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M-Commerce

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M-COMMERCE

Although there are some questions pertaining to landscape, technology standards, and the ultimate M-device, it is clear that for those companies that are involved in the process, M-commerce is going to be a reality, and sooner rather than later.

Overall, there is a fairly clear sense of direction on the purpose, benefits, technology, and markets associated with M-commerce. M-commerce is going to be a global practice, yet in different parts of the world it might take different shapes.

Younger, active, mobile, and higher-income people are likely to be the first to experiment with M-commerce, they are being targeted by M-commerce companies. Moreover, travelers and mobile professionals are at the forefront of this market segment.

Money can be made from M-commerce providing that companies apply lessons learned from the introduction of e-commerce on the Internet. The focus should be on value added rather than on discounts and freebies.

MAPPING OUT THE EARLY M-COMMERCE MARKET

The demographic and lifestyle profile of the M-commerce early adapter, according to the Cap Gemini Ernst & Young Center for Business Innovation, will include the following elements:

  • Young. The range of ages vary according to the analysts, but in general it will be people in their twenties and thirties who drive M-commerce in its early years.
  • Active and mobile. The more active the person, the more likely he or she is to use M-commerce. In particular, this includes mobile professionals.
  • Higher income. New technology tends to be relatively expensive in the introductory stage of its cycle. Therefore, it is reasonable to assume that early adapters will have higher than average incomes to acquire it. Over time, however, the price of the technology will go down, and as a result, people with lower incomes will be able to acquire such technology. A successful M-commerce strategy will try to jump on the emerging market, but with an eye toward long-term stability.
  • Risk takers. New technology can be intimidating to the average person. Especially in its early stages when it is still complex and not optimally user friendly. Therefore, a characteristic of the early adapters will likely be a high degree of risk taking in terms of trying new technologies.

FOCUS ON MOBILE PROFESSIONALS AND "TECHIES"

There are two groups of people that were identified as target markets more then any other groups:

  • Travelers. The value proposition of M-commerce has a high correlation with the needs of business travelers, and therefore the business travel segment will be the first to adapt to the M-commerce trend. Naturally, those people who are away from their "permanent" environment will appreciate the need to stay in touch, receive information, and conduct transactions while on the road.
  • Techies. As a group, Techies cut across demographic lines. Yet, they have one major attribute in common: the urge to acquire and explore new technologies. To attract these customers, you neet to demonstrate why your particular m-commerce service will be both useful and exciting.

REVENUE MODELS FOR M-COMMERCE

As an infant technology, there are few tried-and-true revenue models to base your business on, but a few models were emerging in the early 2000s that seemed poised for stability.

One type of revenue model is push advertising. Advertising revenues can become a valid revenue model providing that it will be used in a localized-short-wave environment. For example, when a customer is in a regional area utilizing your particular m-commerce service, he or she could receive an ad or coupon for a local restaurant, and directions for how to get there.

A different revenue model involves a transaction fee. iMode of Japan charges users a transaction fee whenever he or she plays a game on their mobile device. Transaction fees will take the form of "micro payments," whereby a charge is applied to the customer only for what he or she uses. Thus, if a user plays a game for ten minutes, they will be charged only for those ten minutes.

M-COMMERCE STANDARDS

Many of the wireless protocols and platforms that exist today are suitable to serve as a standard platform for M-commerce. Nevertheless, the many entities (carriers, device makers, enablers, etc.) can't agree on which standard to adopt. This is the main reason North America is lagging behind the European Union and the Asia-Pacific region in its ability to provide advanced M-commerce applications. In the meantime, it becomes slightly risky for your company to dive too strongly into any particular form of m-commerce service that utilizes one or another protocol or platform, as the standardization of others may render your service oboslete.

M-COMMERCE SERVICES

It seems that M-commerce services will be introduced in stages. The first stage will be the information-based services, which are relatively easy to implement because they do not require the infrastructure and sophisticated technology needed to purchase actual goods through mobile devices. Purchasing of goods and e-cash functionality will follow at a later stage.

Information-based transactions, rather than purchase of tangible items, will be the first to reach critical mass on mobile devices. These information-based transactions include messaging, usaully short messaging and e-mail involving pagers or mobile telephones; limited financial information, such as up-tothe-minute stock-trading or bank-account information; and travel-related information, such as flight schedules, weather reports, directions to specific destinations, along with the ability to review and modify travel itineraries.

CUSTOMER PRIVACY

Protecting and respecting the privacy of consumers is a major issue in e-commerce, and was in fact an imediment to faster e-commerce growth in the 1990s and early 2000s. On the one hand, m-commerce service providers need to know where customers are at any given time in order to provide effective location-specific information based on that knowledge. On the other hand, providers must be careful not to project an image of intrusiveness. Wireless providers will have to find ways to give consumers almost total control over their degree of privacy. Security, quality, and ease of use will have to find the right balance.

SELLING YOUR M-COMMERCE SERVICES

The main value proposition of M-commerce in the short run isn't the type of features or services that it provides, but its ability to provide these services to people while away from the home or office. M-commerce provides value added in the form of greater time efficiency, which is a strong proposition these days. Time is the single most precious commodity, and M-commerce is one way people can utilize their time more efficiently. Thus, you should position your m-commerce services in such a manner that it highlights these key advantages, rather than trying to compete in the m-commerce realm directly on the turf of established e-commerce services.

FURTHER READING

Bluetooth. "The Official Bluetooth Web site," 2001. Available at http://www.bluetooth.com.

The Cap Gemini Ernst & Young Center for Business Innovation. "Scanning the Future," 2001. Available at http://www.cbi.cgey.com/cgi-bin/pubs.plx?sort=topic.

WizBizWeb, LLC. "Interviews with M-commerce Executives," 2001. Available by request from http://www.wizbizweb.com.

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