A few years, ago when mobile-enabled shoppers began viewing products in store, only to buy them online – a practice known as showrooming – we knew the era of mobile commerce was upon us. So it comes as no surprise that shopping via mobile devices is poised to surpass e-commerce transactions done via computer Internet browsers.
Globally, mobile online commerce has accelerated at a much faster pace than in the United States. According to joint research by PayPal Inc. and Ipsos, mobile online spend worldwide will eclipse $290 billion in 2016, up from $102 billion in 2013. They also projected such spend will increase at an average compound annual growth rate of 42 percent through 2016, compared with 13 percent for online commerce overall. In addition to surveying over 17,500 consumers in 22 countries about online shopping preferences, PayPal released data collected from its own pool of PayPal users. "At PayPal, we've seen our mobile growth rise from less than 1 percent of our payment volume in 2010 to more than 20 percent in 2014," said Anuj Nayar, Senior Director of Global Initiatives for PayPal.
However, as a percentage of online spend, mobile commerce remains relatively small. The survey revealed smartphone purchases accounted for just 9 percent of online spend, and tablets for 5 percent. Of that group, 33 percent reported making a purchase from a smartphone within the past year and 12 percent did so from a tablet device. Laptops, desktops and notebooks cumulatively were still used in 85 percent of online spend. Those preparing for mobile's ascendancy remain undaunted, understanding that any new technology takes time to reach mass adoption. Consistent with other mobile findings, early adopters of smartphones as commerce tools are largely younger adults.
While smartphone shopping is just beginning to gain momentum in the United States, other markets are further along in the adoption cycle. The United Arab Emirates, for example, dominates the world in this regard. According to the PayPal/Ipsos survey, online shoppers in this region attribute 24 percent of online spend to smartphone purchases. Close behind are China, at 21 percent, and Turkey, with 19 percent.
One aspect driving smartphone shopping is the proliferation of applications. Researchers found that 64 percent of global smartphone users have made purchases via apps versus 52 percent who did so via mobile browsers. And the number of shoppers who expressed a preference for using an app to shop has risen based on the perceived speed and convenience associated with app usage.
What appears to be motivating mobile shoppers most at this time are functions that allow them to find information about a store or location, product information, and reviews. In terms of the future, mobile users said they expect to be able to tap and pay, order ahead and comparison shop as part of an integrated mobile shopping experience.
Other barriers to smartphone shopping are concerns about security and ease of use as compared with traditional, entrenched technologies. Online shoppers told PayPal/Ipsos they felt no compelling reason to switch from devices with larger screens, where product details can be viewed easily.
As a shopping tool, smartphones, by design, are hampered by small screen size, which helps explain Apple Inc.'s launch of the larger screen iPhone 6 Plus simultaneously with the smaller iPhone 6. Industry observers believe the plus-size iPhone will attract 60 percent of buyers who use smartphones to make payments.
PayPal believes overcoming such barriers as screen size will reap monetary rewards in the end. "With the advent of low-cost mobile phones, larger phone screen sizes and mobile device security improvements, the barriers to mobile commerce will decrease," Nayar said. "Those improvements, combined with streamlined digital payment options … will make it easier, more secure and more intuitive for customers to pay with their mobile phone."
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