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PayPal forecasts m-shopping to grow to £2.5bn by 2016

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A five year forecasting study commissioned by PayPal – which pretty much pioneered mobile payments aback in the day – anticipates an explosion in UK mobile retail, predicting that the market will grow an average of 42% each year and be worth £2.5 billion by 2016.

According to the study of 550 mobile shoppers in the UK conducted for the payments giant by Forrester, UK mobile retail sales currently represent 1.5% of overall UK online retail sales, or £438 million. By 2016, UK mobile retail sales will have hit £2.5 billion, accounting for some 5.9% of online retail sales as just over 14 million adults start to regularly shop via their mobiles. This would equate to 26% of wireless subscribers, and 42% of mobile internet users, engaging in m-commerce in five years time, measured against scores of 4% and 13% respectively in 2010.

The figures also show that each mobile shopper will have spent an average £100 in 2011 hough their phone, but that this will have jumped to around £180 per year by 2016.

Currently, some 22% of this audience make acquisition from a handset on a monthly basis, with 21% doing so quarterly, and 15% once every six months, says the study.

While 66% of the sample anticipated making the same number of purchases in the future, an additional 15% expected to cut back and 10% were likely to stop doing so altogether, matching the amount foreseeing an increase.

Meanwhile, 38% of contributors had paid for an app in the last three months, standing at 28% for music downloads, 17% for ringbacks, 14% for video games and 11% for apparel. At the other end of the spectrum, large domestic appliances logged just 1%, climbing to 3% for household goods, 4% for consumer electronics and 6% for groceries.

Currently, 45% of mobile shoppers log on to the internet from their phone “several times a day”, rising to 72% of 16-24 year olds, and 25% use an iPhone.

A 36% proportion of the survey panel had accessed a retailer or network provider’s website through the mobile net, 29% had used an ecommerce app, and 8% had bought something via text.

Taking all this into account, the figures point to a compound average growth rate of 42.5% per year, fuelled by increasing numbers of mobile shoppers, a rise in smart phone use and increasing numbers of retailers developing easy to use mobile shopping experiences.

According to PayPal, mobile retail will show strong growth across all categories, but some retailer segments will race ahead of others, with ticketing coming out top at 46.6% CAGR and vouchers, coupons and deals seeing growth of 44.4%. Hot on their heals is fashion, which will see growth of 43.9% over the period. Media sales will see growth of 40.4% on mobile between now and 2016, while mobile sales of computing and appliances will grow by 39.6%. Health and groceries will see a 42.1% growth rate.

“The convenience of a connected device that can be used almost anywhere will lure increasing numbers of UK consumers into mobile buying,” says Cameron McLean, General Manager, Merchant Services PayPal UK. “Our report shows that this consumer pull will be matched by a retailer push, with mobile-savvy retailers offering slick, sophisticated mobile experiences that rapidly become a key part of an overall multi-channel strategy.”

PayPal currently expects to handle more than $3.5 billion in mobile payments globally in 2011 and more than a million PayPal UK customers have sent a payment on their mobile.

“The act of paying for something should be as seamless as the decision to buy it, and that’s where we can help retailers grow their mobile business,” says McLean.

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