M-commerce has moved from the future agenda to being a current
issue. Daniel Thomas examines the factors companies should confront
as they prepare for the next business shake-up
Businesses and consumers have been waiting for the mobile commerce
revolution since wireless application protocol (Wap) first entered
industry parlance. Although few of the promises have come to
fruition IT experts say 2002 may be the year when m-commerce offers
real advantages to businesses.
Last week Computer Weekly reported that supermarket giants Tesco
and Sainsbury's and hair stylist chain Toni&Guy had made firm
commitments to m-commerce projects.
Tesco.com plans to release a Pocket Shopper software application
allowing registered users with GPRS phones to log their orders on
the move. Both Sainsbury's and Toni&Guy's announcements were
focused on marketing promotions, but the supermarket said this was
just the first step and it has created the post of m-commerce
manager to oversee future mobile projects.
Duncan Brown, consulting director at analyst firm Ovum, predicted
that m-commerce adoption would be mainstream by the end of 2002.
"All the technology is there - it just has to be tailored to what
consumers actually need," he said.
In the longer term G2, an offshoot of analyst group Gartner,
estimated that UK online shoppers will spend £2.63bn via m-commerce
by 2005 - almost 10% of total online spending - so companies should
look at their multi-channel strategies now, said G2 analyst Gill
Mander.
"While sales via mobile phones and digital TV are still in their
infancy, offering complementary services across a range of devices
will give you an edge over your competitors," she said. "Hybrid
commerce will become increasingly popular with consumers, who often
prefer to gather product information using one platform and buy
using another."
But she said it is important that companies do not overestimate the
capabilities of the mobile phone as a sales channel - as many did
to their cost with the Internet. "The mobile phone is best suited
to purchase decisions that involve little choice, or products that
have already been browsed using another platform," Mander
explained. "It is limited as a buying tool by its small screen
size, awkward data entry facilities and high cost of use."
Brown agreed that firms should not be over-ambitious with their
mobile projects. "M-commerce should be specific - the consumer's
usual order or a delivery at a certain time," he said.
"If you can get it right it has the potential to be very popular.
Mobile grocery shopping has a good chance of working as it is just
another step on the evolutionary path from loyalty cards and online
shopping," Brown said. "And supermarkets are very good at
understanding what the customer wants."
Analysts also advise IT managers looking at m-commerce projects to
consider technical issues such as the integration of a portal or
Web server with existing IT infrastructure and security, and
whether legacy systems are able to handle the increased traffic
generated by the mobile channel.
The next big trend for m-commerce will be when micropayments become
available on mobile devices. This will allow a consumer to buy a
small item, say from a vending machine, and have the payment added
to their mobile phone bill. This avoids the use of cash or a credit
card. It is expected to be a massive growth area over the next few
years, with research group Forrester predicting that the UK mobile
payment market will be worth £2.8bn by 2005.
Micropayments will be boosted if a European Commission directive is
passed this summer allowing non-banks to issue electronic money.
This will allow mobile operators to become virtual banks and
Vodafone is already developing a mobile payment system to allow
users to pay for small value items, such as ringtones, via their
handsets.
Mander said mobile payments are likely to play an increasing role
in e-commerce, although she predicted it would be largely
restricted to areas such as buying tickets for travel, concerts,
sports events and films.
Online travel and leisure retailer Lastminute.com has identified
this opportunity and plans to allow customers to pay for services
such as restaurant booking and theatre tickets with mobile devices
in the near future.
Circus, the London restaurant and bar, already allows customers to
pay their bills using their mobile phone, while motorists will soon
be able to pay their car parking/meter charges by mobile phone and
receive the bills by e-mail, following a deal between Mobile 2
Meter, a provider of payment services to the parking management
industry, and e-billing supplier ACI Worldwide.
However, Brown warned companies not to expect too much from mobile
payments in the short term. "There will be very little change in
payment systems for some time," he said. "Micropayments is a large
step and we will not see much progress over the next 12 months."
Location-based services - targeting customers or employees in a
particular area by tracking their handsets - are another area to
keep an eye on in the m-commerce space.
So far, these services have mainly been used for internal purposes,
such as companies tracking their drivers via the cell area of the
mobile network base station.
However, the advent of GPRS mobile phones (2.5G), which offer
always-on Internet connection, and wireless communication
technologies such as Bluetooth, open up significant opportunities
on the customer side.
For example, GPRS would allow a customer to be alerted to special
offers when they are nearing a supermarket. A Bluetooth-enabled
mobile phone could guide a Tesco or Sainsbury's customer around the
store helping them to find products or compare prices.
Whatever form m-commerce finally takes, there seems to be little
doubt that it is here to stay and IT managers need to start
thinking about their mobile strategies - from mobile marketing
promotions to accepting micropayments.
A blueprint for m-commerce success in your
organization
- Formulate multi-channel (mobile, digital TV) strategy now to
gain a competitive edge
- Consider technical issues such as the integration of a portal
or Web server with existing IT infrastructure; security; and
whether legacy systems are able to handle the increased
traffic
- Keep applications simple, fast and reliable - minimise text
entry and menu levels
- Do not just rehash Web content
- Offer mobile services that are time-sensitive or
location-specific and use text messaging to confirm
transactions
- Do not overestimate the mobile phone as a sales channel - start
slowly, for example with mobile marketing promotions
- Target young people with products that emphasise "any time,
anywhere" lifestyle factors
- Target blue-collar workers, spearheading m-commerce offers with
sports and entertainment services; add value for business
professionals with services, such as share dealing, that integrate
mobile phones with PC-based e-commerce
.