M-Commerce Doubles, iDevices Lead the Charge

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Online sales have shown strong results in 2011, with Apple
AAPL
lending a generous
helping hand
. We are not talking gadgets bought online or apps purchased at Apple's App store, but purchases from
regular retailers
bought while browsing on a mobile device, simply known as
m-commerce
. The share of total dollars spend online made on mobile devices doubled from 1.77 percent in April of this year to 3.74 percent in December. Findings are made available on a
study
released by retail analysis firm
RichRelevance
, which combed over 3.4 billion shopping sessions occurring during the April-December 2011 period. (Benzinga Pro subscribers got real-time updates on RichRelevance and other developments in m-commerce. Try it
here
.) RichRelevance says over 92 percent of sales originated on iOS devices manufactured by Apple, which include the iPhone and the iPad (as well as the iPod Touch). According to the research firm, iOS users outspend the rest of the mobile market goers. In December 2011, for example, the average iOS user spent $123 on average, compared to $101 on average for Google
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GOOG
Android users. Both iOS and Android user bases, on the other hand, outspend the [comparatively luddite?] desktop shoppers, who in December shelled out an average of just $87 per transaction. In addition to being confident in online purchases, m-shoppers are becoming more numerous, as shown with the doubling of their expenditures from April to December of 2011. Although comprising just over three percent of online shoppers in number currently, the m-commerce market share is continuing to ramp up. There are currently 90 million smartphones and 24 million tablets in the hands of
Americans
, which will continue to aid these trends--if they haven't already--as consumers get more comfortable with their devices' security when it comes to trusting online transactions. Apple, for one, requires a valid credit or debit card number to initiate an Apple ID, which is a compulsory part of a user's iOS experience. For mobile shoppers, the increased convenience and user experience may prove worthwhile as often a transaction in a mobile device is a single-touch affair. In addition, the intended mobility of handheld internet access makes shopping a breeze, especially when placing an order for a better priced offerings when a consumer is browsing in a physical store location. This begs the obvious question of what the future holds for physical retailers other than to provide a showroom proxy for virtual retailers. We hope it does not entail news like
this
.

ACTION ITEMS:

Bullish:
Are you an shopper on your smartphone or tablet? As a trader, you may consider the following trades to share into the bounty:
  • Long shipping companies such as FedEx FDX and United Parcel Service UPS as they are the likely ones to deliver your purchases to the door
  • Long banks such as Bank of America BAC or JP Morgan Chase JPM: with more m-shopping, there are more opportunities for these banks to extend short-term credit to fund these purchases as they offer online payment options
  • Long online payment systems such as MoneyGram (MGI) and Western Union WU. With such hot m-commerce trends, they may decide to join Paypal (who, though most recognized, is not yet public) in providing payment options that do not include direct credit card disclosure online
Bearish:
Traders who are bearish on the prospect of m-commerce becaming a prevalent part of online shopping may consider the following trades:
  • Long established online retailers such as Ebay EBAY and Amazon.com AMZN as they are the best-positioned to capture e-commerce volumes to come, regardless of m-commerce participation
  • Long traditional brick-and-mortar retailers such as Wal-Mart WMT, Target TGT or Barnes & Noble BKS as they may still be a place for retailers who afford their shoppers the very real experience of “kicking the tires” on a product rather than buying sight unseen
  • Long fashion outlets such as Kohl's KSS, Macy's M or Saks SKS as clothing may prove to be one of the more resistant product categories to jump heavily into the m-commerce bandwagon
Neither Benzinga nor its staff recommend that you buy, sell, or hold any security. We do not offer investment advice, personalized or otherwise. Benzinga recommends that you conduct your own due diligence and consult a certified financial professional for personalized advice about your financial situation.
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