The Mobile Shopping App Market: How Developers Make Up the Lucrative Shift Towards M-Commerce
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If you're a mobile developer, mobile app shopping may alter the future of your role from a creator to a "value-adding reseller." According to Matt Asay's Read Write article, online shopping has branched out to mobile apps as well, with the number of people shopping on mobile devices growing exponentially.
Asay says that, previously, apps would be created by developers before being sold to Facebook.
What this meant, as ReadWrite's Dan Rowinski highlighted, is a non-existent middle class of mobile developers: "The revenue distribution is so heavily skewed towards the top that just 1.6% of developers make multiples of the other 98.4% combined.” Nearly half of all mobile developers make nothing at all.
Part of this derives from the revenue models available to mobile developers. While the desktop web has a healthy advertising-based market, mobile ads have been slow to catch on, and getting someone to notice and then pay for an app is even harder.
Just to be clear, mobile apps include those on tablets as well as smartphones. But how do these apps prove to be more lucrative for developers, and what's to explain for the sudden shift? Here are some of the key takeaways from Asay's article.
A History of Mobile Commerce During the Holidays
For years now, online shopping has been so popular that many retailers are including both an in-store and online set of deals on Black Friday. This is incredibly convenient for those of us who want to take advantage of all the good deals out there, get started on our gift list for our loved ones, and still relax at home (sans insane crowds).
As reflected in the Nielsen Global E-Commerce Report, "Online purchase intention rates have doubled in three years for 12 of 22 measured categories," topping $1.5 trillion on 2014. As noted in the ADI, during the holiday shopping season this growth can reach 28% over last year's numbers.
Mobile is a natural extension of the online shopping trend, as almost everyone has a smartphone now (90% of American adults have cell phones, and 58% of that number has a smartphone according to Pew).
How Mobile Began to Take Over
Mobile shopping is projected to be at 31% this year for the holiday season, which is a significant percentage of holiday shoppers out there when you consider just how many people will turn out for Black Friday deals and Cyber Monday. Plus, Asay says, shoppers are increasingly visiting stores only to look at a product before buying it online on their mobile device, a trend called "showrooming."
But what about tablet shopping? Turns out, tablets are losing their popularity.
At the heart of this shift away from computer-based buying to mobile-based buying is consumer convenience. A few years ago mobile apps or websites were virtually unusable. Today they're optimized to make it easy to buy.
In 2013, for instance, tablet use outpaced that of smartphones nearly two-to-one, according to last year's ADI post-mortem on holiday sales. This year, tablets and smartphones are much closer to parity. Next year, don't be surprised to see phones jump ahead.
[I]n 2014 the ADI predicts huge growth in the number of people both initiating and consummating a purchase on their mobile devices and, increasingly, their smartphones.
So What Does that Mean for Developers?
As mentioned before, the business model of developing an app before selling it to a social network has prevented mobile developers from maximizing their income off apps, due in part to the lack of traction mobile ads have been getting. But there are rumors of a growing niche in the market, as a Goldman Sachs report, summarized in the article by Jay Fiore, states that "M-commerce" will eventually account for "nearly half of all e-commerce sales in 2018," essentially tripling the current hold mobile has on the online retail market.
Asay is calling on developers to create apps on their own without making them for a larger company:
Given that prospective growth, coupled with the growth already seen in the ADI data, mobile developers really need to be thinking about apps that not only encourage consumers to play games or watch video, but also to buy things...there's really no reason to go build someone else's app when developers can focus on their own.
Asay goes on to muse:
In short, as consumers become comfortable buying with their mobile devices we're seeing a "shift in revenue models from pay-to-buy [the app] to pay-as-you-use [the app]," according to VisionMobile's Developer Economics Q1 2014 report.
See the full article here.
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