We do just about everything on our phones today. We do work, take photos, call cabs, check our heart rate, order food, get directions, and listen to music–but do we buy things? Since the early days of mobile commerce, people have questioned whether it will ever be the real deal. Will we ever make significant purchases from the 3.5 inches of our phone screens?
As the founder of a company that helps commerce apps increase purchases, these questions are always on my mind. However, I firmly believe the answer is yes, otherwise I wouldn’t do what I do. My response to the cynics is to remind them of the mid-1990s, when the Internet was new and there was doubt as to whether people would ever buy things online. Then Amazon arrived and changed the game–and now look at Amazon.
This same transformation is happening today, but this time the disruption is mobile. I believe mobile commerce is the next big thing and have staked my company and my career on this belief. Here are three reasons why mobile is a real revenue generator.
1. Traditional Adoption Curve
Mobile is already following the traditional adoption curve. As with all disruptive technologies, money follows time. First you see engagement, then revenue. In 1996, just 20 million American adults had access to the Internet, and they spent fewer than 30 minutes a month surfing the Web. E-commerce was in its infancy, and people were reluctant to make purchases online. Today, we spend about 27 hours a month online, and 80% of the population has purchased something using the Internet. There are 191.1 million online buyers in the U.S., and e-commerce sales are estimated to hit $304.1 billion this year. E-commerce now represents 6.4% of all retail sales, which represents a hefty annualized growth rate of 17%.
Mobile is no different. At the end of 2013, 74% of U.S. mobile phone users owned a smartphone and 60% of media time is now spent on mobile. In fact, mobile web adoption is growing 8 times faster than web adoption did in the 1990s and early 2000s. The market has crossed the threshold of usage that signals rapid revenue growth. Mobile engagement is high, to put it mildly, and the money is already following.
U.S. mobile commerce sales grew by 79% in 2014, and 62% of smartphone users have bought physical goods through their mobile devices in the past six months. 83% of global shoppers who use mobile devices plan to make a mobile purchase in the coming year. By the end of 2017, U.S. mobile users will spend $90 billion via mobile payments, a 48% increase over the $12.8 billion spent in 2012.
2. Low-hanging fruit
The influence of mobile devices on purchasing is even higher than the revenue statistics suggest. 80% of mobile users say their purchasing decisions are influenced by mobile, even though they may not use their devices to complete the final purchase. Shopping cart abandonment on mobile is at an all-time high, with only 3 out of every 10 digital purchases being completed.
All of these numbers mean that a huge amount of money is being left on the table. The intent is undeniably there, but user experience is still a barrier to turning that intent into sales. This is low-hanging fruit. People are clearly interested in making purchases on their phones, but they experience roadblocks along the way that prevent them from doing so.
As the mobile experience matures and becomes more refined, cart abandonment will naturally decrease. More than half of buyers don’t complete purchases on their mobile devices because they don’t want to enter credit card information. It is up to mobile commerce companies to create a path-to-purchase for their users that is frictionless and enjoyable. As product teams come up with innovative new ways to enable seamless payments, revenue will immediately follow. And for any purchases that were interrupted, real-time mobile marketing will swoop in to encourage consumers to complete them.
3. Found time
The third reason I believe mobile commerce is set to soar is the creation of found time. The total pot for mobile commerce is bigger because mobile devices create more opportunities to purchase. Before mobile, shopping was limited to when people were in a store or at their computer. Mobile purchases can be made on the bus, in line at the grocery store, in a doctor’s waiting room, lounging in bed — just about any second of the day. This found time allows for extra hours of discovery and enables people to purchase in the moment.
Taking advantage of these opportunities requires commerce companies to create more cohesive, convenient cross-platform experiences across their website, mobile site, and native apps. If a young professional browses for travel deals on their train ride to work, that experience shouldn’t stop when their train arrives. And a parent who finds grocery deals on their tablet at night should have access to those coupons in-store the next day. Cross-platform continuity will give people greater flexibility in when and how they want to buy, which is critical to increasing cart fulfillment.
The viability of mobile as a purchasing platform has already been proven. Companies that are mobile-first, or have invested heavily in their mobile presence, are paving the way. Just look at Gilt, which attracts 45% of its revenue from mobile, or Hotel Tonight, a leading mobile-only travel app. Mobile is clearly the way the tide is turning. I anticipate that in just a few years, we will look back on the early skepticism surrounding mobile commerce and laugh, just like what happened with Amazon. People do want to buy things on their phone, and retailers need to catch up. Mobile commerce is too big an opportunity to let go.