Social commerce has been unveiled as the new frontier for business, as PayPal’s new mCommerce Index "uncovers a gulf between consumer mobile payments behaviour and business readiness to support mobile transactions".
PayPal has released its inaugural mCommerce Index, a new biannual barometer on the state of mobile commerce in Australia. The index "provides insight into the evolving mobile commerce landscape, where the opportunities for business lie and the drivers of consumer spending behaviour".
It does this by surveying "the payment patterns and expectations of Australian smartphone users and finds a significant gap between consumer mobile payments behaviour and the readiness of businesses to support mobile transactions. Furthermore, the Index identifies the next frontier of online commerce for Australian businesses – social commerce".
You can download the detailed 19-page PayPal mCommerce Index file as a PDF from the Index’s home page here.
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So, what is the ‘Mobile Payments Opportunity Gap’ that PayPal has identified?
The company says its Index "finds a high level of mobile commerce adoption among Australian consumers, with 71% of respondents reporting that they use their mobile devices to make payments and 22% indicating they spend more than $500 per month via mobile".
Despite this, PayPal says its Index finds that "only 49% of online businesses are optimised to accept mobile payments, presenting an opportunity gap for Australian businesses looking to capitalise on mobile-savvy customers".
Furthermore, we are told, "almost one-third (31%) of businesses state they have no plans to optimise for mobile sales, which is reflected in the proportion of online businesses (26%) which have zero sales via mobile devices".
Libby Roy, managing director, PayPal Australia, highlighted the clear opportunity gap for Australian businesses: “Australia has one of the highest levels of mobile penetration globally with 80% of the Australian population owning a smartphone, so I was surprised to discover the low level of business readiness to accept sales effectively via mobile devices.
“The mobile payments landscape is fast-evolving and the Index reveals how habituated Australian consumers have become to mobile shopping with more than a third of us making mobile payments at least once a week – a figure that jumps to 47% for the under 35s. So although online businesses may think they don’t need to optimise for mobile now, they will have to if they want to stay competitive in the near future."
What are mCommerce drivers and barriers?
PayPal says its data "highlights that millennial customers are more likely to shop on a mobile device than any other demographic".
The Index found that "85% of smartphone users aged 18-34 buy via mobile — significantly above the national average — compared to 35-49 year-olds at 73% and the over-50s at 52%".
In addition, "younger Australians also shopped via a mobile device more frequently than any other age group, with 47% indicating they do so at least once a week".
Next up is the stat that "Australians shop on their mobile devices because they love the convenience (48%), it saves time (48%) and it’s easy (39%)".
It’s not all mCommerce peaches and cream, however.
When looking at the barriers to mCommerce, PayPal says "it is the younger consumers who are most annoyed when websites are not enabled for mobile (59%) compared to 45% for 35-49 and 28% for over-50s. Security was also a significant concern for respondents, with 46% citing it as a barrier to mCommerce adoption".
David McLeod, Roy Morgan Research analyst, commented on the potential business impact of consumers’ security concerns: “The 46% of respondents concerned with security were less likely to be weekly mobile purchasers and also had a 24% lower average spend on mobile devices compared to the total smartphone users. This implies a clear need for consumer education and support around the security and integrity of online payments."
What about this ‘social commerce’ term? What is it?
Well, we are told that social commerce, which is "shopping via a social platform", has emerged as the new frontier for online commerce.
Already, we are told, "11% of Australian consumers report that they have made a purchase via a social platform in the past six months and 7% of Australian businesses indicate they accept transactions via social media".
Roy commented on business adoption of social commerce:: “It’s obvious that the early adopters in the business community are getting on board with social commerce as the business uptake at 7% is not far behind consumer adoption at 11% for this new way to buy and sell.
“However there’s a huge gap between the early adopters and the majority in the business community – with 34% of Australian businesses having no social media presence at all and 89% of businesses stating they have no intention of accepting payments via social platforms within the next six months.”
So, social media savvy businesses will be pleased to hear that "social media is also shown to be a strong channel for driving purchases with 18% of respondents buying something after seeing it on social media, a figure that jumps to 24% among the 18-34 age group. Despite this, 28% of businesses don’t believe their customers want to buy via social media platforms.’
And security?
It’s always a hot topic, so it’s no surprise to learn that security was a "significant barrier for consumers in relation to purchasing through social media platforms with roughly half stating that security and safety is a concern and 59% stating they don’t want their financial information linked to their social footprint".
Among businesses, "security concerns were lower (19%), however lack of understanding poses a challenge to adoption with 25% of Australian businesses stating they don’t understand how purchasing via social media works".
McLeod said: “If we look at the history of commerce in Australia we know that the incidence of internet purchases, over a three-month period, back in 1999 was approximately 5%. In 15 years it’s certainly possible that purchasing via social media by smartphone users will be as ubiquitous as online payments are now.”
As noted in the intro, PayPal’s mCommerce Index will be an ongoing, twice-yearly barometer on the state of mobile commerce in Australia. You can download the full report here.
