Mobile commerce (m-commerce) is outpacing the growth of e-commerce, and will accelerate even faster as mobile phones adapt to fit consumers’ shopping habits, according to a new survey by PayPal and IPSOS.

  • M-commerce will see a compound annual growth rate of 42% between 2013 and 2016, compared to e-commerce at 13% growth. Total mobile spending across the 22 global markets included in this survey is projected to reach ~$291 billion in 2016.
  • Consumers will steadily migrate to mobile devices when shopping. Over the next year, a combined 21% of online spending volume will occur on mobile phones and tablets, compared to 14% last year (see chart, below).
  • China is the standout example of m-commerce’s potential. 68% of online shoppers in China have shopped with their smartphone in the past 12 months, compared to 31% in the US and a global average of 33%. Smartphone shoppers in China also skew young more than almost any other country studied. 86% of smartphone shoppers are 18-34 years old, compared to 53% in the US.

The rise of phablets could further ignite m-commerce. Phablets have bigger screens than other smartphones which makes it easier to shop and leads to more purchases. The phablet trend is picking up steam with the introduction of the iPhone 6 and 6 Plus phones that have already become extremely popular across the globe. Thirty-four percent of smartphone users in the survey cited a small screen size as a main reason they haven’t shopped via mobile. If phablets become the norm and more consumers buy them, the barriers to adopting m-commerce will lower and the category could outpace e-commerce even more quickly. It’s also important to note that more consumers in the survey are shopping with phones rather than tablets.

The survey also indicates that a wide range of mobile payment methods are poised to gain more ground this year. The potential growth in NFC payments is particularly notable, with 16% of customers saying they haven’t made these payments yet but plan to do so. Similarly, 15% of customers plan to use a mobile order-ahead feature. This bodes well for restaurants like Starbucks and Burger King that are starting to develop mobile order-ahead programs.

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