What does the year ahead hold for ecommerce?

Predictions

Ecommerce has grown at lightning speed in recent years, its impact felt in every aspect of our daily routines – and confirmed by the research and predictions handed down by industry thought leaders such as Deloitte. 

The multinational professional services firm recently published its predictions for 2016. Here are some of the takeaways from the report:

150% Rise in ‘Touch Commerce’

Imagine this: as you lay on your bed, surfing the Internet on your mobile, you stumble across an ecommerce site with a product that you like. Tempted as you are to buy the product, the hassle of typing in all of your details on your tiny phone screen stops you in your tracks. You tell yourself that you might buy it later from your desktop or tablet, but once you leave that page and get sidetracked by what happening on Facebook or Instagram, you soon forget.

This common scenario is a major challenge for Australian retailers and, for that reason, companies are scrambling to come up with simple and fast mobile checkout processes. Touch-based payment allows consumers to complete a purchase by tapping a fingerprint scanner, using a pattern of screen touches or simply entering a PIN code.

About one third of Australians browse shopping websites and apps at least once a week. But only 9% of them buy anything due to the tedious rigmarole of typing in personal details on a small touch screen. In line with the global average, this is one of the biggest reasons for low completion rates.

According to Deloitte, only 8.5% of mobile users who view an online checkout form currently complete their purchase. The new ‘touch commerce’ technology gives users the ease to make purchases by simply using their fingerprint, without providing log in details or transaction details to merchant or payment service providers.

Some third party services, like Apple Pay, Android Pay, Master Pass and Visa Check Out, are already available in the market. In the report, Deloitte predicts that this third party touch-based payment service for mobile devices is set to increase by 150%, potentially reaching 50 million regular ecommerce users.

How can retailers reach the most consumers? Deloitte suggests:

  • Retailers should educate the market on the existence of touch commerce and encourage first-time usage, perhaps by offering small discounts for doing so.
  • Retailers may need to offer a variety of payment options via a range of third parties.
  • Touch commerce is likely to tap into consumers’ appetite for impulse purchasing. But more mobile commerce and impulse purchases may mean that they will need to be even more responsive and able to cope with unpredicted spikes in demand that may happen at various times of the day and night.
  • A simplified checkout process is not the only prerequisite for mobile commerce. A user-friendly and appealing mobile website or app is also essential.
  • Retailers should carefully weigh the benefits of rapid transaction fulfilment with loss of control of customer data.
  • Retailers should also consider integrating touch payment services with loyalty schemes.

0.3% rise in mobile ad-blockers

Deloitte predicts that in 2016, a mere 0.3%t of mobile users will use an ad blocker in their devices. This puts less than $100 million (0.1%) of the $70 billion mobile advertising market at risk.

For advertisers and businesses, ads help to target specific audiences and show them relevant ads in the form of pop-ups, images, and banners. Analytics from ads helps to measure users’ online activity to determine which ads to show.

If the use of ad-blockers increases, as forecast, page load time speeds will simultaneously decrease. For now, pages with ads take 10-15 seconds to load. But with ad blockers installed and without ads on the page, pages will only take 2-5 seconds to load.

Deloitte’s suggestions for online retailers:

  • Online publishers that rely on advertising for revenues should use the threat of ad-blocking to consider how best to enable easy payment for their content and not provide a vast array of consumer data as a condition of being able to contribute a dollar, or to insist on subscription.
  • The industry should also anticipate how prevalent consumer inertia can be. For example, hundreds of millions of mobile users have been able to access an ad-free, text-only mode for reading content for years, but few have chosen to do so.

Used smartphone market worth $17 billion

The lifespan of the average Smartphone sees the device change hands between 4-5 owners. According to Deloitte, the used Smartphone industry is huge and, in 2016, consumers will sell around 120 million Smartphones, generating $17 billion for their owners at an average value of $140 per device. This is a significant increase from the 80 million Smartphones traded in 2015 with a value of $11 billion, or an average value of $135.

Deloitte also predicts that at least 10% of premium smartphones ($500 or higher) purchased new in 2016 will end up having three or more owners before being retired, and will still be used actively in 2020 or beyond.

Deloitte’s suggestions for online retailers:

  • The smartphone is the primary consumer electronics device by revenues and units: over $400 billion in sales and 1.6 billion units expected to sell in 2016. Its second-hand market is a significant market in its own right and likely to grow over the coming years.
  • One category that may lose from this market is children, seniors and charities, who have become accustomed to receiving hand-me-down phones for free. If trading-in becomes lucrative, the flow of gifted devices may become interrupted.
  • A possible consequence of a more organized second-hand market is the potential for cannibalisation: some consumers may elect to buy second-hand, rather than new, as is the case with the car market. However, some of those that purchase a second-hand device may then decide to purchase new next time round, and they may also purchase new accessories and apps for their used smartphones. Furthermore, familiarity with a used device may act as a brand ‘gateway’ and encourage the purchase of other devices from the same vendor.

About the author

Nital is the founding director at Octos Digital Marketing Agency. He has served big corporate brands of Australia and has more than 10 years of experience under his belt with a profound level of expertise in search strategies, planning and management.