A good hockey player plays where the puck is. A great hockey player plays where the puck is going to be." With that in mind, as mobile market trends continue to transform shopping and payments, competitors are concentrating on several key types of mobile apps and technologies.
The Digital Wallet. From large players including PayPal, Google, Square, MasterCard and VISA, to smaller competitors such as GoPago, the digital wallet is a holy grail in the mobile payments race. Market researchers at comScore produced an exhaustive study on digital wallet competition (see results online). Here again, the results point to dramatic room for market growth.
"Digital wallets represent an innovative technology that has not yet reached critical mass among consumers due to a variety of factors, including low awareness and a muddied understanding of their benefits," said Andrea Jacobs, comScore Payments Practice Leader, in summarizing the study results. "This study delves deeply into the mindset of consumers with respect to their potential use of digital wallets, in addition to helping size the market opportunity. The study also provides guidance on how digital wallet providers, marketers, developers and retailers can contribute to growing adoption of this technology."
The comScore study was based on responses from a million U.S. consumers and two separate surveys of more than 2,000 U.S. Internet users conducted in Nov., 2012. "Even after being asked to review the websites of particular digital wallets, respondents across all wallet brands still scored an average of just 45 percent in terms of demonstrated level of understanding," the study found.
The study also noted: "The digital wallet market opportunity could eventually reach 1 in 2 consumers as consumers become more aware of the offerings and educated on their benefits." Needless to say, 1 in 2 consumers represents a very large market. As digital wallet competitors move forward, security and consumer awareness will help determine the winners.
The New Mobile Shopper
Mobile technology competitors are also in a heated race to respond to how new, multichannel mobile shoppers behave. For example, mobile application competitors increasingly anticipate and cater to "showrooming" and other shopping trends that leverage the ubiquity and immediacy of mobile technology.
Showrooming has even earned its own Wikipedia entry, which defines it as: "The practice of examining merchandise in a traditional brick-and-mortar retail store, then shopping online to buy it at a lower price." Of course, much of that comparative shopping happens on mobile devices, while consumers are in stores.
Consider the following summary of data from Nielsen's mobile research, as of Dec. 2012: 1) Sixty-one percent of smartphone owners research products before shopping; 2) Forty-eight percent of tablet owners purchase digital items on their devices; and 3) Sixty-three percent of mobile shopping smartphone owners check prices on their devices.
Will the next big mobile trend be ordering products by mobile phone and receiving them one-hour later, no mater where the shopper is? Amazon, eBay and others are experimenting aggressively with same-day delivery strategies for mobile shoppers.
In all likelihood, the next five years will bring numerous new types of mobile shopping behaviors, and the key to success for mobile technology competitors will be to keep innovating and experimenting. Mobile shopping and payments will grow substantially over that time frame, rewarding those who anticipate where the puck is going to land.
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