Mobile Online Shopping to Double in 2010

A new study offers fresh evidence that some smartphone users are getting into the habit of purchasing items via their smartphone, and this trend is only expected to grow in the coming year.

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Mobile online shopping more than tripled in the US from 2008 to 2009 and is poised for another sharp hike this year, according to the "Mobile Commerce" report released from ABI Research.

Mobile online shopping increased from about $369 million in 2008 to about $1.2 billion in 2009; and is estimated to reach as much as $2.4 billion in 2010, the report said.

“What we saw happen was driven by consumers,” said Mark Beccue, a mobile consumer senior analyst for ABI Research, “Consumers used mobile shopping to get smarter about how they shop and they used mobile to get what they really wanted.”

But the trend goes beyond comparison shopping. Consumers are using their smartphones for impulse shopping and purchasing virtual goods for online gaming and social networking, Beccue said.

Still, comparison shopping may have helped get consumers into the habit. As shoppers increasingly began to use their mobile devices to compare prices while shopping at a brick-and-mortar retailer last year, they also began to purchase better priced items via their mobile device, skipping the alternate physical retailer all together, Beccue said.

"This mobile online comparison shopping drove a lot of the mobile usage and what it did was make merchants stand up and pay attention because they are going to have to be in the mobile medium," he said.

But consumers are using their mobile device for more than just savvy shopping; they are also using it for instant gratification and to simplify transactions. This includes purchasing small items like pizza and flowers.

In fact, pizza retailers may stand to benefit more than other retailers in the impulse buy category because paying via mobile Internet replaces the hassle of handling cash when the pizza is delivered, Beccue said.

The sale of virtual goods, which are products that only exist in video games, computer games or social networking games, also continues to gain popularity because of its easy transaction method.

Consumers pay for these items with their mobile phone by simply entering their phone number instead of using their credit card, and the charge is added to the consumer’s mobile phone bill or deducted from a pre-paid plan, Beccue said.

Virtual good sales exploded when Facebook opened up its platform for third parties to build apps for the social networking site in 2007, but consumers are now taking advatage of mobile technology to purchase virtual goods.

Mobile payments for virtual goods was just under a $1 million in 2008, but in 2009 it jumped to $24.8 million as the option to purchase virtual items from a mobile phone became more prevalent, Beccue said.

Innovation in mobile commerce, like the sale of virtual goods and apps that allow smartphone users to comparison shop will further push retailers to increase their mobile presence in 2010, Beccue said.

These trends aren't limited to the US. There also will be steady international growth in mobile commerce. Worldwide consumer spending via mobile online shopping will increase to about $119 billion worldwide in 2015, a figure that is roughly 8 percent of the entire e-commerce market, according to the report.

Still there are hurdles, such as the broadband shortage, but the growth will continue, Beccue said.

“The carriers in the US understand very well the importance of mobile Internet to them. They are working very hard to have the infrastructure to enable it,” he said.

Retailers also have to work to encourage the trend.

“I think it will be fun and interesting to watch and see how retailers work through this this year,” said Beccue. “Clearly, there has been an awakening of possibilities.”

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