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Will m-commerce outperform e-commerce in the digital shopping space

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The very fact that Amazon has outpaced every other retailer in the world clearly indicates the growing popularity of IT-enabled shopping options. This of course does not take away the experience that physical stores are giving and which is in fact a big trend for the future. Yet, the convenience of online shopping is also a reality that is giving brick and mortar retail formats a run for their money. And even while e-commerce is still developing roots across all markets and countries, becoming ‘a must have’ option for traditional retailers, m-commerce (mobile commerce) has already posed a serious competition for digital retail. According to retail analysts, global m-commerce economy is taking over the e-commerce platform and is anticipated to have touched US $ 100 billion at the end of 2017.

It took many years for retail to move from the physical format to the digital platform, but the shift of e-commerce to m-commerce has been extremely fast. This rapid change in loyalties has been boosted by a number of factors, including secure payment guarantee with the use of mobile phones; intuitive User Interface (UI), easy and fast access that is available 24×7, one touch payment and the enhanced awareness of the internet. On top of this most retail mobile apps offer attractive loyalty programs that attract customers.

According to market reports, in 2017 over two billion mobile phone or tablet users made some form of mobile commerce transaction, around the world. In the US, mobile devices account for 19 per cent of all US retail e-commerce sales and this figure is estimated to reach 27 per cent by the end of 2018, which represents 1 out of every 4 US retail e-commerce dollars. This holiday season, the bigger shift has been to how consumers are shopping. Purchases made on mobile devices have totalled a record 36.9 per cent of all sales, and 54.3 per cent of all site visits. According to Mickey Mericle, VP of Marketing and Customer Insights at Adobe, “The big story this holiday season was seen in mobile shopping. Retailers know this is where the audience is now and are delivering better experiences, the gap between mobile traffic and revenue is closing. Also, shoppers looking for discounts are getting better at using smartphones to quickly close the deal, and we saw better mobile conversion this season at over 10 per cent growth.”

The biggest m-commerce market place of the future is China. It is predicted that by 2020 mobile commerce will make up 74 per cent of total e-commerce in the country, outpacing the US growth rate. The base has been laid by the huge popularity of e-commerce here. Last year Chinese consumers spent about US $ 750 billion online, outspending both US and UK consumers’ online purchases combined, and beyond that China has been a standout in adopting e-commerce as a driving habit in retail.

Though the trends are strong, e-marketer believes that the US consumer is still hooked to the e-commerce platform with growth in m-commerce yet to match pace with e-commerce growth. In a recent report, e-marketer reports that while e-commerce sales are set to grow to 9 per cent of total retail sales by 2018, m-commerce still only comprises 27 per cent of the e-commerce projection. In other words, by 2018, e-commerce sales driven by PC and laptops will approximately be US $ 359 billion sales channel while m-commerce sales (driven by smartphones and tablets) will only be an approximate US $ 132.69 billion sales channel. Further, though US total retail sales are projected to grow to US $ 5.5 trillion by 2018, m-commerce is only set to grow to 2.4 per cent of total retail sales in 2018.

In the meanwhile, among the fastest developing region for m-commerce is Western Europe, as the region already has a well-developed retail ecommerce market, hence experts predict that most future growth will come from mobile commerce. It also helps that retail sales is on the upsurge, primarily due to the fact that despite sluggish employment and wage growth in France and Germany, Western Europe’s economy is performing well overall. This will have a positive impact on the region’s total retail market, which is expected to grow by 1.6 per cent in 2018 to US $ 3.894 trillion. According to e-marketer, m-commerce will be the biggest driver of retail sales growth across the region, which will rise at a compound annual growth rate (CAGR) of 17.8 per cent between 2016 and 2021. It is also projected that retail m-commerce sales in the region will more than double within the same period to top US $ 200 billion. In 2017, for the first time, digital purchases accounted for more than one-tenth (10.2 per cent) of total retail sales in Western Europe. This share is significantly higher in the UK, at 21.2 per cent, partly due to large numbers of foreign consumers buying from UK-based e-commerce platforms.

However, the biggest m-commerce market place of the future is China. It is predicted that by 2020 mobile commerce will make up 74 per cent of total e-commerce in China, outpacing the US growth rate. The base has been laid by the huge popularity of e-commerce in China. Last year Chinese consumers spent about US $ 750 billion online, outspending both US and UK consumers’ online purchases combined, and beyond that China has been a standout in adopting e-commerce as a driving habit in retail, according to Boston Consulting Group. The rate of growth of e-commerce as a portion of retail in China is particularly striking; it’s going to grow twice as fast as the US and UK at about 20 per cent annually.

Why is m-commerce so appealing to customers and retailers…

Among the most important features, besides convenience and payment security that drew customers to mobile applications are: Push Notifications, Geo-Fencing and Personalisation. Retailers are effectively using apps to generate text message style pop-ups that keeps customers informed on application updates. Such push notifications are appealing to fashion retailers that want to keep their customers informed with the right information but not overburden their view. Consumers are seeming to be accepting of push notifications, a study by Localytics shows that e-commerce has been the most successful area in mobile purchasing through implementing push notifications and holds the highest response rate.

Another interesting advantage is that retailers can access the location of the mobile user and accordingly send information on location-specific deals and offers. For fashion retailers and luxury brands this tool can complement both online and offline operations.

Burberry has taken the initiative and launched geo-fenced store in Soho that advertises products to passers-by and gives their sales assistants/customers information so that they can identify returning customers.

With shoppers becoming extremely choosy and difficult to please, personalisation has become an important tool to not only garner sales, but also retain customer loyalty. Through the m-commerce route, fashion retailers can link social media accounts to applications and share purchase information, viewed items and favourited pictures if the user accepts. This then opens the door to multi-channel advertising as the activity of one platform is now advertised across a multitude of viewing options. The customer, feels like he/she is important to the retailer and getting personalised attention, as per his/her taste preferences.