Why are the big tech companies moving to mobile apps?
Is the trend in retail business development a sign of doom for big companies in the retail space?
In a new study, The McKinsey Global Institute has identified the top three trends that have pushed some big tech businesses out of retail.1.
The rise of mobile commerceIt is not uncommon for big tech to be a pioneer in mobile commerce, and it has certainly made big-ticket purchases, such as Apple Watch and the iPhone X, possible.
But in recent years, some big companies have been moving into mobile commerce as well, like Amazon and Microsoft.
According to McKinsey’s study, mobile commerce was responsible for a third of the company’s $7.4 trillion in revenues in 2017, which is an increase of over 400 percent from the previous year.
McKinsey said that the rise in mobile business is due to both consumers’ increasing desire to purchase more goods online and a shift away from physical retail.
McKinseys findings are consistent with the views of others, who have pointed to a rise in digital retail sales and the growing popularity of the mobile platform as contributing to this shift.
McKinsey’s research also shows that while the rise of e-commerce has helped businesses become more efficient, the shift away has had a bigger impact on the retail industry.
In fact, the rise and fall of ecommerce has been a big reason why companies have started to move back to physical retail, the McKinsey report states.2.
The shift to mobile paymentsFor some time, mobile payments have been one of the biggest drivers for businesses moving out of traditional retail.
While the rise is not yet as big as it used to be, the trend has already begun, with some of the largest companies switching to mobile payment systems.
In its 2018 report, PricewaterhouseCoopers, a financial services firm, noted that the market for mobile payments has grown by a whopping $6.9 billion since its launch in 2016.
McKinsells study also indicates that the average monthly payment for mobile payment platforms in the U.S. is up more than $10 from the same period last year.3.
The spread between online and offline salesSome major players are still sticking with brick-and-mortar retail.
Amazon, for example, still dominates the online marketplace, but it has begun to move into the offline space as well.
According to the McKinsell study, Amazon has nearly doubled its e-tailer sales and revenue in the last three years.
However, it’s not just Amazon.
Google, the world’s biggest online marketplace company, has seen its online sales fall by an impressive 38 percent in the past year alone.
The McKinsey study says that the trend towards online retail is likely due to the fact that people are moving online more, and as a result they are increasingly interested in offline retail, where customers can pick up goods from physical stores instead of online.
The McKinseys report also says that online retail will continue to be more profitable for companies that have a physical presence, such, Amazon, Apple, and Microsoft, but the spread between the online and physical space is expected to continue to widen.4.
The shrinking business of online-only businessesAs businesses move online, the traditional retail model is expected a major contributor to the decline in the number of businesses in online-alone retail.
According the McKinseys study, businesses that do not have physical stores and are unable to deliver online are most likely to be out of business.
In a recent report, Forrester Research, a consulting firm, said that online- and offline-only retail sales were predicted to shrink by 4.6 percent and 2.7 percent respectively over the next five years, as well as by nearly 9 percent by 2023.