Editor’s Note: Welcome to our weekly Reality Check column. We’ve gathered a group of visionaries and veterans in the mobile industry to give their insights into the marketplace.
Contrary to what we might have once believed, the mobile phone is the vehicle that will become the basis of all convergent channels. Before, it was thought that this main vehicle would be the TV or even the computer, but the mobile phone has won this battle — not only with its incredible growth in units but also because these small devices incorporate more tech features every day.
An estimated 5 billion mobile phones have been in use this year worldwide, according to a study by the United Nations’ telecom agency. Of this total, about 30% have had Web access. The number of users, in combination with the convenience of the mobile phone, has helped fuel the creation of a series of opportunities for several types of applications, such as mobile marketing, mobile advertising, mobile dating, and now mobile payment and mobile commerce.
Some people may be confused about the terms relating to the last two modalities mentioned. By definition, mobile payment, or m-payment, is the use of mobile phones as a tool for payment and/or access to financial services. M-commerce is the use of mobile phones as a channel to trade products and services. The latter is gaining relevance among U.S. retailers because they have realized that mobile phones, especially 3G smartphones, are preferred by a new generation of consumers because of their convenience and user-friendliness. Large retailers realize the need for a virtual store and believe that mobile commerce is the next wave because it will allow consumers to have a portable assistant to facilitate their research and shopping in both physical and virtual stores.
Although the use of m-commerce is still in its initial stages in Brazil, the country is showing trends of becoming the pioneer market for Latin America, thanks to its high potential for growth. With strategies supported by development of applications and players in different segments, m-commerce in Brazil is slowly consolidating itself as a real multiplatform.
There are already some examples of this movement. “MercadoLivre,” a Latin American e-commerce marketplace, already has 2% access from mobile phones. While small in terms of percentage, that share represents 17 million page views. The social buying group “Clube do Desconto” said 15,000 coupons have been sold through its iPhone app since its launch last month. Overall, the group sells an average of about 200,000 coupons per month.
Other opportunities for m-commerce in Latin America are related to online games, social networking and dating sites, which will have the opportunity to monetize their virtual goods, digital contents and services with a simple and secure payment. Many companies already have (or are planning to have) operations in Brazil because they recognize that Latin Americans have a strong culture of integration and socialization, which is reflected in the success of social networks such as Orkut and Facebook and the popularity of several online games. This market is already a reality, and the most convenient way for users to pay is via mobile, considering the high penetration of mobile phones compared with the penetration of financial services.
There remain strong opportunities for growth in coming years based on the demands and desires of the lower rungs of Brazil’s socioeconomic ladder. Today, 65% of the people who receive money from Bolsa Família, the Brazilian government’s social program to reduce poverty, have mobile phones, but few have bank accounts. Brazil’s government is also studying the possibility of using mobile phones to provide social incentives for Brazilians.
Finally, Brazil is expected to increase this huge market of m-commerce in Latin America. This segment is certainly the key to the growth of several companies focused on mobile services solutions.
* Fernando Pensado is the director of Neomobile operation in Brazil and a board member of the MEF LATAM.
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