Janis Thomas, e-commerce & marketing director, Look Fabulous Forever joins ExchangeWire's Lindsay Rowntree and Rachel Smith to discuss the increase of mobile shopping in the UK; the rise in cost of streaming service subscriptions; and the introduction of advertising to Netflix’s business model.

- Almost 7 out of 10 consumers in the UK do more shopping via their mobile now than before COVID-19. That’s according to the 2021 Mobile Shopping Report published by by-now-pay-later service provider Klarna, which found that 67% of shoppers rely on their phones to fulfil their retail needs more now than they did prior to the pandemic, with 60% having between one and five shopping apps on their devices.

The research, which consists of a survey of more than 13,000 consumers across 13 countries, found the shift to be widespread, but slightly less pronounced in countries where more relaxed measures were implemented to tackle the spread of the virus (such as Sweden, where mobile shopping increased by 54%). In the UK, this trend was found to be prevalent across generations, although slightly more so amongst younger consumers (up 77% for Gen Z and 79% for Millennials compared to 68% for Gen X and 56% for Baby Boomers). 

Even though visits to brick and mortar retailers are on the up, mobile has become a permanent fixture for many UK shoppers, with 62% admitting to using their phone to research products whilst in store. 78% browse for new products on their phones, whilst 90% say they use their phones to search for price comparisons, and 94% use them to seek out promotions and deals.

Despite the popularity of shopping apps, the research suggests that consumers may be getting fed up of them due to the number on offer and the amount of space they take up on their devices: 35% of respondents say they find the range of apps available overwhelming, and 24% say they would like to get rid of at least half of the shopping apps currently on their phones. The survey also indicated a desire amongst consumers for a streamlined experience of shopping with apps, with 63% saying that they would prefer to have a single app that handles the entire buying process, and 79% saying that such an app would make their shopping experience far easier.

- Consumers may begin reassessing the number of streaming services they’re signed up to in wake of the news that holding multiple subscriptions now costs up to £2,500 a year. The figure, which comes from Ampere Analysis, is thanks to a combination of rises in the monthly cost of broadband, phone, and pay-TV packages, as well as to the price tags of individual subscriptions.

Whilst viewers flocked to services like Netflix, Amazon Prime, and Disney + to stave off boredom during pandemic-induced lockdown measures, the current cost of living crisis will have many weighing up just how essential they are to their daily lives. UK viewers spent 40% of waking hours watching TV during the peak of the global health crisis, and that heightened demand spurred a flurry of new streaming offerings from broadcasters looking to capitalise on the unexpected circumstances. 

More services meant more choice for consumers, and tighter competition for streaming companies. Staying ahead of their rivals requires quality, in-demand content, and the cost of pumping billions into acquiring the rights to pre-existing properties or investing in their own productions has led to higher subscriptions for consumers (market heavyweight Netflix increased the price of their most popular package by 22% last week, their content budget having skyrocketed from USD $7bn (~£5.3bn) to USD $18bn (~£13.64bn) over the past four years). 

With lockdown over and unfavourable economic conditions (30-year high inflation and ballooning energy prices), streaming services could see their numbers decline, leaving the sustainability of the “debt-funded, loss-leading, loss-making models” much of the market is built on in question.  

- Netflix should consider introducing an ad-supported tier to their streaming offering in order to bolster international growth, according to MoffettNathanson Research analyst Michael Nathanson. Nathanson argues that the streaming leader will struggle to stake a claim in markets where their competitors currently offer far lower prices, such as in Asia Pacific. Consumers in India, for instance, may baulk at paying USD $6.49 (~£4.91) a month for a standard Netflix subscription when a premium Hotstar package sets them back only USD $1.64 (~£1.24) in comparison.

By “naturally introducing advertising” to their business model, Netflix could better meet the expectations of consumers and experience “faster total company revenue growth” in APAC and beyond, says Nathanson. “We have long argued that Netflix will need to add an advertising tier to compete in the lower RPU [revenue per user], mobile-dominated markets of APAC, Africa and LATAM”, he adds.

Whilst the streaming giant have previously tailored their offering to cater to different viewing dynamics by introducing a mobile-only subscription across 82 markets in APAC and Africa, they continue to reject the idea of opening the platform up to advertising. However, some wonder whether Netflix will eventually change tact as more and more of their competitors introduce ad-supported options (and, as discussed above, they face the possibility of subscriber numbers dropping in the face of higher living costs). At a recent investor conference, Netflix CFO Spencer Neumann responded to a question about the prospect of introducing an AVOD option with “that’s not something that’s in our plans right now […] We have a really nice scalable subscription model, and again, never say never, but it’s not in our plan.”