The Mobile Commerce Boom in 7 Charts
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The mobile commerce has emerged as the most important trend shaping the retail landscape and is being driven by two trends: (1) The rapid growth in smartphone and tablet ownership, and (2) the rapid acceptance of using these platforms as a shopping channel.
Smartphone sales have grown exponentially since their introduction 10 years ago. Over the past three years the total number of U.S. smartphone subscribers has doubled to over 135 million. In addition, more than 60 million people own a tablet device despite the segment's introduction only a few years ago.
The advent of these new platforms led to digital media consumption to nearly double over the past three years.
Rapid growth in mobile commerce
Mobile is becoming an increasingly important channel for retailers. Today, smartphones and tablets account for almost half of digital time spent on retail websites and applications.
This development has resulted in a explosion in mobile commerce. Since 2011, mobile sales have increased almost three fold to $38.4 billion annually. According to estimates provided by eMarketer, mobile sales could double by 2016 to $86.9 billion.
Mobile commerce is the fastest growing channel in retail. During the first quarter of 2013, total retail sales increased only 1% year-over-year. In contrast, mobile commerce posted 31% sales growth during the same period.
Because mobile is growing so fast, it's becoming an increasingly important part of the broader eCommerce category. In 2011, mobile accounted for less than 7% of total eCommerce sales in the United States. By 2016, mobile commerce will account for nearly a quarter of online business.
Tablets have become the most important platform in mobile commerce with U.S. consumers spending $13.9 billion on these devices in 2012. Sales on smartphones are lower reaching $9.9 billion last year. Other devices, like eReaders, hold only a small share in the mobile marketplace.
Opportunities for investors
So how can investors play the mobile boom?
eCommerce giant Amazon.com (NASDAQ: AMZN) is the top pick. Amazon was one of the first to spot the potential in mobile commerce and is now leading the industry in innovation and sales. According to estimates from Citigroup, the company generates $3 billion-$5 billion from mobile devices accounting for roughly 8% of Amazon's sales. These figures will grow substantially as the category matures.
eBay (NASDAQ: EBAY) has become nearly a pure play on the mobile revolution. The company has the strongest suite of mobile commerce products between its PayPal and marketplace businesses. Last year, one in three eBay transactions involved a mobile device and the company processed $10 billion mobile payments. That processing figure could double in 2013. In addition, eBay is also using PayPal to help other retailers develop their mobile shopping platforms.
Of course eBay is facing challenges. Google (NASDAQ: GOOG) is boosting its eCommerce presence through the creation of Google Wallet. This service is a fast, secure way to buy from stores across the web using a single username and password. Just like eBay's digital wallet, users will be able to use one account for any purchases both online and in-store.
Will Google be successful? The company is rolling out this service on its Gmail platform giving them instant access to nearly 500 million users. Overnight Google Wallet has become five times larger than PayPal.
The retail space is in the midst of the biggest paradigm shift since mail order took off at the turn of last century. Only those most forward-looking and capable companies will survive, and they'll handsomely reward those investors who understand the landscape. You can read about the 3 Companies Ready to Rule Retail in The Motley Fool's special report. Uncovering these top picks is free today; just click here to read more.
Robert Baillieul has no position in any stocks mentioned. The Motley Fool recommends Amazon.com, eBay, and Google. The Motley Fool owns shares of Amazon.com, eBay, and Google. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. Is this post wrong? Click here. Think you can do better? Join us and write your own!