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Mobile and Social Commerce are the Next Payment Frontiers for Australia
We are on the precipice of a truly exciting time for retailers here in Australia, particularly those with a strong e-commerce offering.
While it often seems like there are headlines to the contrary, by our research and accounts commerce across all forms in Australia, including the Australian high street, is expected to increase significantly. By 2022, we anticipate that there will be an 11 percent growth in e-commerce and 15 percent in mobile commerce.
However, it’s that it is changing and evolving and the way customers expect to interact with brands and businesses has been completely redefined, largely by the introduction of technology.
Technology has changed the way people pay. Where cash and cards were once king, mobile and digital payments now reign supreme. Mobile commerce accounted for well over half (58.9 percent) of the more than $2.3 trillion in global e-commerce sales in 2017, a stunning 40.3 percent increase over 2016. And with at least 300 online payment methods in use today across the globe, there is a growing consumer expectation that businesses cater to their preferred way to pay.
But the brands that can leverage this technology are going to succeed and exceed in the years to come.
Australia is in a unique position in that it is heavily influenced by Western culture, but in close proximity to the commerce power houses of the Asia Pacific, where alternative payment methods are rising to meet the needs of consumers online.
Sales on mobile in China are expected to nearly triple from $909.93 billion to $2.595 trillion between 2017 and 2021. This phenomenal growth unsurprisingly can largely be attributed to the rise of so-called Super-apps like We-Chat and Alipay, both incredibly popular platforms which each have over 900 million active users respectively, that combine messaging and social media with shopping, delivery and gaming. Alipay’s parent company, Alibaba, this year set a sales record on the Chinese shopping phenomenon ‘Singles Day’ which brought in $38 billion in sales for the e-commerce giant. Last year the company’s Alipay service clocked 1.5 billion payment transactions, with total orders reaching 812 million.
The growth of these Super-apps however, goes beyond a pure preference to buy via a phone. WeChat is a place that offers far more. WeChat offers frictionless communication between consumers and brands. Users can scan information about products and make payments. Once a business has registered for a WeChat account, consumers can scan their quick response (QR code) and ‘follow’ them – without the need to fill in a lengthy sign up form.
Businesses can then send marketing messages to their followers by text, audio or video. Retailers can also accept payments from customers via WeChat Pay without them having to interact via a dedicated point of sale terminal. They are using mobile apps to communicate with their customers in the channels that fit their lifestyle. Speaking a language their customers truly understand.
Taking the next step
So, what is the lesson for the Australian market that will allow businesses to take the next step? In many ways, there are synergies between our markets that suggest Australia has the right foundations for the adoption of these payment technologies.
Cashless payments are the norm in China – 84 percent of Chinese people are happy to leave the house without cash, and 14 percent now live an entirely cash-free existence, according to a recent report by Tencent. Likewise, the current rate of card payments each year places Australia as the sixth most cashless society on earth, with a completely cashless society predicted to be a reality in just three years, second only to Sweden globally.
Smartphone adoption is also at its peak, with 91 percent of Australians owning a smartphone device. Most consumers never leave home without a mobile device – so they can compare prices, share retail experiences and to a lesser degree – make a payment.
However the reality is that this is not translating into more consumers buying from their mobile at the same rate as our Asian counterparts, and Australian merchants still need to consider how physical stores, online, and app-driven device experiences best integrate into holistic experiences that require no stitching.
Australian businesses need to engage with their customers rather than just selling to them. Chinese brands don’t just offer products and services – they partner with consumers in their daily lives. Chinese companies build their advertising, marketing, social communication, shopping and payment programs around mobile.
Another opportunity for Australian businesses is how to serve Chinese consumers, knowing the need to recognise and adapt to an entirely different set of expectations, and understanding that above all else, apps like Alipay and WeChat Pay represent a lifestyle choice for Chinese consumers and can help dictate the retailers they shop at and the brands they interact with whilst visiting. So, serving them means, at a minimum, accepting Alipay and WeChat Pay, as well as UnionPay, the leading Chinese card brand.
This is certainly true of e-commerce and increasingly the case for serving Chinese tourists as they travel abroad in larger numbers. Chinese visitors typically spend substantially more in their travels. In Australia, Chinese tourists spend on average more than $8,000 on a trip, compared to $5,000 for other international travellers.
This presents a huge opportunity for businesses in Australia, which sees an influx of more than 1.4 million Chinese tourists annually. However, Australian businesses also need to adapt to the expectations of these visitors and match the ways they want to pay, in order to win over Chinese consumers.
The bottom line is that if Australian businesses want to succeed, then they need a rich interactive experience combined with frictionless payment options. The foundation is in place for an exciting period of change for retailers, consumers, and the payments that connect us.
This is an excerpt from the 2020 E-Commerce Leaders’ Playbook. If you’re interested in reading more, find out about a Power Retail membership here.
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