Mobile Device Connectivity Changing Ecommerce Business



Internet connectivity is exploding across the world, especially in rapidly developing countries such as Brazil and South Africa. According to data from Cisco’s Visual Networking Index (VNI) Forecast Update, global mobile data traffic grew by 74% in 2015. Globally, the Middle East and Africa will record the strongest mobile data traffic growth at a rate of 71% CAGR (compound annual growth rate) between 2015 and 2020. By 2020, the number of active wireless connected devices will double, connecting more than five billion people and 50 billion devices. With that in mind, here is some more information on the effect of mobile device connectivity on the e-commerce business space.

Connectivity Effect on Purchases

The increasing number of Internet-enabled devices continues to have a huge impact on the e-commerce sector. To start with figures published by Think with Google show that the mobile-commerce (m-commerce) sector alone accounts for 30% of all e-commerce sales in the United States. In addition, the m-commerce niche is growing at a faster rate than the e-commerce sector all together. Data revealed from the 2015 Internet Retailer study found that m-commerce grew 2.58 times faster than the online e-commerce sector and forecasts predict that mobile-commerce revenue will grow by 15% throughout 2016. The fourteen largest retailers in the Asian markets are witnessing similar trends. Their e-retail data suggest that m-commerce revenues increased by a staggering 249.3% year-over-year in 2015. This represents a 640% faster m-commerce growth rate compared to all American e-retailers.

When you consider the amount of time that consumers spend glued to their mobile devices, these figures are not surprising. In fact, data from Mary Meeker’s KPCB Mobile Technology Trends report shows that American adults with Internet-connected devices spent an average of 2.8 hours in 2015 consuming digital content. In comparison, the same demographic spent an average of 1.6 hours on mobile devices in 2012. Moreover, a study done by Nielsen found that mobile device owners spend 89% of their time inside apps compared to 11% who use mobile web. With this massive increase in mobile usage and the social media, mobile retail stores will inevitably see an increase. Over 70% of company CEO’s mentioned that mobile has started transforming their business and brand experience.

E-Commerce and M-Commerce Advantages and Disadvantages

E-commerce enables consumers to purchase products from the comfort of their homes or workplaces. They don’t have to go to stores, search for products or stand in line to pay. In addition, consumers can access a wide range of goods and services unavailable locally. To entice customers, many e-commerce retailers offer exclusive online discount deals and coupons to increase purchases. One of the biggest online shopping benefits comes with the ease of matching product prices through comparison sites and various online searches.

Though the e-commerce market allows consumers to buy products with a press of a button, its disadvantages are still lurking around. The biggest drawback of e-commerce happens to be data security. Consumers always risk losing their credit card details to active cyber criminals, which means those affected could lose money and become victims of identity theft.  When purchasing goods online, most retailers average a five to seven-day shipping window. Amazon Prime is trying to change this trend, as they started offering two-day shipping on specific products to their members. Lastly, online shopping lacks the personal touch consumers experience when shopping in brick-and-mortars like grocery stores or small local retailer. Studies have shown touch and feel are important aspects of shopping because three out of four shoppers make buying decision in-stores.

M-Commerce Advantages and Disadvantages

To start off with, the mobile-commerce industry has many of the same advantages of e-commerce, but let’s take it a step further. Mobile-commerce enables consumers to purchase goods and services on the go, meaning anywhere and everywhere as long as there is cellular service. M-commerce allows e-retailers to offer consumers personalized services based on location or prior purchase behavior. Google data suggest that 82% of shoppers consult their smartphones when purchasing a product. Moreover, mobile shopping related searches have increased by a staggering 120% within the last year.

When it comes to disadvantages, mobile devices have smaller screens making it harder for e-retailers to show their goods and services to consumers. Furthermore, the processing power of mobile devices is much lower than that of laptops or PCs, which means they are prone to limited use of graphics and ability of interaction. The high cost of installing mobile data transmission infrastructure can make the online mobile market unattractive.

With the number of web-accessible devices on the rise, Internet connectivity and access will increase as a direct result. This is already changing the way consumers purchase goods and services, because now any person with a smart device can easily purchase a car or groceries from the comfort of their homes. As the Internet of Things sector grows, experts predict that smart city technology investments will increase to $174.4 billion over the next 10 years. Cisco forecasts that the Internet of Things will add an additional $19 trillion to the global economy through instance purchases, improvements in service delivery, increased profits, cost savings and increased efficiency.




Image Credit: CC by Johan Larsson

About the author: Andrew Deen

Andrew Deen has been a consultant for startups in almost every industry from retail to medical devices and everything in between. He implements lean methodology and is writing a book about scaling businesses.

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