Though all the media attention focused on the app stores and the revenue generated from them, they are far from the biggest opportunity in the app economy.
Mobile commerce is booming. According to the data from Shopify annual report, one third of ecommerce sales happened on mobile devices in 2014. This is up from 23% the year prior, and just 12% from 2012. This means that in only 2 years, mobile’s contribution to total sales has skyrocketed by 175%. Mobile also accounts for 50% of all ecommerce traffic.
Comparing to the other revenue channels in app industry, mobile e-commerce is expected to generate 2.5 times as much revenue as all the other sources combined in 2015, reaching $300 billion. Although app store sales are still going to be second in total revenues for 2015 at $40.5 billion, they are at the slowest growth. Mobile advertising will be growing more rapidly to reach $34 billion, while subscriptions grow the fastest of all, albeit from a relatively low base, to reach $9 billion.
Source: State of the developer nation Q1 2015
However, high revenues do not necessarily mean high profits. It is true that the margins in e-commerce are not very high (typically 15-30%). A targeted m-commerce app might make more. Even considering high acquisition costs, m-commerce will still be more profitable than any other revenue generating models.
Despite the potential high revenue in m-commerce industry, only 9% of all developers are building apps within the industry.
Though mobile commerce is growing, the mobile conversion still lags behind. Many users use mobile apps for discovering things and then complete the purchase from their computers.
However, this is going to change very soon with the implementation of deep linking. Deep linking is a link that will take an app user to the specific part of the app (like a specific url that takes you to a page you want on web).
Deep linking will boost the in-app sales as now the m-commerce platform owner will be able to advertise specific items instead of the app itself.
According to data provided by Custora, the m-commerce market is still dominated by Apple, however their e-commerce orders went down from 75.1% in 2012 to 53.6% as of March 2014.
In short, m-commerce is growing and it will become more and more popular with the implementation of deep linking. At the same time the market is still not saturated and can assure profit for a number of app developers.
Have an idea for an awesome m-commerce app? Let’s make it real!!!