M-commerce: The next frontier for U.S. retailers?

Article by William Polk
person looking for shopping deals on a smartphone
Image credit: Shutterstock

Americans have long embraced shopping online but a growing number are choosing to not just browse but also to buy from their favorite retailers through their smartphones rather than their laptops.

Now m-commerce – shopping via a mobile device like a smartphone – is quickly establishing itself as a key source of retail sales as technological advancements and changes in consumer behavior make smartphones an increasingly viable shopping tool.

On Black Friday this year, American shoppers spent more than $1 billion just using their phones and tablets, a 33 percent jump on 2015. And the stats suggest that mobile sales have significant room to grow, according to Adobe, which collects data on online shopping. It reports that while 55 percent of visits to retail websites came from mobile devices, m-commerce only currently accounts for about a third of the sales.

The Black Friday figures reflect the soaring popularity of the m-commerce marketplace over the last few years. In 2014, m-commerce purchases made up just under 12 percent of the $303 billion U.S. e-commerce market, according to data from the U.S. Census Bureau and comScore.

However, forecasts from Business Insider’s research service suggests that m-commerce will snowball to hit $284 billion and account for 45 percent of the entire U.S. e-commerce market by 2020.

Meeting the m-commerce challenge

Although e-commerce and m-commerce are still small portions of the trillion-dollar U.S. retail market, “mobile is clearly the number one portal in retailers’ minds, and they must be focused on fully maximizing their mobile offering,” says David Zoba, Chairman, JLL Global Retail Leasing Board. “More and more people are taking their first step into a retailer via their mobile device.”

A 2016 study from LexusNexus found that 16 percent of U.S. retailers have already set up mobile shopping channels and a further 32 percent are considering doing so in the near future. The benefits of getting it right are huge, says Zoba. “The data mining opportunity is great, and with that, the ability to personalize the offering, which is the holy grail of e-commerce,” he explains.

Yet retailers need to approach it differently to their other online operations, according to Zoba. In particular, the size of the screen and internet speeds can create a different type of shopping experience to visiting a retailer’s website on a laptop.

“Screen size can have negative implications for certain product types,” he explains. “With apparel, for example, you have to have emotion and a bit of romance, and it’s hard to translate that to a 2×4-inch screen.” Technology products typically do well via m-commerce as they are more data and fact-based.

However, there is still work to do to address consumer security concerns. “There’s a less tech-savvy, generally older segment of the U.S. population that’s not yet convinced of the security of purchasing via mobile devices,” says Zoba. He believes those concerns will be overcome, which will open up m-commerce to an even larger group of people.

As more people adopt mobile shopping habits, delivery speed will become ever more important to meet growing consumer expectations, Zoba predicts. Other cities around the world such as Shanghai in China have reduced delivery times to just a few hours after purchase, and in the near future, Zoba says, it will be customary for Americas to receive m-commerce purchases ranging from clothing to food in 2-3 hours.

“Mobile is tied to fast delivery,” Zoba says. “With m-commerce as a giant trend this year, delivery will be the hot topic next year.”

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