A handheld high street
One prediction it's easy to make as the year draws to a close is that while some of us have already become used to paying for things with our smartphones in 2011, even more will do so in 2012. Recent research by Forrester Consulting commissioned by PayPal paints a buoyant growth path for mobile retail in the UK: a market that is worth over £438 million at the end of 2011 is predicted to soar to some £2.5bn by 2016. This represents around 4.5% of the UK online retail market.
Typical mobile shoppers have a higher than average disposable income, and, unsurprisingly, are the ones who tend to be most comfortable shopping on the internet. Currently they spend just over £1,600 per year online, of which around £100 is spent via their phone.
Mobile shopping is still something of a niche, new activity – more than 60% of those of us who do have been doing so for less than a year – but as people naturally become more familiar with the concept and the technology involved, it will move firmly into the mainstream. Around 14 million adults are expected to shop with their mobiles by 2016, and along with the increase in numbers the average spend will also increase, up to around £180.
As you'd expect, buying from an App store is the most common route to purchase, and digital products like MP3s, games etc are also popular. But the survey shows that we're reaching for a broadening range of other products through our phones: books, clothing, cinema tickets, hotel reservations, cosmetics, household products, even large domestic appliances. Early adopters of new technologies tend to be big spenders on computers and electronics, so these categories are likely to grow particularly fast.
The message to retailers is that complacency kills. Given the limited screen-size of the smartphone there is less margin for poor design and process, so it's essential that a user-friendly experience is created for would-be shoppers, and innovative approaches need to be taken to visual merchandising. Retailers need to offer mobile-optimised e-commerce websites if they wish to capture a share of the growing market.
The other critical area is security. As in the early days of internet shopping, we all want to be confident our personal data and payment details are secure – and even though most of us now accept the internet is a largely safe environment for commerce, the mobile market has to convince us all over again.
Interestingly, the 2012 Olympics may have a contribution to make on this front. Major brands like Lloyds TSB and Orange are joining others like Barclaycard and Visa in making significant investments in the embryonic field of contactless payments ahead of the games. As shoppers become used to securely and successfully using their phones in this way, mobile shopping more broadly will become more widely adopted.
Even for those who remain concerned about their own data, smartphones are still likely to make some deep changes in the way they shop. From finding shops and comparing prices, to reserving products remotely before physically visiting outlets to perform the transaction, to sharing their experiences with other shoppers after the event, the technologies involved will alter the marketplace just as much as the fact of making an actual payment with a handset.
As the survey concludes, “While the smartphone isn’t going to replace more mainstream methods of shopping online, the convenience and immediacy of a portable device that can be used almost anywhere will lure an increasing number of UK mobile users into mobile buying. This consumer pull will be matched by a retailer push, with mobile-savvy retailers offering slick, sophisticated mobile experiences that rapidly become a key part of an overall multi-channel strategy.
“Though consumer trust remains a key barrier, getting the basics right, such as a mobile-optimised website, a coherent app strategy and an understanding of where mobile fits in the overall channel mix, is the ticket to entry in this new game.”
Meanwhile, those of us who can't remember how we used to function without our smartphones will have a field day.
