The explosion of mcommerce: top trends

5 trends that will fuel the market’s growth in the next few years

The mobile commerce market in the U.S is a $41B industry that grew 68% YoY in 2013 . It’s still a small fraction of overall commerce — 16% last year — but this landscape has changed over the past 6 months. Just look at how crowded the Lifestyle category of the App store has gotten since last Christmas: the section is now flooded with commerce apps. After a record-breaking Black Friday/Cyber Monday in 2013, in which mobile drove between 40 percent to 60 percent of retailers’ visits; the market is continuing to mature.

Why? First, the gap between desktop and mobile shopping behaviors is closing. Smartphone average order values (AOVs) have gotten close to that of the desktop and tablet, which proves that users are more comfortable shopping on mobile. It certainly helped that retailers have worked on delivering more efficient mobile experiences last year, too.

Second, there are a lot of new entrants in the space. Large retailers like Nordstrom or Neiman Marcus, large brands like Nasty Gal, Uniqlo, H&M or ASOS, and lots of newbies, including Moda Operandi, ASAP54 or Poshmark (and its many iterations of mobile-first vintage marketplaces). All are thriving.

Yet mcommerce is still at a nascent stage: the market is projected at $113B by 2017. Here are 5 trends that will fuel that growth.

1- Offline to online commerce

Today you can easily scan the barcode of any item and buy it on the spot with apps like Amazon or Zara. But what’s coming is far more advanced and exciting than that: image recognition and the power to buy anything you can take a snap of.

And it’s becoming reality in phases: with ASAP54, the ‘Shazam of fashion”, you can take a picture of your friend’s bag and the app will find you the exact match, or items similar to what you have photographed. The technology is advanced enough that results are incredibly accurate. Olapic may be even closer to figuring out visual commerce; it’s been matching Instagram pictures of retailers’ feeds for a few years now and may have developed a robust visual commerce technology — Olapic enabling commerce on Instagram, anyone?

ASAP54 is the ‘Shazam for fashion”

Finally, we can’t talk about bringing offline to online commerce through mobile without exploring iBeacon. While the technology is being talked about, it has a long way to go before it will be adopted by retailers and shoppers. Retailers need to install, configure iBeacons, and have the apps to send iBeacon updates (most don’t); shoppers need to voluntarily opt-in to receive those updates, which is like asking to opt-in to email newsletters but in a much more invasive way. This whole process is full of friction and hard to scale; unless iBeacon updates are supported by apps with mass adoption — such as a Whatsapp or Apple-developed native app — the technology will be though to get to market.

2- Personalized, ubiquitous content

Because of the small screen real estate afforded to mobile devices, personalization of content on those screens is more critical than ever. Ecommerce as a whole has moved towards personalization, with ecommerce companies developing in-house solutions or leveraging personalization software solutions like Custora. Retailers will push it further by adding geolocation and contextual data to their personalization algorithms, so much that all commerce experiences and the products that you will be exposed to will be 100% personalized to your preferences, location, or browsing behavior.

3- Next generation push notifications

Push notifications are the most underrated channel of ecommerce. Retailers rely heavily on emails today but just look east to Wechat in China to realize that this medium is short lived. The future of communication for retailers lies in mobile messaging and push notifications. And the latter will be, just as they are today, the most intimate and most efficient way for retailers to reach their users.

Retailers are starting to realize its potential, which has resulted in an overload of push notifications. We will probably see user fatigue, to which retailers will answer by sending more relevant, personalized push notifications. Kahuna is working on automating that through a powerful push ; soon users will receive only relevant messages at relevant times and on the right device.

4- Universal, one-click-to-buy checkout

App conversion rates may be higher than those of desktop, but completing the checkout process on mobile — especially smartphones — is still full of friction. It’s not surprising that the mobile-first companies Lyst and The Fancy, both marketplaces connecting to the checkout of many retailers, were the first ones solving for it: both introduced universal checkouts last year. In a mobile-first, multi-device world, one universal method of payment will have to emerge that will work across apps and devices. Paypal is at it and may succeed in becoming that solution if, beyond the strength of its technology, it manages to build a Consumer-centric experience and product.

5- Mobile messaging commerce

While still at a nascent stage, mcommerce in China will triple by 2018 to become the world’s second largest behind the US. Given this, it’s worth looking at what’s happening there, with WeChat emerging as the fastest growing mcommerce channel. Think of messaging platforms as the new Internet — one centered around person to person communication rather than content — but structured in the very same way: brand/institutional pages (brand messaging accounts) and blogs (personal messaging accounts). In this new Internet, users and brands are talking about products and sharing them, and most importantly, buying them in one click within the platform.

Naturally, WeChat introduced payment and ecommerce to its platform last year, and those two features are expected to change the game of ecommerce in China. Take the example of the device manufacturer Xiami, which recently partnered with WeChat and sold 150,000 smartphones on the platform in under 10 minutes.

WeChat, “The New Way to Shop”?

If messaging apps are becoming the #1 communication platform, then logic tells us that, just like we’re seeing in China, they will become the place where users discover new products and buy them.

If you want to chat about this post, hit me up at maud dot pasturaud @ gmail dot com or on Twitter at @maudpas.