Mobile Broadband Issues Holding Back UK mCommerce

Mobile shopping could deliver a £4.5bn boost to Britain’s economy by 2016 and a further £13bn by 2021, according to new research commissioned by eBay.

The research reveals that mCommerce is on the verge of a potential four-fold increase over the next five years, as consumers become more comfortable with shopping on their handsets.

Despite the future potential of mCommerce, however, the research, from retail specialist Verdict, warns that the market is currently being held back by unreliable mobile broadband. UK retailers are missing out on at least £1.3bn as a result of consumer frustrations with patchy coverage, unreliable connections and slow connection speeds driving shoppers away. Verdict surveyed 1,500 consumers between 11 – 16 May, 2011.

eBay is calling on regulators to take action to enable mCommerce  to support the UK’s economic recovery. In a submission to communications regulator Ofcom, eBay is calling on policy-makers to do more to address consumer frustrations when rules for the fourth generation (4G) of mobile networks are agreed later this year.

The research shows that 16 per cent of the UK is an “mCommerce not-spot”, where mobile spending is at least 20 per cent below the national average. Sparsely populated areas, such as the Scottish highlands and islands, rural Wales and rural counties of England are the worst affected. But the evidence also shows that mobile shopping is underperforming in certain heavily populated areas like central London, with broadband reliability and coverage acting as a brake on the potential mobile retail market. According to the study, more than a third of consumers have failed to complete a purchase on their mobile due to issues with mobile broadband.

Although network coverage (79 per cent), the reliability (85 per cent) and speed (86 per cent) of mobile internet connections rank highly as barriers to mobile shopping, consumers are also heavily put off by the cost of data (80 per cent). 

When asked for their views on what should be the top priority for mobile networks and regulators, the cost of data came out top (over half), with improving coverage in second place (23 per cent). 14 per cent think improving the reliability of internet connections in urban areas should be the priority, followed by providing better internet coverage on transport routes (13 per cent).

In publishing the data, eBay is calling on Ofcom to take action to support mCommerce and help the sector realise its potential, as the regulator decides on how best to sell licences for “4G” mobile broadband. Ofcom is currently consulting on the rules of the auction.

“Mobile shopping represents a massive opportunity, not just for retailers, but for the economy as a whole,” says Angus McCarey, UK retail director for eBay UK. “But our research shows that consumers and retailers are missing out as the cost and reliability of mobile broadband prevents shoppers from spending.
“High quality and reliable mobile broadband coverage throughout the UK has to be our ambition, giving consumers choice over when and how they shop, encouraging spending, thereby benefitting online and high street retail, and giving a much needed boost to the fragile economic recovery.”

Mobile continues to be the fastest-growing part of eBay’s business, with global mobile sales set to double again in 2011 to over $4bn (£2.43bn). The company says that more than 16m people currently use their iPhones to shop through eBay for bespoke or vintage items, or for branded and new items direct from over 100 high-street retailers.

The UK’s top 10 mCommerce ‘not-spots’, where mobile spend is significantly below the national average, are:

  1. Outer Hebrides – Mobile Spend 58 per cent below national average
  2. Lerwick, Scotland – 57 per cent below
  3. Kirkwall, Scotland – 50 per cent below
  4. Llandrindod Wells, Wales – 47 per cent below
  5. Jersey – 43 per cent below
  6. London WC – 38 per cent below
  7. Inverness – 35 per cent below
  8. Galashiels – 35 per cent below
  9. Perth – 34 per cent below
  10. Isle of Man – 30 per cent below

The UK’s top 5 mCommerce hotspots, where mobile spend is significant above the national average, are:

  1. Birmingham – mCommerce spend 75 per cent above national average
  2. Chester – 62 per cent above
  3. Leeds – 28 per cent above
  4. Romford – 28 per cent above
  5. Halifax – 26 per cent above