Asia is dominating the mCommerce market, puts US and Europe to shame

Tim Merel, founder and managing director of Digi-Capital

The largest piece of pie for global mCommerce revenue comes from Asia, says Tim Merel, founder of research firm Digi-Capital. According to him, as with all things mobile, the largest area of mCommerce growth will continue to be in the eastern world. As an aggregate market, Asian countries account for nearly half of the global mCommerce revenue at US$230 billion. America and Europe are still massive growth areas, but entrepreneurs and investors in the space should ignore Asia at their own risk.

Digi-Capital is a global research firm specializing in mobile internet companies, games ventures, and other digital businesses. Merel is recognized as a global mobile investment expert, having built his reputation at Ernst & Young in various markets around the world. He says:

Mobile’s so big, it’s hard to take in all at once. When we broke down the data by sector – into almost 30 individual sectors – what jumped out was the power of mCommerce to drive the market. Growing from over US$100 billion to half a trillion dollars globally, it commands the lion’s share.

According to Digi-Capital’s five-part August report that analyzes the economics of mobile internet, Merel forecasts mobile internet to hit US$700 billion in revenue by 2017, a more than 300 percent growth over a four-year time span. He predicts mCommerce will push growth primarily via consumer and enterprise apps, along with the digital advertising business at large. By 2017, Merel believes mobile internet revenue will have grown by US$500 billion.

The report cites mobile games as having “had an amazing ride.” Merel claims that games drove three quarters of of all mobile app business last year, despite having only 40 percent of the total downloads. Analysts can see significant growth coming from mobile games, but Merel expect other sectors to take over half the market by 2017. Where in-app purchases work brilliantly for games, apps-as-a-service business models are starting to deliver new revenue streams for other sectors.

See: Digi-Capital predicts gaming’s growing role in every major internet empire

How does this help me?

The report matters particularly if you are an entrepreneur or investor. To make life easier, Merel and his team put together a mobile internet investment quadrant. The chart positions the different sectors in terms of investment and consolidation potential. In other words, if a sector looks like it will be big, and there is low investor competition and more remaining exit opportunities, then that could represent what Merel calls a “hidden opportunity” for you. See the chart below.

Digi-Capital claims it’s important to note that the analysis does not actually tell you if any specific sector or company is a good or a bad investment. “It is not an exhaustive analysis considering all factors,” Merel says. Instead, it simply analyzes data in terms of revenue forecasts, mergers and acquisitions, and investment. So buyer beware. It’s not the investment bible, but rather, a useful compass.

Major opportunities with high consolidation and high investment potential include business, education, and productivity apps, along with wearable tech. “Hidden gem” opportunities include enterprise mobility (or B2B apps), mobile games, messaging, and navigation apps. Exit opportunities (high consolidation potential but low investment potential) feature lifestyle, medical, and news apps, along with social and travel businesses.

Merel and Digi-Capital team members invite tech stakeholders to exploit their research further or get in touch directly for an open dialogue.