Almost half of all e-commerce is now transacted via mobile, which is perhaps unsurprising: everyone under 35 has had a mobile phone for most of their life and we spend hours a day looking at them. As a result, retailers are investing huge sums into tighter CX via apps and loyalty plays in a bid to grow share. A side-effect is that the resulting shopper data is the new targeting gold in hunting out buyers on the post-cookie open web – hence the rise of retail media.
Meanwhile, big tech and social platforms see mobile commerce – from payments and banking to games and subscriptions as well as traditional retail – as a means to build deeper moats around their walled gardens.
Which means mobile commerce is only heading in one direction.
Tipping Point Approaches
While the e-commerce boom inevitably slowed following the pandemic anomaly, the investment in digital infrastructure it spurred should pay dividends for the next leg of growth.
The desktop-mobile tipping point is coming. Per Insider Intelligence forecasts, mobile commerce will make up 43.4 percent of total US retail e-commerce sales in 2023, up from 41.8 percent in 2022, when the firm estimates US e-commerce sales totaled $416bn.
But there is still huge upside potential: Across total retail – online and offline – mobile commerce currently takes a single digit share of US sales, circa 6.5 percent according to eMarketer.
Globally, commerce via social media is powering growth, with net sales expected to hit $1.3 trillion this year. Within three years, that is expected to more than double to $2.9 trillion. That’s equivalent to the GDP of France, the world’s seventh largest economy – and most of it is coming via mobile devices.
Eyes on the Prize
The social media heavyweights are all vying to take a bigger slice of that prize. But traditional publishers are also making a play for transactions and affiliate dollars as ad markets soften.
Publishing and media giant, News Corp, is making a concerted push to tap commerce revenues in both the US, via flagship business publication the Wall Street Journal, and other markets, including Rupert Murdoch’s own backyard as the firm hedges against marketing budget pressure and a shift from brand to performance investment. Time Magazine is taking a similar approach.
But while the Journal (42m monthly digital readers) and Time (100m including social followers) claim significant reach, they lack true scale, leaving large advertisers to deal with audience fragmentation.
Which is why the big social platforms plus Amazon – outside of Asia at least – are taking the lion’s share of mobile commerce dollars.
Yet in commerce terms, none of them come close to WeChat, which drove the vast bulk of TenCent’s Q1 Yuan31bn ($4.34bn) revenues from social networking. That figure is dwarfed by the firm’s broader fintech and business service revenues – including WeChat Pay – which accounted for 32 percent of TenCent’s Yuan150bn ($21bn) first quarter revenues.
Race for Super Apps
Against that backdrop, the race for super apps in the West may be back on. Apple’s push into banking signals the shape of things to come, locking-in users to its ecosystem. Meanwhile, Apple’s ads business is powering ahead after the firm removed a crucial piece of the broader ad tracking machine – ID for Advertisers (IDFA) – through its 2021 iOS update.
Meta is back to double-digit revenue growth as evidenced in its latest quarterly earnings, with Facebook Marketplace and Instagram powering its social commerce transactions. The firm is still driving the largest volume of social commerce transactions in the US, which eMarketer predicts will top $107m within two years.
Twitter has lagged in commerce. But Elon Musk is now talking big. Will his new X service deliver a single marketplace super app that wraps in goods, services, payments, subscriptions and everything else Musk can muster?
The jury’s out.
In the medium term, the smart money is on TikTok, which is already putting in the hard yards on mobile commerce infrastructure after meteoric user growth – especially younger generations for whom mobile commerce is native. (Per eMarketer, half of millennials and Gen Z are buying goods and services via social channels, with around a third of Gen Z consumers stating they made their most recent social purchase after seeing an ad.)
The China-owned app is on a hiring spree to deliver its commerce intent while drumming up partnerships with Chinese manufacturers keen to sell globally via TikTok Shop.
TikTok last year shied away from official announcements around the US leg of its global push into commerce fulfillment, amid intense political scrutiny. But it’s now moving at pace, bidding to take on Amazon, and thinking big. According to the WSJ, TikTok is aiming for a $20bn commerce transaction value on the platform within 12 months. Last year transactions on the platform were sub-$5bn.
That’s still a rounding error compared to Amazon’s $514bn net revenues in 2022. But TikTok has advantages that could power growth globally: It’s mobile first, has a billion monthly active users, and is all about discovery versus Amazon, which right now skews to search.
Discovery or Bust?
Connie Chan, known as ‘The China Whisperer’ at tech VC Andreessen Horowitz, thinks discovery could be a critical differentiator as the battle for mobile commerce dominance heats up.
In the US, product discovery is “an unsolved problem,” she told the FT last year. “Anytime I want to buy something, I go to Amazon, to that search bar. But I am not browsing Amazon. I’m not looking at their product recommendations.”
Whereas TikTok “uses this idea of discovery commerce” where people are scrolling through videos and every now and then “see one on a product they want to buy. And … it makes it so easy where it’s one click and you can go into that page to complete the transaction,” added Chan.
“There is more opportunity across the board for every platform to push product discovery more.”
That same opportunity applies to brands and advertisers: create compelling content that’s more likely to be discovered and invest in the media channels that deliver the best conversion bang for buck. Crucially, ensure the end-to-end shopping experience is seamless – from first click to last mile – or risk the repeat business shopping elsewhere.
