Mobile commerce is finally poised to achieve the promise so many have imagined for so long.
Mary Meeker’s most recent presentation on mobile drew an analogy between the US nascent mobile e-commerce market (m-commerce) and Japan’s m-commerce market ten years ago. Over the course of 10 years, mobile revenues increased by more than 700%, with dramatic growth in paid goods and services.
Curious about the composition of these $15B in annual revenue, I found Infinia’s presentation on m-Commerce published last year. In Japan, m-commerce spending is broadly distributed. From my reading, this survey data below is a response to the question, “What do you purchase using your mobile phone?”
Respondents submitted multiple answers and these figures indicate penetration of users: 39.5% purchased fashion(able) things using their phones.
Assuming these figures are directionally correct, they differ vastly from US current e-commerce metrics. Taking another page from Meeker’s “book”…
…there are some large differences in e-commerce behavior in the US and m-commerce in Japan. These figures are the e-commerce penetration in various categories. For example, apparel has 40% of Japanese, but only 8% of US e-commerce dollars indicating significant differences. There are some categories with similar patterns as well – music and computers.
NB: these figures aren’t apples to apples since we’re comparing a survey to census data, self-reported purchasing habits to e-commerce penetration as a percentage of total sales and so on.Some of these directional differences are functions of market differences.
Comparing m-commerce per capita spending
In Japan, there are roughly 100M mobile subs generating $15B in annual sales, according to Infinia. In the US there are 300M mobile subs generating $2.4B in annual mobile commerce sales. Additionally, smart phone penetration in the US is 17%. Crunch the numbers and you’ll see the differences in per capita m-commerce spending: $150 in JPN and $8 in US.
Key differences in Japan and US mobile markets
Of course, no back of the envelope analysis would be complete without contrasting the differences between the two markets:
- Revenue share for content providers is 90% in Japan (70% in the US)
- Homogeneous handset ecosystem (US is wildly fragmented)
- Same day delivery to convenience stores and COD there is ubiquitous (no notion of this in the US)
How big is big?
Assuming the US m-commerce market behaves identically to the Japanese market, an upper bound might be about $45B. However, it’s too early to tell how reasonable such an estimate is.