In 2015, the number of requests from mobile devices in Google exceeded the number of search requests from PCs once and for all. At the same time, Google commenting on this landmark event noted that the world is at the dawn of a new age – a mobile era. And as it always happens the company was just right. Smartphones are already at the center of our lives. And experts call mobile commerce to be the future of business.
Mobile Commerce in Ukraine and the world
The term “mobile commerce” or “m-commerce” has come into use quite recently, even though both the notion itself and the business area was created nearly 10 years ago.
As early as 1997, Coca Cola installed “cashless” vending machines in Helsinki. You could buy a drink there by sending an sms.
At the same time, Merita Bank of Finland introduced mobile banking. A year later, a service for selling mobile ringtones was launched again in Finland. These three events became a launch pad, a springboard boosting the m-commerce popularity.
In 10 years, the segment has grown greatly. It is catching up with e-commerce fast in sales volume. And soon it will be ahead.
The experts from Mobify think that it will happen for this year’s end by the Black Friday – a huge sale in Europe and USA, which traditionally takes place in November’s end. And by 2021, the share of m-commerce in the Internet commerce will exceed 50%.
In 2016, according to the Mobify report, an average purchase amount in mobile applications exceeded the average order amount from a desktop by 27%. For comparison: the average amount of orders from mobile devices was below the desktop orders only by 9% in 2016.
Investment in mobile commerce is also growing exponentially. According to Сoupofy, in 2014 alone, the number of investment in the industry increased by 32 bn., which is 255% more than in 2013.
The largest number of mobile buyers — over one half of population — has been recorded in China, as well as in Turkey and UAE.
China is also among the leaders in the growth rate of m-commerce. According to Coupofy, this segment grew from 23 to 52% between 2013 and 2016. And the countries of Western Europe have even got ahead of the Land of the Rising Sun. For example, in Denmark, m-commerce grew from 11 to 55% for the same period, and from 11 to 54% in Norway.
Ukraine is behind by every measure for now. According to Google last year’s report, there is only 35% of people who use smartphones actively in our country.
The number of mobile searches reached 42%, which is much less than in the developed countries of Europe and Asia.
However, the situation should soon change for the better. A reduction in smarthpone prices is the first factor to facilitate it and the dissemination of 3G is the second. On that basis, we can assume that over a half of Ukrainian internet users go mobile in a year or two. The business should prepare for this in advance.
Why mobile commerce is a profitable thing?
The logic here is simple. A cellphone is always near and once it around, you have an access to your credit cards and e-money. Just click a button and the purchase is made. No need to go anywhere or even turn your PC on.
Additionally, mobile shopping is often a spontaneous thing. A person may be simply surfing the internet and accidentally stumble upon a website, then something picks a client’s attention up, which he/she eventually purchases. And the internet user might not even think about buying in the first place.
In this sense, e-commerce resembles advertising as it allows you to “capture” an internet user, then get his interest and impose a product or a service. Moreover, mobile commerce can sell them at the same time. Advertising is obviously not capable of that.
Subtleties of promotion in m-commerce
In order to develop a business in the mobile commerce segment, the first thing you do is creating a mobile version of your website. And not just making it, but doing it well so that a client would feel comfortable visiting your site from a mobile device.
According to Google statistics, over 60% will leave a website if they feel uncomfortable going through the content. Over 40% will leave immediately if it loads for more than 5 seconds.
You should also turn your attention to mobile ads. This is a very vibrant area globally. As early as 2011, the market of mobile ads was estimated at $5.3 bn. Same estimates applied to the outdoor advertising.
Mobile ads work differently. For example, they allow you to place information about your product inside apps and mobile services. Some types of mobile ads only run when a user enters a site via smartphone.
The cheapest and simplest kind of mobile ad is sending SMS and MMS messages to the users. You can also include push notifications to this category.
A WI-FI advertising gets popular the last couple of years as well. This advertisement is triggered only when users try to connect to the public internet network and can reach a large audience.
M-commerce challenges in Ukraine
One of the m-commerce problems in Ukraine is, oddly enough, the Ukrainians themselves. In the case of entrepreneurs, most of them have yet not fully understood what m-commerce is and what benefits it offers.
Many perceive it as something intangible, distant or meaningless. People simply do not understand why should they spend money on the same mobile ad on the internet while they have traditional context ads also running on the internet.
And the WI-FI advertisement is something they overlooked completely. And in Ukraine itself, there are very few companies offering this service.
According to Google, only 2% of Ukrainian entrepreneurs invested in the mobile advertisement last year. That is an incredibly small number and utterly unacceptable one compared to the other countries.
In the case of buyers, they have a high level of distrust towards mobile payments. Many fear to purchase goods online and are eager to visit offline stores, where they have a complete control over the purchase.
Still, this issue needs time to be resolved. People need to get used to the changing trends. However, for the entrepreneurs to be on roll, they need to act now while the Ukrainian m-commerce is free of tough competition and it is easier to take a niche.
Yet the skeletons are buried elsewhere. In many Ukrainian banks and other commercial structures, mobile payment technologies are underdeveloped. For example, the same Privat24 – the best Ukrainian banking service for mobile payments – hardly has all the functional features implemented.
The security is also limping in Ukrainian commerce. For example, the American MobilePay tied all accounts to the social security numbers, which ensures a greater protection against hacking. That is not the case in our country because we lack a single digital ID for the citizen. Although we actively pursue that direction and perhaps one day we will arrive at that aim.
Ukraine also had had challenges taxing the mobile commerce for a long time. Initially, the pension fund fee applied to the mobile payments. Because of this, many users were unwilling to pay via cellphones as it was expensive.
Therefore, the development of m-commerce in Ukraine was procrastinating. In summer, however, this problem was finally resolved. Now, the pension fund fee for mobile payments is no longer assessed, which should boost this segment in our country.