It wasn’t all that long ago that consumers didn’t have many options beyond “pull out your wallet/purse/checkbook” when they wanted to make a purchase. That was before digital revolutionized the payments world.
Now, people can pull out their laptops or smartphones, and even their watches and rings. The payments world is undergoing more change at a faster pace than ever, and the rate of that change is accelerating. That’s why we’re predicting that 2017 will be a huge year in the age of interconnected commerce.
The popularity of mobile and online commerce is being fueled by increasing numbers of people on the internet or buying smartphones. Just over half of the world’s 7.3 billion people are now on the Internet, 918% growth since 2000, according to InternetWorldStats.com. And the Pew Research Center says global smartphone ownership is 43% and increasing at an “extraordinary rate” in emerging and developing nations.
The link between smartphone penetration and the expansion of digital commerce is very clear in the U.S. this year. eMarketer says U.S. retail mobile commerce will surge to a new high of $123 billion in 2016, and that’s being driven by a nearly 50% spike in smartphone retail mobile commerce sales.
This rapid growth in interconnected commerce creates big incentives for companies to innovate, maximize technology or try out new business models. Here’s some of what we see coming in digital commerce in 2017.
- It’s not (only) about the money. The value found in a digital transaction isn’t just the money collected, it’s also in the data collected. Information such as spending habits, consumer preferences, and (in the case of the mobile transactions) shopping locations can be a major boon to companies who are strategically positioned to use it. We believe the universe of interconnected commerce and payment providers will combine to create a host of new opportunities to integrate payments, commerce, data and marketing in 2017.
- Just tap it. The number of people who think it sounds cool to pay for that mocha latte with a tap of a smartphone is likely far greater than those who have actually done it. There’s various reasons most people have never completed an in-store mobile payment, ranging from consumer trepidation to scattered acceptance among merchants. But we think these kinds of payments are set to surge in 2017, as availability and consumer acceptance increases. Business Insider projects that U.S. in-store mobile payments will hit $503 billion by 2020, compared to $75 billion this year. And it forecasts the number of in-store mobile payment users to rise at a five-year compound annual growth rate of 40%, before hitting 150 million people by 2020 – 56% of the consumer population.
- The IoT pays off. The growth of the Internet of Things (IoT) is creating new opportunities for interconnected commerce that we expect to expand in 2017. The IoT’s capabilities will enable merchandise delivery companies to predict when their customers need products and pre-emptively deliver them. And 451 Research says “the leap between ‘consumers buying things’ and ‘things buying things’ is not as great as one would imagine.” For instance, they note refrigerators are already on the market that need minimal input to order more food, and say that your next printer purchase might well include the option to have the printer re-order ink.
The speedy growth in the world of interconnected commerce shouldn’t obscure the fact it’s all powered by incredibly complex transactions. The simple act of using a smartphone to make an in-store purchase requires instant, secure and seamless interconnection between several disparate ecosystems, including financial, mobile, retail and advertising. And when you bring the IoT into the picture, the transaction surface expands, and so does the need for safe interconnection between the various players.
At Equinix, our global data center and interconnection platform, Platform Equinix™, is equipped to enable massive expansion of interconnected commerce. Platform Equinix hosts the top companies in every ecosystem needed to execute digital payments, and we can simplify private, direct interconnection between all them. We also have a presence in 40 global markets, and we can bring together the multiple components (clouds, networks, end users) that must collaborate so the IoT can deliver the real-time value and insights it needs to offer true business advantage.
Read our white paper, Interconnected Commerce: A Revolution in Value Creation.
Also check out: The Fog Rolls In – Network Architectures for IoT and Edge Computing.
Equinix 2017 Predictions, Overview Post: 7 Bold Predictions for the Connected Enterprise