Mobile vs. PC Commerce

One of the main stats we track is what is happening globally with m-commerce vs. PC/desktop/notebook browser-based commerce. In many developed countries, we are yet to truly see the shift from desktop-based commerce to mobile-based commerce as the majority of transactions. Perhaps even more interesting to track as a part of this analysis is how much headroom e-commerce has to grow as a part of overall purchases worldwide. Here is the current share of e-commerce as a percentage of retail transactions and the forecast from eMarketer.

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As you can see, e-commerce has tremendous upside globally. It is one of the main reasons to take the long view of companies like Amazon, Baidu, and others who are poised to dominate the share of online shopping in many parts of the world.

Our belief is the mobile device will be the catalyst that will drive e-commerce to continue to aggressively take share from physical retail. This is not to say physical retail will not participate in this trend but that the mobile device will become a central gateway to purchasing many of our most common goods from both online and physical retail outlets. Part of our thesis here is because of our conviction of things like Apple Pay and Android Pay to eliminate many barriers to friction in transactions across the board. As consumers become more comfortable with mobile wallets, we believe this will act as a catalyst to drive a hyper growth cycle of e/m-commerce.

Another part of this thesis is built from what we see in markets like China, where mobile wallets within WeChat and AliPay are driving the same kind of cycle we think mobile wallets can drive in the US. While PC penetration is nearly 60% of the online population in China, purchasing from the mobile device has overtaken PC based e-commerce thanks to mobile wallets. In India, only 10% of the online population has access to a notebook or desktop and the rest of the online population uses only a smartphone as their primary computer. This is true of markets like Indonesia, Vietnam, Philippines, etc., where mobile-only is the norm.

As of this latest quarter, here is a snapshot of a few select countries and the percentage of consumers who said they buy a product online each month via either PC or mobile device.

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As you can see, the more developed countries with a larger and more mature PC (desktop or notebook) installed base is still seeing the majority of online transactions from traditional PCs whereas, the more mobile-first or mobile-centric regions have more mobile e-commerce transactions than desktop or notebook ones. However, it is worth noting that, a year ago, both the US and the UK were in the low 20% range of mobile commerce and are now well over 30%. We think when mobile wallets are more widely accepted we will see a sharp S-curve take place in mobile commerce vs. the slow steady line we see today. It is also worth noting that the younger millennial demographic is already much more mobile-centric in their buying habits in countries like the US and the UK. Millenials are already well over 50% who say they engage in monthly buying of goods from their smartphone. Highlighting another element central to our thesis that younger generations in developed parts of the world are showing many similarities to other mobile-first consumers in other parts of the world.

Again, this is not to say that only Amazon, or Baidu, or other online market places are the only winners here. It is a recognition that even physical retail must stay on the ball or risk losing customers. WalMart, for example, is struggling to figure this out as Amazon continues to eat much of their business. Retail used to be about breadth and depth of selection and price as a basis of competition. Hence, WalMart’s advantage for the better part of the last few decades. However, every single advantage big box retail offers is destroyed by online merchants like Amazon or Baidu. Retail has to change if it is to compete.

This was a central theme from the Money 2020 conference I presented research at last week. The value of retail needed to move to more customer experience-based vs just breadth of selection and price. It’s hard to see how a WalMart, Macy’s, or Best Buy survives this transition but companies like Starbucks, which offer “order ahead” via mobile, or Home Depot, which offers order ahead or inventory searching in store for contractors, are adapting nicely. Home Depot, for example, now sees 40% of their online store transactions coming from in-store via their app. This is fascinating since last year at this time, it was only 10%. Contractors are seeing a huge need met via order ahead and in-store ordering at other locations when the current doesn’t have stock. These are two examples of how mobile adds a new dimension to physical retail and the kind of enhanced commerce experience physical retail needs to develop if they are to stay competitive.

If retailers think Amazon and others threaten them today via mostly PC-based commerce, just wait unitl they see what happens when mobile starts to play a bigger role.

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Ben Bajarin

Ben Bajarin is a Principal Analyst and the head of primary research at Creative Strategies, Inc - An industry analysis, market intelligence and research firm located in Silicon Valley. His primary focus is consumer technology and market trend research and he is responsible for studying over 30 countries. Full Bio

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