Leaving your smartphone at home today is like leaving the house without your shoes on. It’s oddly unsettling and anyone in this predicament would likely feel a little lost until they get that device back in their hands.
Not as many people may notice who’s without the device as they would notice who’s without the shoes, but the consumer without it surely feels the pain. But as much as the smartphone has become an extension of a person’s everyday habits, in the U.S., consumers are still turning to smartphones to browse more than they are to shop. But that’s not the case globally. Turns out, the U.S. is just “average” when comparing mobile commerce figures, according to Melissa O’Malley, director of global merchant and cross border trade initiatives for PayPal.
“People don’t associate their phone with making phone calls. They associate it with something that’s transactional — whether it’s transactional because they can text somebody, because they can buy something, they can share something. It’s becomes a really utilitarian device,” she said in a interview with MPD CEO Karen Webster on the eve of releasing the results of their mobile commerce study with Ipsos.
To fully understand the shifting global mobile commerce behavior, here are the top takeaways from PayPal’s recently released report about global mobile commerce:
Everyone instinctively understand that mobile commerce is growing and growing fast. But now we have some facts to back that up.
Overall, PayPal’s research in conjunction with Ipsos that examined the mobile commerce habits of 17,600 consumers in 22 countries, shows that between 2013 and 2016, the multi-country average compound annual growth rate for mobile commerce is projected to be 42 percent, toppling e-commerce’s same growth rate at 13 percent.
PayPal’s been on the receiving end of that growth, as well, O’Malley noted. It’s seen its mobile payment volume grow significantly over the past four years and reports that mobile now accounts for 20 percent of its overall purchase volume worldwide. That same figure was less than 1 percent in 2010.
“We are on the cusp on the mobile-first era,” said Anju Nayar, senior director of global initiatives for PayPal. “One thing is evident: Mobile shopping is on target for meteoric growth. Mobile commerce is growing at three times the rate of e-commerce.”
In the U.S., mobile commerce is anticipated to grow from $54.6 million in 2014 to $96.3 million in 2016. Compared to the roughly 9-11 percent increase e-commerce is expected to see each year, m-commerce in the U.S. has a projected growth rate of between 32-26 percent each year through 2016. Globally, mobile commerce across the 22 markets is estimated to grow from roughly $102 billion in 2013 to roughly $291 billion in 2016.
When it comes to both online shopping and smartphone-shopping density figures, these regions by far surpass any other. According to PayPal’s reports, in the UAE, mobile shopping makes up for 24 percent of overall online spending. In China, that number is 21 percent and Turkey is in third at 19 percent.
In terms of smartphone-shopping density, more than 68 percent of Chinese online consumers said they’ve used their mobile devices to make purchases on a smartphone in the past year. The number is only slightly lower for UAE shoppers at 57 percent and 53 percent for Turkish consumers. But in the U.S. the number is roughly cut in half, with only 31 percent of consumers reporting that they’ve used their smartphones to shop in the past 12 months. The explanation, however, has nothing to do with whether or not the U.S. is filled with Luddites who don’t like using their mobile devices. It’s simply that U.S. consumers have multiple devices to use to access the Internet – tablets, desktop computers, laptop computers – and use them all to do their shopping online.
“China, the UAE and Turkey are leading the smartphone market as a whole, but they also lead smartphones in terms of density. When you look at the percentage of people who are actually doing this, those are the people who are actually leading,” O’Malley said.
According to PayPal’s report, and not surprisingly, the surge in projected smartphone shopping growth comes from young adults. Overall, a third of online shoppers surveyed said they’ve used their smartphone for making an online purchase in the past 12 months. And that increase in mobile shoppers is being driven by smartphone shoppers between the ages of 18-34 (59 percent of smartphone shoppers in that age bracket reported using mobile to shop online).
When comparing individual companies to the overall global average of 33 percent, the U.S. figures are slightly below. The average number of consumers who’ve shopped in the U.S. using a smartphone was 31 percent. That puts the U.S. behind the U.K. (33%), France (36%), Spain (34%), Switzerland (32%), Russia (34%), Israel (37%), Turkey (53%), Ukraine (57%), Brazil (34%), Mexico (46%), Australia (33%) and China (68%).
So why is the U.S. percentage below average? O’Malley said its simply a cultural difference. In the countries like Turkey, Ukraine, Mexico or China, that report having a larger percentage of mobile shoppers, it’s more likely because the trend is to use a smartphone for more purposes. The U.S. is split in their behavior likely because of the consumer trend toward using more devices (desktop, laptop, tablet, smartphone). The trend in many other regions is to have one device for all purposes, including shopping and socializing.
PayPal reports that globally, 64 percent of smartphone users reported using an app for purchases as opposed to the 52 percent who used mobile browsers. The reasons cited for that are two: convenience and speed. Convenience was cited by 35 percent of users and speed by 30 percent. Instant payment confirmation and having a reminder in the app to use discounts or coupons were two other major reasons cited by those surveyed.
“When you look at how a merchant can take advantage of this, they need to decide if they need an app strategy,” O’Malley said. “It’s important because more people are more likely to buy from an app from a browser than a phone.”
PayPal’s research shows that across its 22 global markets, the rate of mobile spending is projected to rise by roughly $190 billion over the next three years. The 2013 mobile spending figure for mobile shopping in 2013 was roughly $102 billion, which is anticipated to hit $291 billion in 2016.
The mobile shopping behaviors consumers say they use today is shifting dramatically to what they say they’ll use their mobile device for in the future. In terms of actual mobile shopping behaviors today, 36 percent of consumers say they use mobile to get info on a product, 27 percent use mobile to find a business and 25 percent use devices to read reviews on particular stores or products.
But consumers revealed that in the future, they are interested in using their smartphones for more mobile-centric tasks. For example, consumers said that they’d be interested in using tap and pay at the register with their smartphone (16 percent), mobile ordering through app or browser (15 percent), and to compare prices while shopping in stores (14 percent).
PayPal reported that the top barrier to mobile commerce is the size of the screens. While that is changing, particularly in the U.S. with the launch of the iPhone 6 Plus, many of the smartphone users (39 percent) surveyed said they prefer to use a laptop or desktop because of screen size and website functionality. Security was another top concern named, as 21 percent of those surveyed had security concerns when it came to using a mobile device to shop online.
The data also shows that the shift from smartphones and tablets is expected to change even during the next 12 months. Data from the previous year show that consumers are still turning toward online shopping 85 percent of the time, with smartphones falling at 9 percent and tablets at 5 percent. But in the next 12 months, the research shows that computer-based online shopping will dip to 79 percent, while smartphone shopping will increase 14 percent and tablet shopping will increase 7 percent.
“With the advent of low-cost mobile phones, larger screen sizes and mobile device security improvement, the barriers to mobile commerce will decrease,” Nayar said. “Those improvements combined with streamlined digital options like PayPal One Touch will make it easier, more secure and more intuitive for customers to pay with their mobile phone.”
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