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By Rajiv Garodia, MD Of Pay By Bank App And International Sales, Vocalink, A Mastercard Company
It is extremely hard to imagine the world without e-commerce. Since the introduction of the internet, the sector has experienced exponential growth, particularly with the likes of electronic commerce firms such as Amazon and eBay.
More recently, the industry has experienced an evolution into m-commerce – shopping through a mobile device– and it is understandable. In Asia alone, there are over one billion smartphone users, so it was inevitable that e-commerce companies would capitalize on this.
Mobile commerce has seen unprecedented growth across Asia, with some regions reporting as much as a 250 percent increase in growth over the past two years. In a report published last year, Accenture found that e-commerce sales in the Asia-Pacific region will surge 300 percent to US$2.6 trillion (US$3.5 trillion) by 2020.
This increase has been predominantly driven by millennials, and Accenture’s report highlighted the importance of this demographic in Asia, predicting this group will have more spending power than any previous generation, with an estimated US$6 trillion in disposable income by 2020.
But Why is the Popularity of M-Commerce Soaring?
Convenience is the most obvious reason.
Furthermore, respondents used smartphones as a way of searching the internet for the lowest priced goods. Nielson also recently reported that 60 percent of online shoppers use their smartphone to find a product first, before making an online purchase. Clearly, the growing availability of apps that facilitate online shopping is aiding the boom in Asian m-commerce.
When comparing Asia to the rest of the world, the continent is an early adopter. According to Criteo, Japan has the highest rate globally of mobile retail e-commerce transactions, and Japanese consumers now purchase more goods via mobile than desktop. In contrast to the staggering US$2.6 trillion sales predicted in Asia by 2020, Business Insider Insights predicts that US m-commerce will only reach US$284 billion. M-commerce adoption varies significantly across Europe - in the UK, 31.1 percent of e-commerce traffic is through mobile, but in Poland just 8.3 percent.
Although the reasons form-commerce adoption are similar across all continents, it appears Europe and the US are held back by the fear of security surrounding mobile payments, or rather the perceived lack of it. Our research shows that European millennials have indicated that security is their primary concern while a quarter of millennials in the US have ceased using mobile payments altogether for this reason.
These concerns do exist amongst Southeast Asian millennials, but it seems these fears are outweighed by the desire to adapt with and consume technology. This age group is constantly looking towards the next level of technology and the convenience that comes with it.
Despite the global variance in adoption rates, the challenges that face e-commerce businesses are ubiquitous. All e-commerce businesses need to ensure that they cater to the burgeoning smartphone market and must pay particular attention to the development of mobile apps which are predicted to be the main means of e-commerce in the next few years. The integration of mobile wallets such as Apple Pay, Android Pay and PayPal and other banking app-based payment technology such as Pay by Bank app are also becoming a part of everyday life for many.
Improving m-commerce offerings could not only improve retailer profits but will also generate a great deal of data and analytics which will provide a valuable insight into their customer base. Retailers should welcome these changes with open arms.