Speech to the AMTA ‘Mobile Nation’ Launch

E-commerce has been around for a long time – a look back to the days leading up to the dot-com crash of 2000 reminds us of websites like Pets.com, eToys.com, and Garden.com.

Similarly, mobile technology has been around a long time – the AMPS network launched in Australia in 1987, when a typical Mitsubishi or Motorola handset sold for over $4,000. Today, of course, the number of mobile devices in use outstrips the population of Australia.

But despite these two innovations being around for some time, there is the sense that we’re at a real inflection point in the potential – and the reality – of mobile for e-commerce.

I want to congratulate AMTA and Deloitte Access Economics for their work on this new paper, ‘Mobile Nation - Opportunities and Strategies for Retail’ which looks at the impact of mobile technologies on the retail industry.

There are three points I want to highlight today. First, that mobile has some special features which have brought us to this inflection point, second, these special features are driving an increasing shift toward mobile for retail, and third, that this provides an opportunity for Australia.

Mobile has some special features

One of the special features of mobile is that they are always with us – to the point that they are an extension of our bodies.

46% of Australians check their smartphone within 15 minutes of waking up, a figure which is as high as 75% for 18-24 year olds, according to the 2014 Deloitte mobile consumer survey.

Even back in 2005, the CMO of Vodafone said that people always check for three objects before they walk out the front door of a morning – phone, keys, and wallet. Within a few years, new mobile technologies may see the phone replace the keys and the wallet.

Another special feature of mobile is that capacities are increasing all the time.

We turn them over regularly – for many once a year, for others once every two years, hence on average many of us have the latest devices.

Remember when the Motorola RAZR was the latest thing? Today, 77% of Australians own smartphones, according to the latest Sensis e-Business report.

Another key feature which makes mobile special is that it is always where we are – opening up the potential for location-based services. This provides new opportunities for e-commerce, such as accommodation booking. An example I regularly hear about in regional Australia is from tourism operators, who find that people often book their accommodation on their mobile device from the car as they drive out of the city.

This is driving an increasing shift towards mobile for retail

The near-ubiquity of smartphones has led to dramatic changes in consumer behaviour.

Since 2013, Apple has launched Apple Pay, Google launched Android Pay, and Samsung launched Samsung Pay – all using near-field communications in mobile handsets as the new wallet.

And while shoppers are using their mobiles to pay for their purchases in ‘bricks and mortar’ retail outlets, they are also using their mobiles to shop online. China’s largest B2C platform is TMall, owned by AliBaba, and has a 57% market share – with 40% of its transactions conducted on mobiles.

The trend towards mobile is also seen on eBay – in its Q3 2014 results, eBay reported $63 billion in e-commerce volume in total, with 21% of that on mobile.

Payments platform PayPal reported that 20% of its payments volume was completed on mobile in its Q3 2014 results.

Opportunity for Australia

All of these factors provide an opportunity for Australia.

Australia has a high smartphone penetration – among the highest in the world.

The ‘Mobile Nation’ report has some fascinating statistics – m-commerce is said to represent around $4 billion a year to the Australian economy. 19% of Australians have purchased a product on their smartphone – a rapid adoption of mobile commerce, considering smartphones as a technology are less than a decade old.

The report also highlights the productivity and social benefits of mobile technology. Retailers are using mobile devices to process cashless transactions, manage supply chains, and connect with their customers in new and innovative ways.

The rise of m-commerce is also creating employment opportunities – online stores need visual merchandise designers and user interface designers to optimise the mobile shopping experience, while transactions need to be processed by delivery and warehouse personnel, as well as customer service assistants.

There are a number of key government policy responses to respond to this shift.

First, the government is working to ensure that the infrastructure is in place which underpins the success of these new technologies. In June this year, I announced the results of the $385 million Mobile Black Spot Programme which will see 499 new and upgraded mobile base stations built in regional and rural Australia.

As well as the clear coverage benefits for people living outside major cities, this programme also delivered positive outcomes for competition in these areas: both Telstra and Vodafone were selected to build new or upgraded base stations, and competitors will have the opportunity to co-locate their equipment on the new infrastructure built with public funding support.

With mobile coverage expanding to new places in regional and rural Australia, there are more opportunities to expand m-commerce into new markets.

Another policy response the government is taking is to open up new markets for Australian e-commerce operators, with the internet allowing Australian companies to reach billions of potential consumers online.

The government has been working to create new business opportunities in Asia through Free Trade Agreements with Korea, Japan and China, and we are one of 12 countries negotiating what would be the world’s largest regional trade deal – the Trans Pacific Partnership Agreement or TPP.

Austrade recently issued ‘E-commerce in China: A guide for Australian business’ which is packed with practical advice about how to use e-commerce marketplaces such as Tmall, JD.com and VIP.com. Consumer E-commerce sales in China reached AUD 500 billion in 2014 and are growing very strongly.

A further government policy response is a package of measures to boost the start-up sector, which plays a significant role in the production of new m-commerce applications.

From July 1, there will be expanded tax concessions for employee share schemes to make it easier for small start-up companies to attract and retain the talent they need to grow.

Start-up companies in the early stages of growth will face a lighter tax burden: for companies with an annual turnover of less than $2 million, the company tax rate will be cut by 1.5 percentage points to 28.5 per cent.

We have also made important changes to the Significant Investor Visa which are expected to stimulate new funding for start-up companies. SIV applicants are required to invest at least $5 million in complying investments – and from 1 July this year this must include at least $500,000 in eligible Australian venture capital or private equity funds investing in start-up and small private companies.

To conclude, we are at an inflection point for m-commerce in Australia. With smartphones in the hands of more than three-quarters of Australians; the emergence of new mobile payments and retail platforms; and improving mobile coverage across Australia; we have a great opportunity to capture the benefits on offer.