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The definition for mobile commerce (m-commerce) has expanded as technology and mobile methods have evolved, from the initial Premium Rate SMS payments for 8-bit ringtone purchases to Near Field Communications-enable smart phones where a simple swipe at the POS is all that is required to purchase your new skinny jeans.
A well accepted definition describes m-commerce as the payment for goods/services with a mobile device such as phone, PDA, or other such device. This is the general definition for both digital goods (such as in-game upgrades) and physical goods (such as shopping for shoes on Amazon’s mobile app) are bought.
The opportunity in South Africa
While there is a large amount of research and actual data on m-commerce available for more mature markets such as the US, there is surprisingly little information available on the emerging market countries.
In South Africa, we found some interesting statistics in the “World Wide Worx Mobile Consumer in SA 2012” survey. Per the survey, phone-based purchases of physical products that are delivered to the buyer are made by only four percent of urban cell phone users.
Currently the three most common purchases on a mobile handset for a South African consumer are:
- Mobile money transfer to other users
- Mobile banking (notifications and account access)
It is clear that most consumers use their cell phones for purely utilitarian purchases. However as mobile trends such as falling smartphone and data costs gather wider adoption, we will see m-commerce gaining more traction in South Africa.
General market indicators also point to an impending period of explosive growth in m-commerce in South Africa:
That low number of “real world” purchases on mobile phones in South Africa is possibly driven by the following factors:
- Low smartphone penetration: In 2011, there were an estimated 8.5M smartphone users in South Africa. Low penetration of smartphones can help explain why m-commerce volumes are still so low. We expect a large number of user to adopt Android phones over the next 2 years providing a larger user base of potential shoppers
- Availability of payment options: Developers don’t have access to many sophisticated payment providers who are able to support payment acceptance on the developers platform of choice
- Consumer comfort with shopping on the phone: South African consumers have not yet
reached the same level of comfort for shopping on their mobile phones as their counterparts in countries like the US and the UK. However given the large cell phone user base this situation is also about to change rapidly.
- Integration with other e-commerce systems
- Lack of budget
- Lack of understanding on how to deliver a suitable mobile experience
Despite the growth in internet-capable (for mobile browsing and does not include WAP) phones in South Africa, it still represents a small proportion of total phones in a market still dominated by “feature phones”.
There are a few innovative companies in South Africa who have taken the first steps towards capitalizing on this huge dormant opportunity and we expect a lot more to follow their steps soon.
- Mango Airlines
- Mr Price