The digital commerce market is projected to grow to more than $8 trillion by 2020.
According to a report from Juniper Research, 2015’s digital commerce market hit $4.9 trillion. The study said that last year’s total in transaction values from three major commerce segments — digital banking, remote digital goods and remote physical goods — was more than Juniper’s estimate of the GDP of Japan in 2014, or $4.6 trillion.
Lauren Foye, the report’s author, said, “The digital commerce market as a whole is seeing an ever-increasing propensity toward an omnichannel approach, and this extends to e-commerce, where the mobile and tablet platform is seeing increased use towards the purchasing of physical goods, either for delivery or collection.”
Online retail events are credited with boosting the online commerce platforms. Cyber Monday was cited as one example, as was China’s “Singles’ Day” events, which saw Alibaba sell $14.3 billion in goods. The report also said that transaction volumes could be further boosted as more companies transition to digital formats and as streamed subscription services gain popularity.
Looking at individual transactions, the report said that the use of mobile devices to make monetary transfers is also expected to gain traction by 2020. It found that in China both WeChat and Alipay saw spikes in Person-to-Person traffic during February 2015, and WeChat registered more than 3.3 billion P2P “red envelope” transactions in the six days over the Chinese New Year period. The P2P “red envelope” is the digital version of the monetary token in small red envelopes that’s traditionally given for good luck at the start of the New Year.
While banking transactions are self-explanatory, the payments components in digital encompasses auto payments for loans and savings, as well as remote payments for digital and physical goods and remittances. The retail component of digital commerce includes coupons, vouchers and loyalty programs, as well as various points of sale, including transactions that use near field communication chips on a smartphone.
Financial apps on the App store and Google Play were among the most downloaded financial apps in the U.S. and the U.K. As for digital and physical goods, the white paper concluded that while both tablets and smartphones are “heavily used for browsing, consumers are far more likely to make their purchases on tablets.” It cited data from IBM regarding Cyber Monday sales to support its thesis. The white paper said that in 2014, 28.5 percent of the online traffic was from a smartphone, while 12.5 percent was from a tablet. About 12.9 percent of purchases were made from a tablet, while only 9.1 percent were from a smartphone. Online access using the desktop or laptop was still the primary option, with 59 percent accounting for online traffic and 78 percent for online purchases.
The study said the tablet user interface is “more conducive to entering payment details, [and] to where purchases occur,” noting that most of the time access is in the home, with the spend migrating from desktop to tablet. The report concluded that “if the transition from mobile browsing to tablet purchasing is seamless, retailers will gain a great uplift in sales.” It also said the IBM survey indicated that traffic and purchase levels were significantly higher on Apple devices than those using the Android system, “more than two times and four times, respectively.”
The U.K.-based research firm noted that the migration of consumers to mobile devices has led some retailers to redesign their Web sites from a “mobile-first” perspective. It cited House of Fraser as an example, noting that by mid-2013, more than 50 percent of its traffic was from handsets and tablets. The company introduced its “mobile-first” site in February 2014 and saw a “gradual uplift in purchases made via mobile, with the result that this total, too, reached 50 percent by October 2014.”
As for mobile remote transactions, the white paper said that data from existing mobile payment options indicate that “retailers of physical goods see uplift” in the average transaction size when a mobile payment method replaces cash. “This is a direct result of increased consumer confidence in, and willingness to engage with, the mobile device as both a content-browsing and payment mechanism,” the report concluded.
It also found other examples where consumers are becoming more comfortable with the online world. In the case of ticket buyers for events in the U.K., Juniper’s research indicated that consumers prefer to have the tickets purchased, delivered and validated using a mobile device or app. While 27.6 percent still received a paper ticket, 19.5 percent preferred a mobile/in-app one. While a high proportion of consumers, at 41.7 percent, had no preference, only 10.3 percent chose a print-at-home eTicket. The study cited growth in the Chinese, Indian and Brazilian markets where the bigger players among the ticketing platform providers, such as Baidu and Tencent, have their own mobile and online ticketing Web sites. The growth of Chinese consumers purchasing movie tickets online jumped to over 30 percent in 2014 from under 10 percent in 2013.