With Christmas decorations now cropping up next to Halloween costumes, the holiday shopping season seems to be creeping earlier every year. And so are the predictions about what the all-important fourth quarter will look like for retailers, as well as what role mobile holiday shopping and purchasing will play this year.
Several recent reports offer an interesting pictures of the possibilities. For some overall context, let’s look at the new predictions on the size of the global mobile wallet market from Transparency Market Research. Despite limitations like lack of consumer knowledge about mobile wallets and security concerns, this is an area expected to see significant growth. The firm noted that mobile wallets have more widespread use in Africa and Europe than the United States; Europe, the Middle East and Africa accounted for more than 40% of mobile wallet revenues in 2011. Major players include PayPal, Amazon Payments and Isis, which recently changed its name to Softcard to avoid association with the militant Islamic group of the same name.
Transparency expects a compound annual growth rate for the mobile wallet market of more than 30% between 2012-2018, and says that retail is the most important segment, with a value of $144.8 billion in 2011.
Meanwhile, another report released this week by Packaged Facts said that mobile payments are on the rise in Canada, especially among the affluent and “millenials.” The report classified mobile payments as transactions including purchases, bill payments, donations, peer-to-peer payments and any other payments made using a mobile phone. The research found that more than one-quarter of Canadian mobile phone users had made a mobile payment in the past 12 months, an increase of 17% year-over-year. In fact, the average mobile payment user does four mobile payment transactions per month, up from 2.5 per month in 2012.
Not surprisingly, penetration for mobile payment was highest among those ages 18-34, with more than 39% having recently used their phone to make a payment. The research also found differences in the mobile payment methods used, with millenials and younger “gen-xers” relying on browser and app-based methods while those with household incomes above $100,000 often preferring to scan bar codes in order to make payments.
So in the context of increasing purchases and payments via smartphones, what might we see in terms of mobile holiday shopping this season? Well, it’s worth keeping in mind that some experts are predicting that overall, the season is going to be relatively soft and shoppers will be both cautious in their spending and willing to drive out of their way to pursue a good deal — one that they might get via mobile phone.
Mobile is expected to be a driver of sales, but the primary e-commerce route is still via the Internet on a computer. Volusion, which focuses on e-commerce for small to medium-sized businesses, said that during the second quarter of 2014, its merchants saw 23% growth in mobile sales — but mobile still accounts for less than 15% of overall e-commerce, and most e-commerce holiday purchases will still come from desktop computers.
One particularly interesting emerging trend is that of buying online and picking up in-store, known as BOPIS. Target recently updated three of its mobile apps and added two more, as 451 Research noted this week (aiming to make mobile its “new front door to Target,” per Jason Goldberger, SVP of Target.com and mobile). Included in those Target apps is an expanded ability to buy via mobile and pick up items in-store — Target is piloting the program with a startup called Curbside at 10 Bay Area locations. Customers order online and then pick up their items at a Curbside-branded trailer or tent just outside the Target store.
BOPIS is expected to be an increasing trend this season, and may offer brick-and-mortar retailers a chance to boost their revenues and customer visits, according to a survey from customer engagement firm Parago — particularly if they offer additional incentives, such as an additional rebate. I saw this happen firsthand this week on Target’s website, as a matter of fact. I was shopping for a filing cabinet and was offered an additional $5 gift card if I ordered it online and picked it up in-store — and I took it, even though the location was a little out of my way, and farther away than the Office Depot where I had also been considering a purchase.
Going the BOPIS route let me have the convenience and efficiency of shopping online and considering a number of stores, combined with same-day gratification of not having to wait for a package to ship — my file cabinet was ready for pickup within a few hours of the purchase and I was able to do other routine shopping when I went to pick it up. A win-win for Target, I guess, and all they had to do was promise me $5 that I promptly spent.
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