April 28, 2014, 1:02 PM

E-commerce and m-commerce: The next five years

As shopping on smartphones and tablets becomes routine for consumers and the importance of home desktop computers fades, retailers will need to focus more on a consumer's location and context and less on the type of device a consumer is using, experts predict. Mobility, both outside and inside the home, will remain key, experts say. But what about 'the Internet of Things'?

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During the next five years, mobile commerce will become even more influential than it is today. Desktop PC use will continue to drop while PC makers try making PCs and laptops function more like touchscreen mobile devices, consumers will start to buy wearable computers (including smartwatches and smartglasses), and consumers also will begin buying new web-connected devices for the home and car that combined are known as the "Internet of Things."

As a result, retailers will need to shift their focus from the type of device a consumer uses (mobile or stationary) to a consumer's location and context, Internet retailing experts predict. And because context will be key at a time when mobile devices come to dominate the way consumers interact with the web, knowing the best ways to serve customers on smartphones and tablets will remain a strategic priority for retailers, experts say. 55% of time spent with online retail today occurs on smartphones and tablets—imagine what that figure will be in five years.

In five years, e-commerce on desktops and laptops will still exist, and m-commerce on smartphones and tablets will still exist, but to consumers, online shopping will mean researching and buying wherever they may be on whatever device is best suited to the moment or whatever device is simply handy, says Jeff Schueler, president of Usability Sciences Corp., an e-commerce and m-commerce research and consulting firm.

"In five years e-commerce and m-commerce will become 'contextual commerce,'" Schueler says. "The consumer will make a purchase in whatever situation he is in when he realizes the need for that purchase—on a desktop computer at work, on an iPad on the couch at home, on an iPhone as he rides in a car. That said, the odds of the consumer completing that purchase in a given context is dependent on whether the retailer can, in that context, assure the customer he's getting the best price, assure the customer he can get it delivered when he wants it, assure the customer he will receive a quality product, and assure the customer the product fits his needs."

In online shopping five years from today, location will be a critical component of context, a component that will drive design, features and functions, says Nikki Baird, a managing partner at Retail Systems Research LLC.

"Location services will become so sophisticated—and consumers, in their typical approach to their privacy, ignorant enough—that the shopping experience will hinge on the combination of the type of device and the location of the consumer," Baird says. "That will tell the retailer how to engage with a shopper, down to whether the shopper is accessing the retailer on a smartphone from the retailer¹s own Wi-Fi in-store or in the parking lot, or from the same IP address in the home, and so on."

In 2018, mobile commerce sales on smartphones and tablets will account for 27% of total web sales in the U.S., according to research firm eMarketer Inc., and 47% of total web sales worldwide, according to investment bank The Goldman Sachs Group Inc. The percentage globally is higher because the percentage of consumers who primarily use smartphones to access the web is much higher in developing countries with huge populations compared with the U.S.

Baird says in five years the distinction of mobile commerce being shopping and buying on smartphones and tablets will remain, but retailers will by then have much more experience selling to consumers on mobile devices and will better know how to customize shopping by device, context and location.

"Retailers already separate tablets from smartphones within the category of mobile devices, that's how they look at traffic," Baird says. "But five years from now, retailers will have much more distinct strategies for tablet shoppers versus smartphone shoppers. The behaviors are different, and the experiences are very different."

It should be noted that shopping on mobile devices occurs not just on the go but in the home. Some retailers like to call this "mobile in the home," meaning a customer can shop from literally any location within their homes thanks to their untethered mobile devices and home Wi-Fi networks. 80% of tablet shoppers and 67% of smartphone shoppers use their devices to shop in the home, according to new research from Nielsen. So mobile is still mobile, but context on the very same device can change wildly.

Mobile devices—defined as smartphones and tablets, by far the most common definition used by retailers—will continue to be mobile anywhere and everywhere, experts say. Consumers who own smartphones are virtually never without their smartphones, no matter the time or location. And 68% of consumers who own both a desktop and a tablet take their tablets with them when they leave home at least 25% of the time; 14% take their tablets 75-99% of the time, according to research from marketing firm Adroit Digital.

Ultimately, when it comes to online shopping, consumers in the home will dump their desktop PCs and laptops in favor of tablets, predicts Julie A. Ask, a vice president and principal analyst at Forrester Research Inc.

"In five years, tablets will offer a more immersive experience," Ask says. "These tablets will have cameras. There will be gesture-based and voice control. They’ll have two cameras on one side of the device for 3-D imaging, measurements, etc., things that will allow consumers to have more experience with products before they buy them."

But while tablets come to dominate mobile commerce sales as well as replace desktops and laptops, the importance of smartphones does not diminish, Ask says.

"Smartphones play a huge role in the purchase process: The percentage of purchases smartphones influence dwarfs the total amount of sales transacted on smartphones," she says. "Mobility and connected devices, especially smartphones, are changing everything about the way companies sell products and offer customer service."

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