Shopping via smartphones to ring in a rise

Smartphone shopping is tipped to rise in the UAE, with more than a third of mobile users saying they are comfortable making purchases using their phones.

Travel, application downloads and cinema tickets are said to be driving mobile commerce, or m-commerce, while advertising spending on smartphones is also forecast to rise this year.

About 37 per cent of phone users in the UAE say they are happy to make purchases using their smartphones, according to a study by the Middle East mobile-advertising network Plus7.

The GCC-wide survey of 4,326 mobile users found consumers in the UAE were more comfortable with making transactions on a mobile than those in Saudi Arabia, Oman and Kuwait.

"We will see an increase in adoption of m-commerce as more smartphones come into the market," said Ashwin Salian, a co-founder of Plus7.

"At the moment, it's primarily people buying … ringtones, apps or downloading something," he added. "You can also book air tickets and cinema tickets using your mobile phone."

However, the fear of fraud is cited as one concern and may hamper further growth of m-commerce.

Consumers in the UAE are reluctant to enter their credit card details to pay for goods, with 44 per cent of respondents saying they pay cash on delivery when ordering products via mobile.

"People are not very comfortable using their credit card over the mobile phone yet," said Mr Salian. "That's a concern with e-commerce [online shopping by computer] as well … People prefer cash on delivery."

The introduction of direct billing - where goods bought via m-commerce are added directly to a consumer's mobile-phone bill - could give a further boost to smartphone shopping, Mr Salian said.

"Telcos need to play a bigger role in supporting this," he said. "Once that happens, I think this number will shoot up."

The Middle East's online shopping market - via both computers and mobile - is minuscule compared with markets such as the United States and United Kingdom.

People in the UAE, Saudi Arabia and Egypt spent US$1.01 billion (Dh3.71bn) on internet retail sites last year, according to the research firm Euromonitor. That is expected to more than double to $2.09bn by 2016.

According to JPMorgan, global e-commerce revenues were forecast to grow to $680bn last year, an increase of 18.9 per cent on 2010.

With widespread use of smartphones in the region, m-commerce is predicted to drive further growth in online shopping.

Smartphone advertising on mobile websites and apps will also help, Mr Salian said.

"You can use mobile advertising to drive mobile commerce," he said. "We're hoping for at least 30 per cent growth in the mobile ad spend this year."

The total annual expenditure on digital advertising in the Middle East and North Africa was estimated at just $175 million last year.

Mr Salian said mobile advertising accounted for as little as $2m a year, but was set to grow.

"Mobile ad spend probably takes around 1 to 2 per cent of the entire digital spend in this region," he said.

"The only way is up, with more and more smartphones and tablets coming on to the market. It's the only marketing channel that you carry with you in your pocket … We see a lot of demand from publishers in the region."

InMobi, a rival mobile-advertising network, was launched in the Middle East at the start of this year.

Richard O'Sullivan, the the Middle East head of sales at InMobi, conceded that spending on mobile advertising in the region was still "minute" but said it was set to rise.

"Mobile advertising will definitely grow," he said. "The mobile penetration is going through the roof … Advertisers want to reach audiences. And audiences are on mobile devices."

[ bflanagan@thenational.ae ]

twitter: Follow our breaking business news and retweet to your followers. Follow us