Roadmap to M-Commerce

Thanks to the 2007 introduction of the Apple iPhone, mobile or m-commerce now offers retailers a fourth sales and marketing channel beyond brick-and-mortar, contact center and conventional e-commerce. They also face more complexity by having to add a consumer's physical location to the long list of other factors they examine before deciding what customer services to deliver and how to deliver them.

So far, the phenomenon has only taken baby steps since it requires a heavyweight mobile browser to turn the ubiquitous handset into a "smart phone." Such devices currently represent only about one percent of all active cell phones. But the number and variety of smart phones are soon expected to skyrocket joining the ranks of the already activated iPhone, RIM Blackberry and the recently launched Google Android.

What It Means
"M-commerce will make smart cell phones into the 'remote control for the world,'" says Nikki Baird, managing partner, RSR Research. "But it is not just an extension of existing e-commerce platforms and strategies. Among other things, they will need to integrate this new medium with other channel strategies and technologies."

The new channel delivers more than one sales outlet. "We just launched our m-commerce site on August 1st," says Kevin Ranford, director of Web marketing, 1-800-Flowers.com. "Customers can enjoy a robust user experience by linking into the Digby Marketplace based on Powered by Digby that includes other retailers such as Godiva Chocolatier and Barnes & Noble. "Separate from the mall, we also have our own m-commerce site, the Mobile Gift Center which offers many items beside flowers."

M-commerce also enables retailers to execute their existing retail strategies in the newly launched channel. "We are using our site as a bargain center -- offering hot items at low prices in limited quantities for a limited time," says Ed Matibag, director of marketing, eCOST.com, an electronics retailer and a subsidiary of PFS Web. "We send out SMS (short message service) alerts that may change hourly targeted at savvy tech users." The site uses GoMobile!, an mPoria M-commerce solution.

What's at Stake?
For some, the rise of m-commerce reminds them of the origins of e-commerce in 1997. "The advantage of getting involved early is to have the time to figure it all out and define the customer experience. The key is enabling consumers on the move to buy what they want in a couple of clicks so you can sell more products," says Baird.

However, the underlying technology remains a challenge. "Launching our m-commerce system on the Blackberry involved more than a few nuances," says Ranford. "Digby made it easier by providing downloadable tools so users can make the connection easily. The links to the iPhone will be easier."

The current lack of standardization among devices inhibits interoperability. Different handsets models from the same vendor do not always operate smoothly with the same carriers. That requires massive debugging and testing to ensure the network works.

Consequently, Nikki Baird of RSR Research counsels retailers to bring in third-party developers and service suppliers to kick start their M-commerce initiatives. "It is a complex, expensive and fast-moving technology," she says. "Having outside suppliers makes more sense than doing it on your own." 

Baird also suggests retailers need to curb their enthusiasm when marketing in the new channel. "Right now, mobile advertisers are producing banner ads," says Baird. "Retailers are sending text messages as well. But they can't overdo it since consumers then feel it is an invasion of their privacy. People will not accept being spammed on their cell phones."

Another barrier is the lack of flat-rate text message plans from North American telecom providers. Many users in North America pay for all outgoing text messages, however certain carriers overseas have set up flat rate plans for text messaging.

How to Succeed
When using their cell phones to buy products on the go, consumers want transactions to be short, simple and snappy -- just like their own text messaging activities. "Our customers tell us they are very happy that they can complete an order within 30 seconds," says Ranford. "We have done everything we can not to slow down the process."
"We pared down our m-commerce gift selection to about 10 items in eight different categories. Also we focused solely on the Mobile Gift Center as a streamlined order service. Customers are not able to update their information data."

But the focus should not be entirely on the front-end ordering experience. "We transmit back-end, fulfillment information confirming the order, stating the shipping date and estimated delivery time," says Matibag. "Later, we also send a message asking if the package arrived safely and on time as well as 'do you need anything else?' That opens up cross-sell and up-sell opportunities."

What's happening in Japan offers a hint at future m-commerce possibilities. "Almost all cell phones have cameras," says Baird. "In Japan, people use the camera on their cell phone to capture 2-D barcodes on store shelves which links them into other Web sites offering more detailed product and other information. These barcodes are not just attached to consumer goods but also cars, equipment and even buildings."