Get ahead by planning for m-commerce now

M-commerce has moved from the future agenda to being a current issue. Daniel Thomas examines the factors companies should...

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. 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 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

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