The phrase mobile commerce was originally coined in 1997 by Kevin Duffey – “the delivery of electronic commerce capabilities directly into the consumer’s hand, anywhere, via wireless technology.” Mobile commerce transactions continues to grow, and the term includes the purchase and sale of a wide range of goods and services, online banking, bill payment, information delivery and so on. Also known as m-commerce.
Mobile commerce is worth US$230 billion, with Asia representing almost half of the market, and has been forecast to reach US$700 billion in 2017. The rapid growth of mobile commerce is being driven by a number of positive factors – the demand for applications from an increasingly mobile customer and consumer base; the rapid adoption of online commerce thanks to the resolution of security issues; and technological advances that have given wireless handheld devices advanced capabilities and substantial computing power.
In 2015, nearly half of all online sales were completed using mobile devices. India’s e-commerce companies are racing to embrace mobile. With 235 million people accessing the Internet only via mobile, online commerce in India is fast becoming ‘M-commerce’. The numbers speak for themselves. ShopClues gets 70 per cent orders from their app and mobile website together. Snapdeal got more than 90 per cent of its orders from their desktop site till about a year and a half ago; now it is 25 per cent. Flipkart gets 75 per cent of orders from app. Voonik now gets 62 per cent orders from the app, and 22 per cent from the mobile website. Craftsvilla gets 25 per cent of its GMV from its app, with a conversion rate of 50-60 per cent.
Desktop vs. Mobile – Key to Transition
We should stop talking about ‘mobile’ Internet and ‘desktop’ Internet, “It’s like talking about ‘colour’ TV, as opposed to B&W TV. We have a mental model, left over from feature phones, that ‘mobile’ means limited devices that are only used while walking around. Modern smartphones are equipped with sensors that track ground-level data that laptops cannot. Really, it’s the PC that has the limited, cut-down version of the Internet.
As app-commerce gets bigger, mobile technology is getting better. Virtual reality, mobile wallets and geo-tracking are becoming ubiquitous, as are multilingual content and light weight apps. Mobile commerce already accounts for 30% of U.S. e-commerce and is expected to grow 300% faster than traditional e-commerce. It is no longer a question of whether e-commerce will transform into m-commerce, but how soon.
Retailers are highly aware of the overlap between online and physical channels. In response, they’re offering an increasing array of online + in-store options. It’s clear – 2016 will be a year in which retailers will leverage technologies across the digital and physical channels to offer their customers the best of both worlds in one seamless experience.
Easy Payments – Key to Mobile commerce
Consumers now want to purchase goods and services in the most convenient way possible, especially in regards to the payment process. Lengthy and complicated checkout processes make m-commerce less user friendly and result in customers abandoning their baskets. Retailers are losing $18 billion annually due to shopping cart abandonment.
eMarketer expects mobile payments to grow 210% in 2016. If retailers want to keep these customers buying on their mobiles, then they need to improve their payment processes. Retailers have been able to overcome this by offering ‘one-click’ payments, mobile friendly payment methods such as PayPal and adopting new and innovative technologies such as Apple Pay. M-commerce players are realizing that payment is a strategic lever to ignore at their own peril, hence, they need a wallet to gain competitive advantage.
Mobile wallets in general have been slow to take off. One historical challenge was not all retailers accepted mobile wallet payments. The challenge is mobile wallets do not offer enough incremental convenience to shift user behavior.
Competition – Key to Quality
As they say “Competition improves service”. There is a mobile commerce revolution taking place in India. As we shall see, this revolution only started a short time ago and is accelerating with blinding speed. It’s not just that the majority of users in India are on mobile, it’s how far they’ve come, and how fast. This is why all of the multi-billion dollar e-commerce companies in India are betting on a Mobile strategy.
With competition heating up, both established players and fresh entrants are seeking to differentiate themselves. Competition is so severe that not everybody is going to jump in and do mobile commerce in the same way. Be it service startups, fashion, retail, electronics, handicrafts, payments, Entertainment, Travel, Food, Home décor, etc. Despite the massive shift to mobile that has happened in such a short time frame, the game is far from over. In fact it’s still early innings. As the mobile user base expands at an exponential rate, opportunities in m-commerce as well as in other areas will continue to multiply.
Consumer Expectations – Key to Business
Consumers rely on their smartphones during countless mobile moments throughout the day. In fact, 91% use their smartphones while completing another task. And as they become more reliant on their mobile devices, consumers expect to get exactly what they need in the moment they need it. Thanks to a smaller screen, harder-to-find product details and finicky credit card form fields, it’s easy for shoppers to give up on a purchase. Think of it as “Client Requirements”. A holistic mobile approach needs to be the first consideration for retailers.
Mobile moments enable brands to provide their customers exactly what they need in their immediate contexts. Application designs are constantly emerging and evolving. Mobile commerce continues to gain momentum as a mainstream way for consumers to shop online. According to a report released in April by market research firm Zinnov, India’s mobile commerce market could balloon to $19 billion by 2019, up 850 percent from its current size of $2 billion. Surging smartphone sales in the world’s second most populous country amid a tidal wave of low-cost handsets is the key driver, the report said.
High Security standards – Key to Customer confidence
It is critical that retailers ensure the safety and security of the customer’s payment data when they are making online purchases. This protects the retailer’s reputation, gives consumers peace of mind and also reduces the likelihood of chargebacks.
Retailers need to consider their own security by planning and implementing robust fraud strategies. They should take advantage of new technological advancements such as tokenization, encryption and layered authentication. Ensure that payments are easy, secure and convenient for shoppers.
Mobile Web & Mobile App – Key to Personalization
Apart from the leaders with the biggest reach, like Target, Amazon and Walmart, everyone else really needs to focus on mobile Web over mobile apps. Retailers like to think that people will want their app icon on their home screens, but that’s not really the case. 8 out of every 10 minutes of app time is spent solely in an individual’s top 3 apps. Across industries, the web drives 2x the site traffic of apps.
Apps can certainly play a key role in retailers’ mobile strategies, particularly for their most loyal customers. And thanks to deep linking and Google App Indexing surfacing relevant app content in mobile search, traffic to apps will surely increase in 2016. In fact, already 40% of Android searches turn up app-indexed results. But given its clear leadership over retail apps today, the mobile web will no doubt continue to eclipse apps as the biggest revenue driver for retailers.
Mobile websites are gaining significance, but apps are more critical as they offer personalization and help e-commerce players understand consumers better; communicate with them more frequently; and target them with relevant products based on their browsing history. Even small and medium-sized enterprises (SMEs) want their own native apps now, so that they have better control over the experience and can save on royalties paid to aggregators.
What’s needed of M-commerce service providers is to strike a balance between the two – Mobile Web & Mobile App!
Payment Methods – Key to moving into new Territories
It’s paramount that retailers who are moving into new territories consider the local currencies and payment methods. Consumers from around the world have different payment habits and it’s important that new retailers tailor their services so that they can accept these payments.
Retailers should thoroughly research these payment methods during their market research, whether that’s iDeal, used by 60% of Dutch online shoppers, or bank transfer, popular in Germany and the Nordic countries.
Fintech companies are building the foundation for the Indian mobile commerce ecosystem by enabling cashless, on-the-go financial transactions. From cab rides to movie tickets to utility bills, almost anything can be paid via simple mobile apps. However, mobile wallets in particular can add extra value by bridging payment with discovery and procurement to offer more seamless mobile shopping experiences — either through integration with existing e-commerce apps or the creation of their own in-app features.
Infrastructure Upgrade – Key to Customer adoption
Poor infrastructure and low-end smartphones pose a challenge. Not all users have the bandwidth to update to the latest version of different apps regularly, leading to 20-30 versions of an app floating in the market on different smartphones. That’s where the concept of light m-websites & apps come into picture!
Logistics – Key to operations
With the advent of e-commerce we have already seen a growth of logistic partners like courier services, operations, team acquisition, online channel building, to name a few. With M-commerce logistic demands too have reached another level – Same-day delivery, Loyalty rewards, Offers & Flash sales, Manpower intensive Cash-on-delivery, etc. Merchants need to focus on both online & offline operations to win customer loyalty.
Technological challenges – Key to Overcoming roadblocks
- App developers are now expected to develop light apps, with low loading times, where images are loaded in the background, and users have a smooth user experience.
- It is of paramount importance to keep app size low and still deliver great content.
- Ask is for the ability to segment users by location to send targeted promotions and offers.
- The rising number of orders from Tier II and Tier III cities have prompted e-commerce players to adapt to multilingual content. For users who are not comfortable in English, you need to keep the interface simple and visual.
It’s a lot of tech investments that you have to make – Investing massively in building lighter apps and mobile sites that load up in three seconds even on a 2G network.
Innovations – Key to excel competition
Social-commerce: There is a very strong connection between social media and mobile. In the realm of retail, social media is a significant force. And social-driven retail sales and referral traffic are increasing at a faster rate than any other online channels.
- Shopping often becomes a collaborative experience with discussions over chat apps. Imagine if Whatsapp (with a billion User base) started something like WeChat in China – chat-based m-commerce?
- 2015 was a big year for social commerce, with the launch of buy buttons on Twitter, Pinterest, Instagram and Facebook. Social Buy buttons – whether they gain a foothold with consumers or not – will be an important trend to watch in the coming year.
The Internet of Things (IoT): Offers companies the opportunity to increase revenue, lower operating costs and provide more relevant customer experiences. Gartner expects that in 2016, 6.4 billion “things” will be connected to the Internet – a 30% increase from 2015. The IDC forecasts worldwide spending on the IoT will reach $1.32 trillion by 2019. 2016 will be a year of milestones, both for the IoT in general and for wearables in particular, providing retailers with myriad more ways to engage their customers.
Analytics: We’re in a period of time where location and analytics has become a big deal when it comes to understanding what users are doing. Study analytics and consumer research to find more information about customer’s online shopping habits and thus adapt the strategy to suit them.
Speech Recognition: IBM and other companies are experimenting with speech recognition software as a way to ensure security for m-commerce transactions.
AR / VR: The augmented reality and virtual reality (AR/VR) sectors are seeing a lot of interest from VCs and tech giants because of their numerous applications, one of which is in e-commerce. Are the current smartphone devices efficient enough to leverage the possibilities of virtual reality?
The Adoption – Key to the future
Of course, the app ecosystem is still new. 65 per cent of users uninstall the app after purchasing an item. Apps function subjectively. For purchase of higher ticket rates, like a refrigerator, an average user would want to view the product on a computer screen. App-based solutions are valuable only for purchases or transactions made on the go. When it comes to purchases not made on the go, people take decisions after research on the desktop website.
Aggregator Apps – Key to First-class
In recent years, there has been a rise of “aggregator” apps that compile anything from offline retail brands to restaurants to health service providers in one convenient app. With the exception of a few restaurants (e.g. Dominos, KFC), airlines (e.g. Indigo) and entertainment providers (e.g. PVR), most large companies and big-box retailers have become reliant on these aggregators for their mobile app presence. For many of these businesses, it is a tough call whether to develop and market their own apps or rely on the well-established brands and strong user bases of existing services like Zomato, MakeMyTrip & BookMyShow.
Hyperlocal M-Commerce – Key to Offline Markets
Over time, we expect the ecosystem to slowly go “hyperlocal mobile”, driven by the rise of Mobile and the fact that a sizeable amount of commerce is still happening offline, especially outside of Tier I cities. If companies want to tap into the country’s massive market opportunity, they will need to develop strategies that enhance the offline world with the use of mobile, and vice versa. Harnessing mobile devices in these offline environments can open up a world of possibilities. In many cases, the phenomenon of “aggregating offline” (BigBasket, Swiggy, FreshDesk, FoodPanda, etc.) allows a business to layer mobile technology on top of an existing framework of offline commerce – and hopefully profit in the long run from it.
In an ecosystem with new acquisitions, investments and partnerships seemingly every week, it is clear that there will be a rapid reorganization of Indian mobile commerce in coming years. Will there be a consolidation of players, a fragmentation or something in between? Will established e-commerce titans make the successful transition to hyper-local before a new generation of mobile-first companies does, or will the two coexist? Can hyper-local turn hyper-profitable? The answer to all of this and more, it seems, is in the palm of our hands.
All of this isn’t to say that “traditional” e-commerce – purchases made on desktop and laptop computers – is dead and that you should move on to mobile commerce. The intention here was to highlight the way in which mobile commerce can no longer be ignored. It might be a few years before mobile commerce spending and revenue reaches the levels that e-commerce enjoys right now, but it’s definitely better to get in on it now and ride the wave, instead of having to play catch-up later on.