New research from Cap Gemini has found that 23.2 per cent of online sales came from mobile devices in Q2. That’s double the figure for last year. This is exciting news for the mobile industry and brands alike as it’s proof that consumers are becoming more confident in using their mobile devices as a shopping tool. We believe this is driven by smart retailers understanding that a secure and frictionless checkout, specifically designed for a mobile device, makes for experience that consumers embrace.
Our view is that this rapid growth is underpinned by five main trends:
1) Your carrier is becoming your bank: After Google & Apple disintermediated the wireless carriers with simpler user experiences to buy digital goods within their app markets, mobile carriers have finally started to fight back and leverage their huge installed bases to their advantage. With 310MM mobile subscribers in the United States (v. 150MM Google/Apple customers) and by offering 2x better economics to merchants selling goods purchased on one’s cell phone bill versus via an app store, wireless carriers are fast becoming the biggest new player in the payment ecosystem.
2) Direct carrier billing providers are opening up new and far simpler ways for merchants to drive sales on mobile devices by providing a two-click purchase process for consumers to buy on any mobile device. Not constrained by downloading an app and available on every mobile device, mobile checkout via direct carrier billing has shown up to 3x higher conversion than credit card entry. This data has led merchants from Skype to Facebook to integrate direct carrier billing as an option and analysts are forecasting billions of dollars of products to be purchased in 2014 via this channel.
3) Developers are fast disrupting the traditional merchant-consumer relationship by embedding payments capabilities into their apps, whether via credit card processors like Stripe or direct carrier billing providers. This has created a long-tail effect for mobile payments as the billions of apps installed are becoming engines of mobile commerce.
4) Advertisers are becoming smarter and have begun to deliver more valuable, personalized and contextual content and offers to their customers. Generic banner ads and un-optimized email is being replaced with richer, native mobile experiences, including multimedia messaging (MMS), short-format mobile video (i.e. Vine, Instagram) and personalized content.
5) Most importantly, consumers are starting to choose their preferred vehicle of shopping and purchasing, which is increasingly mobile. With mobile traffic from mobile devices hitting 40-50% of all e-commerce traffic for many top retailers, consumers are choosing that they prefer to shop on mobile devices. The exponential growth in mobile shopping combined with the improvements in user experience in buying on mobile will enable the payments market to finally begin to hit its stride.
We see the news from Cap Gemini as further proof that soon the mobile device will be the primary screen for the consumption of content, advertising and shopping. And we can’t wait!