Mobile Commerce in Asia Continues to Zig as the World Zags

The Asia-Pacific region is set to become the world's largest e-commerce market, with mobile playing a key role.

When people think of Japan they tend to conjure up a variety of images in their minds – sumo wrestling, Hello Kitty, capsule hotels, and the infamous scenes of the movie Lost in Translation.

But another area synonymous with Japan is mobile phones.

When I moved to Japan in 2006, the way in which Japanese people were using their phones was so advanced that at that time, it positioned Japan as the top market globally for mobile technology, user behavior, and receptivity of mobile devices.

The QR code, for example, was invented in Japan in 1994 and applications of these codes were wide-ranging, taking off globally in the early 2000s. QR codes created a behavior change among the Japanese around the ability to use their handheld devices to transact in daily situations. Already back in 2001 they were using mobile devices to buy from vending machines, swipe through train and airport gates, redeem mobile coupons at McDonald's, and purchase goods and services from known retailers.

Rakuten, the Amazon of Japan, was already seeing mobile commerce revenues of around 30 percent of total sales back in 2007. And Japan’s mobile commerce market in 2005 was already valued at $5.2 billion, but pegged to hit $24.4 billion by the end of 2014.

I no longer live in Japan, but the education of mobile I learned during my time there, and the advancement of what they were doing at the time, has stuck with me. And it implanted in me this theme of Asia as being such a hotbed of mobile development and opportunity, specifically around the explosion of mobile commerce. 

Mobile Commerce in Asia: Key Figures

• By 2014, the Asia-Pacific (APAC) region is expected to become the largest e-commerce market in the world, led by China, India, and Indonesia (eMarketer, 2013) 
• In 2013, Pizza Hut sold $2 billion worth of pizza online in Asia, and 72 percent of this was done through mobile transactions (Media Masters Conference, 2013) 
• In 2013, Mainland China overtook the U.S. to become the largest smartphone market in the world (eMarketer, 2014) 
• Asia-Pacific is the number one region globally of Facebook user growth, at 900 percent in 2013, with 92 percent of Japanese accessing Facebook via mobile (Facebook data, 2013) 
• APAC consumers lead the world in multi-screening at 439 minutes per week versus 417 globally. Thirty-six percent comes from smartphones. (Millward Brown study, 2014) 
• Forty-five percent of APAC consumers use mobile phones to compare prices. This is the highest globally, with the U.S. coming in at 28 percent (eMarketer, 2014) 
• South Korea, at 51 percent, is the top market for mobile banking use. China (41 percent), Australia (40 percent), and the U.S. (38 percent) round out the top four. (eMarketer, 2014) 

So what are people buying? Well in Asia, apps are still the number one purchase, according to Warc, with Thailand at 37.9 percent, Vietnam at 31 percent, and Malaysia at 30.4 percent. However, we are starting to see a shift from people purchasing digital-only goods via mobile to the purchase of higher-end retail goods such as fashion, grocery, and even auto in certain cases.

The main mechanisms people are using to buy goods are the mobile Internet at 36 percent, mobile apps at 24 percent, SMS at 19 percent, and NFC (near field communication) at 12 percent.

SMS payment is mostly used in China and represents 30.5 percent of all mobile payment solutions in that market. Mobile phones linked to a credit card make up just 13.6 percent of mobile payment solutions.

I believe there are four movements that have helped fuel the mobile commerce explosion in Asia:

The Lowering Smartphone Costs

Smartphone costs have been declining at an annual rate of 5 percent since 2008, according to KPCB, which has increased the availability of smartphones to the masses.

Evolution of Apps

The massive popularity of mobile messaging communications apps like WhatsApp, LINE, WeChat, and others has helped spur an increased interest and necessity in smartphone sales.

Tightening Security

An eConsultancy report found 57 percent of APAC respondents pointed to improved personal data security as a key driver for increasing adoption of transactions and communications over mobile.

Strong Credit Card Issuance

Credit card growth in Southeast Asia has seen strong growth rates since 2008 and average purchase orders on credit cards are seeing record highs, according to Euromonitor International.

With all this growth in the mobile sector, some brands in Asia are really getting mobile right.

In Korea, Tesco took mobile commerce to the people via a subway installation that allowed users to order goods on-the-go with direct home delivery. Mercedes-Benz looked to sell cars aimed at their WeChat mobile users at a 2013 auto show being held in Beijing. They sold 388 cars in less than three minutes. ELong, part of Expedia, saw mobile bookings increase 60 percent year-on-year in 2013, with one in every five hotel room stays being booked from mobile.

But at the heart, trends are about people and their deep-seated, fundamentally unchanging needs, wants, and desires. And for mobile in Asia, the top five biggest needs they want their mobile experience to deliver, according to a trendwatching.com 2014 report, are: speed, convenience, security, access to new kinds of personalized information, and access to new services.