mCommerce primed for rapid expansion beyond the pandemic

March 10, 2021

mCommerce primed for rapid expansion beyond the pandemic
Jonathan Bennett, Chief Commercial Officer

Jonathan Bennett

Chief Commercial Officer

If 2020 taught us anything about technology adoption, it was that more people bought higher volumes of physical and digital goods and services using their smartphones as they adapted their lives and shopping habits to handle coronavirus lockdown restrictions.

Forrester estimates that over 75% of online retail sales in Asia were made on smartphones in 2020, for example. Enthusiasm in the US was more restrained but is gathering pace. Insider Intelligence forecast the mobile commerce (m-commerce) market in the country was worth US$284bn in 2020, 45% of the total US eCommerce market and up from around 25% in 2019.[i] However, the research company also expects the volume of US m-commerce transactions to increase at a compound annual growth rate (CAGR) of over 25% between 2019 and 2024 to reach US$488bn.

Statista’s forecasts for aggregate worldwide growth are much more bullish. It calculates that m-commerce will represent almost 73% of total retail eCommerce sales worldwide in 2021, up from just over 70% in 2020. Forrester has also forecast that smartphone-led purchases will grow at a CAGR of 13.6% to reach US$2tn by 2024, representing 80% of the US$2.5tn total. Juniper Research goes further, predicting that the total global value of mobile commerce payments will reach US$3.1tn in 2025, up from US$2.1tn in 2020 after a massive pandemic-driven boost to electronic wallet (eWallet services).

Shopping/banking app downloads on the rise

Evidence of consumers’ increasing reliance on smartphones to do their shopping also comes from firms that track mobile app downloads. The use of shopping apps continues to grow, particularly amongst those in the millennial and generation Z age groups commonly attributed significant spending power. These demographics are also more tech-savvy and willing to do more of their shopping via their smartphones than older consumers. Lockdown closures of physical retail stores have significantly accelerated this trend.

Amazon was the most popular shopping app offering delivery on a global basis with 169m downloads in 2020, according to Apptopia’s Worldwide and US Download Leaders 2020 report. It was followed by Shopee (139m), which is available to consumers in Singapore, Malaysia, Indonesia, Philippines, Taiwan, Thailand, Vietnam and Brazil. Wish (138m downloads), SHEIN (112m), and AliExpress (79m) also deliver globally, while Pinduoduo (90m) is limited to China and Flipkart (72m) India. MercadoLibre, active in 18 Latin American countries but reported to derive 95% of its revenue from just three (its native Argentina, Brazil and Mexico), had 56m downloads.[ii]

Around 37,000 new shopping apps were released on the Apple App Store in 2020, and 82,000 on Google Play, according to SensorTower’s Mobile App Industry Trends 2021 report, which also tracked a marked uptick in downloads of payment apps. Downloads of Google Pay grew 11% in 2020 compared to 2019, with PayPal up 78% and Flipkart owned PhonePe up 38%, the latter all the more impressive given that it is only available in India.

SensorTower also calculated that global consumer spending on mobile apps reached a record US$111bn in 2020. That was up 30% in 2019, with US$72.3bn paid out for App Store purchases and US$38.6bn spent in Google Play. Gaming apps were the most popular purchase, accounting for almost 72% of the total, followed by entertainment and social media apps as billions of locked down consumers worldwide looked for things to do at home.

eWallets lead mobile payment charge

Whatever people end up spending their money on, the massive pandemic-driven boost to eWallet adoption identified by Forrester looks unlikely to fizzle out any time soon. Long-term forecasts suggest that consumers who shunned cash in favour of contactless payment methods due to coronavirus transmission concerns will maintain their newfound habits long after the pandemic subsides.

In its latest Digital Wallets: Key Opportunities, Vendor Analysis and Market Forecasts 2021-2025 report[i], Juniper Research forecasts that the value of global eWallet transactions will exceed US$10tn by 2025, up from US$5.5tn in 2020. The research firm credits one reason for that expansion as their increasing use for both remote online payments and contactless transactions in physical stores. Another is the rising penetration of affordable smartphones, particularly in emerging economies, with integrated mobile payment technologies such as near field communications (NFC). As a result, Juniper expects that over 34% of mobile handsets will use contactless payments by 2025, up from 11% in 2020.

The convenience and security of storing and accessing payment details in a single application that embedded smartphone biometric authentication tools can protect have proved significant advantages that increasing numbers of consumers will come to value over the next five years.

Significant numbers of people engaging in m-commerce transactions, and especially younger buyers and those in emerging economies, either do not own credit/debit cards or don’t like to type in bank account numbers and other authentication details on small screen mobile devices with restricted input capabilities.

A quick, simple and seamless payment mechanism is essential to their mobile shopping experience, and eWallets are one way of delivering that. But so too is direct carrier billing (DCB) which funds purchases from the user’s mobile phone subscription rather than their bank account, with the charge incorporated within their monthly post-paid bills.

As demand rises and the m-commerce market matures, buyers will favour online merchants that offer more than one different mobile payment method to suit the wide variation in preference and budget apparent in other world regions. Conversely, online sellers that limit the payment options they offer are likely to restrict their revenue streams and customer base simultaneously.

Setting up the necessary backend payment infrastructure and processes can be complex and time-consuming for businesses more focused on building their product/service portfolio and marketing campaigns. So outsourcing the job to a specialist third-party payment service provider like DOCOMO Digital will pay dividends in the long run.

[i] Rise of M-Commerce: Mobile Ecommerce Shopping Stats & Trends in 2021, Business Insider, 30th December 2020

[ii] Better Buy: MercadoLibre vs. Amazon, The Motley Fool, 26th January 2021

[iii] Digital Wallet Spend to Exceed $10 Trillion Globally in 2025; Driven by Rising eCommerce & Contactless Spend, Juniper Research, 25th January 2021

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