Mobile Shopping Poised to Dominate E-Commerce

By the end of 2011, according to analysts, the majority of American cellphone users will have smartphones. That's nearly a 200% increase from the current 28% smartphone penetration level. Nowhere does this have a more profound implication than in the realm of retail. Businesses that were late to the e-commerce game and suffered the consequences (sorry, Borders), will be perhaps overly eager to make a name for themselves in mobile, or m-, commerce. The breathtakingly quick pace of mobile developments and their tangible returns to retailers— a recent study shows that 62% of businesses surveyed felt their mobile campaigns had exceeded or met their expectations on returns— businesses who are slow to embrace the technology will be able to see more painfully and promptly than ever how the competition is forging ahead, and, hopefully, adopt or adjust mobile strategy accordingly. This theory is already in practice in Australia, whose retailers took a hit in the early 2000s for failing to rise to the e-commerce call. Companies have learned from those mistakes, and are reaping the benefits of m-commerce. PayPal in Australia, for example, boasted a 25% monthly increase in total mobile payments for its merchants, and $155 million in mobile sales in 2010. Smartphone penetration in Australia is 20% higher than in America. The potential for retail growth as a result of a sound mobile strategy when American smartphone usage reaches that number is staggering. Despite the minority share of smartphones in the cellphone market, online retailers like eBay are already recognizing and capitalizing on the popularity of m-commerce. In a, recent release,eBay's barcode-scanning app RedLaser reported that it was nearing 9 million downloads (its homepage, now claims it has bypassed that number), a 350% increase in downloads from when eBay acquired the company in June 2010. With RedLaser, smartphone users scan a product in a store, and eBay listings of the product along with local stores that carry the product is pop up on their screens. As a result of strategies like this, eBay global mobile sales rose from $600 million to $2 billion from 2009 to 2010. While some worry about the damages mobile shopping may do to brick-and-mortar retailers, m-commerce could in fact give them a leg up. A recent survey revealed that 84% of respondents preferred to have the ability to buy an item online and pick it up at an actual store. GiftRocket, for example, is a new startup that allows people to send location-specific gift cards to their friends via mobile device, regardless of whether that location issues its own gift cards. The recipient is able to redeem the gift card with their device when they visit the store. Physical stores also have the advantage of combating online retail giants by rewarding customer loyalty with special deals when consumers are in their vicinity, exploiting the growing trend towards location-based apps and games. The usual hesitancy of consumers in the area of security and privacy does not seem to hold as much weight in mobile shopping— at least, the 69% of Asian respondents to a recent survey that prefer making payments with their mobile phones would suggest. The businesses that address these concerns, which seem to be more of a concern here than in other countries, as the US catches up to the trend may very well end up on top.