The golden rule of retail could never be more truer – retailers need to be where consumers are, according to PayPal’s mCommerce: Secure Insight research report.

A Nielsen survey commissioned by PayPal has found that the growth of smart phones is fuelling mobile commerce – now commonly known as mCommerce – with total mobile payment volumes growing 14 folds year-on-year reaching $42 million and saw the total amount of mobile transactions reach $155 million in 2010.

The survey, which explores the impact mobile and changing consumer behaviours are having on the Australian retail environment, also found that internet-enabled phones now account for 65 per cent of the total handset market.

But this number is expected to only grow as 68 per cent of Australians said they plan to use mobile devices for transactions and payments in the near future. 

Having published a forecast of $35 million in October 2010, PayPal indicated that the value of transactions going through mobile surpassed even our own expectations and the online service provider enjoyed a 25 per cent month-on-month growth in total payment volume in 2010. 

Frerk-Malte Feller, PayPal Australia managing director, said there will be more change in the retail industry in the next three years than what has been seen in the last decade.


“The explosion of smart phones, already accounting for 63 per cent of all mobile phones in the market, is changing the way we behave and interact. Mobile technology is well and truly breaking down the barriers between on and off line and challenging the traditional perspective of retail,” he said.

At launch of the report last week, and in partnership withe Australian Retailers Association, PayPal called to action to the Australian retail industry to forget about the prefixes surrounding commerce and embrace a multi-channel retail strategy. 

“In the last quarter, our merchants have enjoyed a 25 per cent month on month increase in total mobile payment volumes. Retailers must embrace mCommerce now or risk being left behind. Australian retailers were late to the eCommerce market and cannot afford to make the same mistake again,” Feller said.

Jennifer Cromarty, Australian Retailers Association deputy executive director, said: “It is time for Australian retailers to form strategies addressing multiple channels. The retail industry is evolving and retailers must move with it to both remain competitive and meet shifting consumer demands. Put simply, retailers must have a presence wherever their customers are – be they in store, online or on their mobile phones.” 

Convenience and being able to make transactions on the go was cited as the main reason behind mobile device transactions by 76 per cent of consumers. Typically, the items bought via mobile are lower priced items, such as clothing, books, gifts and music. Conversely, the top ten overall online purchases are higher priced items such as airline tickets, financial products/services, apparels and concert/ event tickets.

“The mobile device has become such an integral part of our lives that most people would rather leave the house without their wallet than forget their phone. It is highly personal, always connected and always with you. The opportunities for retailers to create highly personalised and compelling user experiences are endless,” Feller said.

However, the survey also found that currently 51 per cent of Australians are not convinced the current security measures for mobile transactions are adequate. Usability in terms of the size of the screen being too small and difficult was also a key concern for almost half of the consumers surveyed. 

“The retail landscape is changing, and this is just the first wave. Today, a customer can stand in a bricks and mortar store; scan an item, price compare, and read reviews online. Customers have a newfound power and the tools to make intelligent purchase decisions. The technology is here, the consumer demand is here, and the time is right for Australia’s retailers to embrace multi-channel strategies,” Feller said.