Mobile shopping could deliver a £4.5bn boost to Britain’s economy by 2016 and a further £13bn by 2021, according to new research by online marketplace eBay. The research reveals that m-commerce is on the verge of a potential four-fold increase over the next five years as consumers become more comfortable with shopping on their handsets.
Despite the future potential of m-commerce, the research by retail experts Verdict, warns that the market is currently being held back by unreliable mobile broadband. UK retailers are missing out on at least £1.3bn as a result of consumer frustrations with patchy coverage, unreliable connections and slow connection speeds driving shoppers away.
eBay, Britain’s market leader in m-commerce, is calling on regulators to take action to enable m-commerce to support the UK’s economic recovery. In a submission to communications regulator Ofcom, eBay is calling on policy-makers to do more to address consumer frustrations when rules for the fourth generation (4G) of mobile networks are agreed later this year.
The research shows that 16% of the UK is an “m-commerce not-spot”, where mobile spending is at least 20% below the national average. Sparsely populated areas, such as the Scottish highlands and islands, rural Wales and rural counties of England are the worst affected. But the evidence also shows that mobile shopping is underperforming in certain heavily populated areas like central London, with broadband reliability and coverage acting as a brake on the potential mobile retail market.
More than a third of consumers have failed to complete a purchase on their mobile due to issues with mobile broadband.
Although network coverage (79%), the reliability (85%) and speed (86%) of mobile internet connections rank highly as barriers to mobile shopping, consumers are also heavily put off by the cost of data (80%).
When asked their views on what should be the top priority for mobile networks and regulators, the cost of data came out top (over half), with improving coverage in second place (23%). One in ten think improving of the reliability of internet connections in urban areas (14%) should be the priority, followed by providing better internet coverage on transport routes (13%).
eBay has published this data as it calls on Ofcom to take action to support m-commerce and help the sector realise its potential, as the regulator decides on how best to sell licences for new superfast “4G” mobile broadband. Ofcom is currently consulting on the rules of the auction.
Angus McCarey, UK Retail Director for eBay UK said: “Mobile shopping represents a massive opportunity not just for retailers, but for the economy as a whole. But our research shows that consumers and retailers are missing out as the cost and reliability of mobile broadband prevents shoppers from spending.
“High quality and reliable mobile broadband coverage throughout the UK has to be our ambition, giving consumers choice over when and how they shop, encouraging spending, thereby benefitting online and high street retail, and giving a much needed boost to the fragile economic recovery.”
MP Rory Stewart, a leading campaigner for mobile broadband, confirmed the importance of m-commerce to small businesses: “Growth in Britain is going to come from small businesses and it will be driven by mobile broadband. In rural areas, our businesses depend upon online activities, e-commerce and increasingly eBay and m-commerce. This is another fantastic example of why we must take this opportunity to expand mobile broadband coverage as far as possible.”
Mobile continues to be the fastest growing part of eBay’s business, with global mobile sales set to double again in 2011 to over $4 billion. More than 16 million people use their iPhones to shop through eBay – whether that’s for bespoke or vintage items, or increasingly for branded and new items direct from over 100 high-street retailers at up to 70% off full price.
Retailers also have a role to play in harnessing this opportunity and reflecting the demand from consumers, with 88% less likely to shop via mobile because many shopping websites are not optimised for mobile.
Neil Saunders, Consulting Director, Verdict Research commented: “With the increasing proliferation of smartphones, more and more consumers want make the most of the convenience of being able to shop on the move. Retailers need to move fast to optimise their websites and capture this growing market.”