Why the (Rumored) Apple Digital Wallet Will Change Apple's E-commerce Trajectory

Tomorrow Apple is rumored to announce the iPhone 6, along with the long-awaited iWearable thing (our money's on it not being called a watch). In this post however, we'll focus on another rumored big announcement: A digital wallet, or a new "mobile payment system".
According to the rumors, the iPhone 6 is going to be the first device embedding Apple's new payment system, allowing customers to pay with their phones online and in physical stores like CVS and Walgreens. The rumors also report on a partnership between Apple and major banks and credit card companies, with significantly lower credit card processing fees for Apple compared to rivals like PayPal.

 Here's what the new digital wallet means for Apple as an e-commerce player.

 iPhone and iPad dominate e-commerce (for now)

According to The Custora E-Commerce Pulse Mobile Report, Apple devices still dominate mobile e-commerce (= online shopping done on phones and tablets). In August 2014, over half (52.4%) of online shopping done on mobile phones was done on Apple iPhone devices. Almost a third (30.6%) was done on Samsung phones, and the rest - 17% - on other phones.

Tablet shopping presents an even rosier picture for Apple, with four out of five - 80.5% - of tablet e-commerce transactions done on iPads. Only 9.7% of tablet shopping is done on Samsung tablets, and the remainder is split between other tablet brands.

However, Apple's mobile e-commerce supremacy has been challenged. 

While Apple still dominates mobile shopping, its supremacy continues to be challenged - most notably by Samsung and more recently, Amazon.
Over the last two years, Apple’s share of e-commerce orders done on phones went down from 75.1% in January 2012 to 52.4% as of August 2014. Samsung devices have more than quadrupled their share of orders over the same time period — growing from 6.9% in 2012 to 30.6% in 2014.

Share of orders made on Samsung tablets increased substantially in the past year and a half: From 1.9% in January 2012 to 9.7% as of August 2014. Amazon has also quickly become a player, as purchases made on Kindle Fire tablets account for 3.1% of all tablet orders.

What the digital wallet means

Apple's new mobile payment system might slow down - or reverse - the trend of Apple's declining mobile e-commerce share. Here's why:

1. Paying directly with one's iPhone or iPad offers convenience, speed, and security (stolen celebrity photos notwithstanding). The Apple Touch ID mechanism is a clever way to bypass Amazon's one-click patent (as a touch is, conveniently, not a click), and can make those terrible payment forms all but disappear from online retailers' sites.

2. The fact that Apple owns both the mobile operating system and the hardware it runs on means it controls the entire mobile experience end to end - as opposed to its main mobile commerce competitors Amazon, Google, and Samsung, whose mobile products are all entangled with each other.

3. Apple's Touch ID also paved the way to its lower ("Credit Card Present") processing fees. These could be passed on to merchants and/or to consumers. Over time, Apple might offer exclusive deals and promotions with retailers, which will make it even more attractive to consumers.

So now what?

The story will unfold in the next few months as the iPhone 6 is released, and the US holiday shopping season kicks into high gear. The Custora E-Commerce Pulse will keep tracking this trend, and other e-commerce stats: Sign up to receive updates when we release new e-commerce updates and research reports.

This post is an update to the Custora E-Commerce Pulse Mobile Report. The full 12-page report includes an analysis of mobile commerce growth in the past 4 years, the marketing channels driving mobile transactions, cross-device shopping behavior, and more.

Download the full report here:

About The Custora E-Commerce Pulse
The Custora E-Commerce Pulse tracks key US e-commerce statistics and allows any retailer to benchmark their data in real time. The Pulse is based on Custora’s analysis of over 70 million online shoppers and over $10 billion in e-commerce revenue across over 100 US-based online retailers. The Pulse also leverages external data points, such as the US Department of Commerce e-commerce growth figures, to extrapolate growth trends within the Custora data universe to arrive at predictions for the US industry at large.

Pulse research has been featured in The Wall Street Journal, USA Today, Inc., Bloomberg TV, McKinsey Insights, AdAge, eMarketer, and many other publications. Pulse data is part of the Bloomberg Professional® Platform.
Sign up to receive updates on e-commerce trends and new reports here.

About Custora
Custora provides a customer-centric marketing platform that helps e-commerce teams make customer acquisition and retention programs more profitable. Custora’s software uses advanced statistical models to identify distinct customer segments and predict how customers will behave in the future. This enables e-commerce companies to deliver more relevant and effective communications that promote long-term customer relationships. Custora is proud to work with some of the world’s leading e-commerce retailers, including Guess, Ann Taylor LOFT, Etsy, Backcountry, Bonobos, Crocs, Wine.com, and One Kings Lane. If you’re interested in learning more about Custora, request a demo here.

Like this? You might also enjoy these.

How Supergoop Topped Custora’s Retail Benchmarks, part 1

This past May, Custora announced a new benchmarking feature within our...

Your Revenue Forecasting Ignores the Source of Your Revenue

If you’re like most organizations, your finance department focuses on overall...

4 Steps to Solving the One-Time Buyer Problem, Part III

In parts one and two of this series, we laid the groundwork on a methodology to...