PayPal sees social commerce as the next frontier

Internet Retailing

21st Sep 2016

PayPal Australia has this week released its PayPal mCommerce Index, a biannual barometer on the state of mobile commerce in Australia.

In its first-ever survey of the payment patterns and expectations of Australian smartphone users, PayPal finds a significant gap between consumer mobile payments behaviour and the readiness of businesses to support mobile transactions. The Index also identifies the next frontier of online commerce for Australian businesses – social commerce.

“We’ve seen incredible growth in mobile transactions and mobile is now a channel in its right, not just an add-on to  websites,” PayPal Australia’s head of merchant services Simon Banks told Internet Retailing. 

But while 71 per cent of respondents said they use a mobile device to make payments and 22 per cent said they spend more than $500 per month via mobile, only 49 per cent of businesses are optimised to accept mobile payments. “I do think businesses need more insight on where to invest in mobile and how to move forward in this space over time,” Banks said.

He suggested that the same principles behind e-commerce success – removing friction and making transactions safe and secure – apply to creating competitive mobile commerce offerings. “Having a mobile site that’s easy to navigate, minimising the number of fields to be filled out, requiring the minimum amount of information to transact the sale – this is even more critical on mobile.”

Despite this, 31 per cent of businesses have no plans to optimise for mobile sales, which is reflected in the proportion of online businesses (26 per cent) which have zero sales via mobile devices.

PayPal Australia’s managing director Libby Roy was surprised to learn how many businesses are not prepared to accept sales effectively via mobile devices. “The mobile payments landscape is fast-evolving and the Index reveals how habituated Australian consumers have become to mobile shopping with more than a third of us making mobile payments at least once a week – a figure that jumps to 47 per cent for the under 35s.

“So although online businesses may think they don’t need to optimise for mobile now, they will have to if they want to stay competitive in the near future,” Roy said.

The data highlights that millennial customers are more likely to shop on a mobile device than any other demographic, with 85 per cent of smartphone users aged 18-34 buying via mobile – significantly above the national average. Younger Australians also shopped via a mobile device more frequently than any other age group.

Australian consumers like the convenience, time-savings and ease of mobile commerce. Alternatively, they are annoyed when websites are not optimised for mobile devices and are concerned about security.

The new frontier for online commerce is social, PayPal reports. Already 11 per cent of Australian consumers report that they have made a purchase via a social platform in the past six months and 7 per cent of Australian businesses indicate they accept transactions via social media

“The beautiful thing is that the mobile device is the engagement platform for mobile commerce as well as social,” Banks said. “The same fundamentals of mobile commerce [removing friction and ensuring security] are going to apply to social commerce.”

Social media is also shown to be a strong channel for driving purchases with 18 per cent of respondents buying something after seeing it on social media, a figure that jumps to 24 per cent among the 18-34 age group.

A recent study from Deloitte similarly found that online reviews and recommendations – a key aspect of social media – have the highest impact on people’s purchasing decisions. Despite this, 28 per cent of businesses don’t believe their customers want to buy via social media platforms.

PayPal reveals that consumers do have security and safety concerns with 59 per cent stating they don’t want their financial information linked to their social footprint. Among businesses, a lack of understanding poses a challenge to adoption with 25 per cent of Australian businesses stating they don’t understand how purchasing via social media works.