Accounting for the largest portion of America's GDP, consumerism plays a major role in the overall health of the economy. But as unemployment remains stubbornly high and consumer confidence stays low, the retail sector continues to drift along. However, a new trend in consumer behavior is emerging. The adoption of smartphones and tablet PCs are not only causing a dynamic shift in the way we communicate, but how we shop as well. Consumers are increasingly using smartphones and the mobile internet to find deals, conduct product research and ultimately purchase products. For investors, this shift towards M-Commerce could be one of the biggest tech trends since the dawn of the PC.

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The Phone As a Wallet
According to analysts, the majority of American cell-phones will be smartphones by the end of 2011. That's approximately a 200% increase from current smartphone penetration levels. Over next 10 years there will be an exponentially growing number of devices with internet connectivity. With so many of these new devices getting into consumers hands, the online world, both traditionally via computer and through the mobile internet, is dramatically changing consumer behavior. More than 29% of U.S. online consumers have made a purchase of digital or physical merchandise using their mobile devices. This compares with 23% in July 2010 and 13% in November 2009. While 48% of U.S. adults have browsed or researched products on their mobile devices. By 2013, eBay's (NASDAQ:EBAY) PayPal division expects its mobile payments volume to reach $7.5 billion and its RedLaser bar code-scanning app has been downloaded nearing 9 million times.

While our new "recessionary mindset" has increased mobile internet shopping and deal hunting, the digital wallet is just getting started. As it is, we are moving ever closer to a cashless society. Almost all American's use the internet for their banking and bill paying. The next logical step in this transition to a truly digital society would be point of sale (POS) transactions. Some companies have already begun the process of a "phone as a wallet." For example, Starbucks (NASDAQ:SBUX) allows users to load a virtual gift card via an app onto their smartphones. After they order their morning latte, a barista then scans the phone for payment. Google (NASDAQ:GOOG) wants to take the digital wallet further. Partnering with MasterCard (NYSE:MA), the tech giant wants to make a user's smartphone a container for digital credit cards, coupons, receipts and loyalty cards that can be "tapped" to terminals in stores.

Portfolio Shopping For M-Commerce
As smartphone adoption continues to grow and tech-savvy consumers continue to flock to m-commerce, retailers that work the necessary infrastructure into their business plans will benefit. Both the First Trust NASDAQ CEA Smartphone (NASDAQ:FONE) and SPDR Morgan Stanley Technology (NYSE:MTK) offer broad ways to play the growth of M-Commerce and smartphones. However, there are plenty of individual ways to play the trend. Here are a few picks.

Putting the "tap" in mobile payments, short-range communication technology called Near Field Communications (NFC) will facilitate the transfer of data between mobile devices and POS terminals. Both NXP Semiconductors (NASDAQ:NXPI) and Broadcom (NASDAQ:BRCM) make the NFC chips that transmit information between the devices, while VeriFone (NYSE:PAY) remains the POS terminal leader. Small-cap USA Technologies (NASDAQ:USAT) is also an interesting play as the company sells equipment to retrofit current cash vending machines into digital payment accepting ones.

With the M-Commerce becoming a larger slice of the retail pie, securing that data will become ever more important. Look for industry leader Check Point Software (NASDAQ:CHKP) to continue to offer more products in the area. In addition, biometrics company AuthenTec (NASDAQ:AUTH) manufactures fingerprint readers with navigation capabilities for smartphones.

Bottom Line
As smartphone adoption continues to grow, so will M-Commerce. As the mobile landscape continues to change, investors may want to consider the sector. Those companies that facilitate mobile internet retailing and design new digital wallets will be the ultimate benefactors. The previous stocks are a few examples of how to play the trend. (They're hard to predict, but commodities cycles provide valuable information for traders. Check out Cashing In On A Commodities Boom.)


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