An Introduction to Mobile Commerce Basics

This article will give you a crash course on mobile commerce and share all the background information you need about the m-commerce industry. We’ll explain what mobile commerce is, show how businesses are using m-commerce today and share some key data points and trends related to the industry.

We’ll finish up by explaining why mobile commerce is trending up, discuss the benefits of mobile commerce for e-commerce brands and finally show you how to take advantage of the m-commerce wave for your brand.‍

Quick Summary:

• Mobile commerce is a form of commerce that takes place specifically on mobile (i.e. smartphones), with the term often used in reference to mobile shopping.
• More than half of all internet traffic today comes on mobile, and smartphone ownership has skyrocketed, explaining why m-commerce is so big.
• M-commerce represents a growing share of the total e-commerce market, offering greater convenience for consumers and greater potential reach and revenue for brands.

Dive into the basics you need to know about mobile commerce in this video:

What is Mobile Commerce?

Mobile commerce, or m-commerce, is the subset of commerce that takes place on mobile devices, such as smartphones and tablets.

M-commerce is a subcategory of e-commerce; where e-commerce involves goods and services being sold online, m-commerce transactions specifically take place on mobile.

Different Types of Mobile Commerce

The m-commerce industry covers several different commercial activities.

Mobile Shopping: m-commerce most commonly refers to mobile shopping. This is e-commerce that takes place on the customer’s mobile device, either through a shopping app or by visiting an online store in a mobile browser.

Examples include branded shopping apps, marketplace/multi-brand shopping apps (like Amazon), mobile e-commerce sites, and buying and selling through social media apps.

In-App Purchases: m-commerce extends to include any time a user makes a purchase or transaction within a mobile app, not just in a traditional e-commerce sense.

Examples of this include purchasing subscriptions, virtual currency or virtual items within an app, such as a mobile game or a news app.

Mobile Payments & Banking: m-commerce can also refer to consumer financial services that take place on a mobile device.

Examples would be mobile banking, such as making transfers or paying bills within an app, or using mobile payment solutions like mobile wallets and QR codes for payments, either at physical or online stores.

How Mobile Commerce Fits Into Today’s E-Commerce Ecosystem

The introduction of m-commerce is similar to the rise of e-commerce in the late 1990s and early 2000s.

Like e-commerce, mobile commerce is more convenient for consumers, making it a great way for brands to better serve their customers.

E-Commerce gives consumers a way to shop without having to get up and visit a physical store. Now m-commerce offers a way to shop on the go, or without having to load up a PC or laptop.

Over half of all global internet traffic now comes on mobile. Mobile commerce aligns with the growing popularity of mobile internet usage.

M-commerce also offers a way to make traditional retail more convenient and more secure, through mobile payment solutions, which consumers can use to make payments without carrying large amounts of cash, or physical cards that can be lost or stolen.

Also much like the rise of e-commerce earlier, m-commerce is not necessarily a threat to its predecessor (in this case, e-commerce). It should be considered an extension. Like most physical retailers were forced to expand into e-commerce or be left behind, the same is true today for e-commerce brands, most of whom have been forced to embrace mobile commerce to stay current and relevant.

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Mobile Commerce Key Data & Trends

Here are several key statistics and trends you need to know regarding mobile commerce today.

There are nearly 7 billion smartphone users around the world.

Sources: Bankmycell | Statista

Over 85% of the world’s population owns a smartphone. The number of smartphone users has more than doubled since 2016, and is still rising each year. Access to a smartphone today is the norm, not a luxury as it once was.

94% of people aged 18-29 use a smartphone.

Source: Pewresearch

The age distribution of smartphone users compared to regular cell phone users shows that smartphone penetration is only likely to grow.

A 2019 study found that 100% of respondents between the ages of 18-29 had a mobile phone, with 94% of those being smartphone users.

98% of those 30-49 had a mobile phone, 89% being smartphone users. Smartphone usage gradually decreased as the age bracket went higher.

This shows a clear trend towards smartphone usage for younger generations. As these generations age, the overall share of smartphone users will likely increase as well.

29% of people in the world make a mobile purchase once a week.

Source: Statista

A study in Q3 2022 looked at the percentage of internet users who bought something online via mobile each week, separated by country.

The worldwide average was 29.3%. The US scored above average, at 32.2%; the UK right on the average; Canada, Australia and New Zealand below average at around 25%; and South Korea the highest at 44.3%.

That means that slightly under one-third of all internet users (and roughly one-third of US internet users) shop on their mobile devices on a weekly basis. These are the regular m-commerce consumers; it can be expected that many more shop on mobile on a less frequent, yet still somewhat regular basis.

US M-Commerce Sales Are Expected to Pass $710 Billion in 2025.

Sources: Statista, eMarketer Insider Intelligence

In 2021, m-commerce revenue in the US passed $360 billion. The market’s value is believed to have been over $415 billion in 2022, and projected to hit $710 billion by 2025.

Total e-commerce sales in the US were a little over $1 trillion in 2022, according to the US Department of Commerce. That means m-commerce is responsible for approximately half of all e-commerce spending.

M-Commerce Makes Up 6.5% of All Retail Sales.

Source: eMarketer Inside Intelligence

Retail m-commerce sales as a percentage of total retail sales in the US was 5.8% in 2021, 6% in 2022, and projected to be 6.5% in 2023. Projections have it rising to 8.7% in 2026.

The key takeaway here is the room for growth that still exists in the m-commerce market. Mobile commerce is still in its infancy, and by all indications the market size will grow significantly in the years to come.

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Why Consumers Are Gravitating Towards M-Commerce

Let’s examine why m-commerce is growing in popularity with consumers, and will continue to do so.

Here are five reasons we can point to to explain m-commerce’s growth.

1: Smartphone penetration

As we showed earlier, smartphone penetration is close to 100% for younger age groups, and rising for the overall population. We’re using our smartphones to access the internet more often as well. As these numbers grow, it stands to reason that we’re going to do more normal internet activities on mobile, including shopping online.

2: Speed

Mobile commerce makes it quicker for consumers to start shopping, compared to going into a physical store or loading up an e-commerce website. The shopping and checkout experiences are also more streamlined, allowing the shopper to complete a transaction without re-entering payment details every time or handling cash.

3: Convenience

Shopping on mobile is a more convenient experience for the consumer. They can shop from anywhere, as long as they have their smartphone and an internet connection. They can access all their favorite stores and brands in one place, any time. There are no opening hours, no parking, no weather to worry about, and if they need to compare prices with other retailers, all they need is right there at their fingertips.

4: Personalization

Mobile shopping allows retailers to personalize the shopping experience, by collecting data on shoppers’ habits and preferences. If they’ve made a purchase with a retailer before, or viewed certain products before, this can be used to build an experience that’s truly catered to the individual.

5: Exclusive discounts and loyalty programs

Mobile shoppers, particularly those who shop on branded apps, are worth more to businesses than in-person or website shoppers. That means a lot of brands and retailers offer exclusive discounts, rewards and more incentives for people to shop on mobile.

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The Benefits of M-Commerce for E-Commerce Brands

Mobile commerce not only offers benefits for shoppers, but brands and retailers as well.

Brands can generate more revenue, more repeat sales, higher average order value, higher conversion rates, and build a more powerful perception of their brand by leaning into mobile commerce.

Here’s a little more on the benefits that m-commerce offers e-commerce brands.

Higher Revenue

Delivering a better shopping experience, along with making it easier for people to shop, will likely lead to more sales.

Mobile customers tend to be more valuable, as they shop more often and make more impulse purchases.

In addition, offering m-commerce as an option gives customers the choice of where they prefer to shop, and thus satisfy a wider user base and capture more overall revenue.

Higher Retention

Mobile commerce (specifically mobile apps), are a powerful tool for retention. By downloading an app, the customer gives the brand a direct way to contact them in the future, through native push notifications.

The consumer can get back into the app with one tap from their home screen, compared to the friction of typing a URL to get to an e-commerce site, or the laborious process of going out to a physical store. The lower friction in mobile commerce is a huge win for brands trying to capture repeat customers and get a higher lifetime value from each shopper.

Audience Ownership

Most retailers and brands have little control over their audience.

Physical retailers are reliant on foot traffic to deliver customers, while e-commerce sellers often rely on social media reach, or search algorithms (e.g. Google, Amazon search). If this dries up, or new competition emerges, these retailers find they have very little control over their customer base.

Mobile shopping apps give brands a higher level of control over their audience. Push notifications, as explained earlier, let brands contact their customers directly, with no middle man. And apps also give brands direct access to detailed analytics on their audience, helping them better understand their ideal customer profile.

Reach

Mobile commerce (again, apps specifically) opens up a wider range of acquisition channels for brands, such as the Apple App Store and Google Play Store.

They can also reach consumers who are smartphone-only, who represent a growing percentage of overall consumers.

Brand Perception

Finally, a focus on mobile commerce can increase brand perception in the eyes of their customers.

A good mobile shopping experience makes a brand appear more professional, modern and trustworthy, while the opposite (a poorly optimized mobile experience) has a negative effect.

It’s even more true with brands or retailers who have their own mobile apps. A branded shopping app itself is a sign of trust and authority, as are listings in the Apple App Store and Google Play Store.

Increased trust and brand perception is vital for commercial enterprises, particularly those in digital commerce, where social proof has the potential to make or break every sale.

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How Brands Can Leverage M-Commerce

Ignoring m-commerce will be a death sentence for today’s retailers, as it was once upon a time for physical retailers who ignored e-commerce.

So how can brands ensure that they don’t miss the boat on m-commerce, and get in on the benefits that it has to offer? Here are three ways to do it.

1: Optimize your site for mobile devices

Every website today should be responsive and usable on mobile devices. This is non-negotiable. Over 50% of global internet traffic comes on mobile, and more than 60% of Google searches happen on mobile. If you don’t have a mobile-optimized website, you’re leaving money on the table.

2: Start building mobile-first

Making sure your site is usable on mobile is the first step. But most site owners still build for desktop first, which leaves the mobile user experience as an afterthought.

As the statistics above show, there’s a very good chance that more of your site visitors come on mobile than desktop. So why should you build for the minority?

It’s smarter to create primarily for mobile users (the majority), and then convert what you have to a larger, desktop-oriented version. This ensures that your mobile UX doesn’t come off as a shrunken-down version of something that’s supposed to be accessed on desktop.

3: Launch your own mobile apps

Even a perfectly optimized mobile website can’t offer the perfect experience for mobile users. For that, you need a proper mobile app, without the confines of the browser.

Apps are not just superior for user experience, but also for retention, revenue, reach, brand awareness and more. And today, it doesn’t take a massive amount of investment to build and launch your own mobile app.

Every large brand today has their own mobile app, but a growing number of mid-sized and independent brands are doing the same. See brands like Rainbow Apparel, John Varvatos and SYN•DI•CATE as examples.

In the next chapter in our series, The Need for a Mobile App, we’ll discuss why just optimizing your website for mobile is not enough if you really want to harness the power of m-commerce, why top e-commerce brands are launching their own mobile apps and why you should do the same, no matter the size of your business.