E-commerce: It’s In-Hand

Globally,
three times as many users have adopted mobile phones as have adopted the
internet. However, while the adoption rate of mobile phones is high amongst
consumers, the bulk of e-commerce developers have ignored this technology.
In Finland today, only wristwatches have a higher penetration rate than
mobile phones and during the next three years Europe and Australia will
achieve similar penetration rates. Ignoring these wireless-enabled devices
as a Business to Consumer (BTC) channel is a mistake. For example, Gartner-Group
predicts:

  •  In
    1999 more mobile phones will be shipped worldwide than cars and ‘PCs’
    combined.

  •  By
    2005, leading e-business companies will think of the mobile phone
    as the retail outlet in their best customers’ pockets (0.7 probability).

  •  2004 will initiate at
    least 40 per cent of BTC e-commerce transactions from a portable,
    cellular-enabled device (0.8 probability).

  • By 2005 more than 1 billion
    mobile phones will be in use worldwide (0.7 probability).

By contrast, a mere half
of these users will be connected to the internet worldwide. Seemingly
unconnected initiatives and trends will rewrite the rule book on mobile
e-commerce. If e-business is a by-product of the internet evolution, wireless
technologies are a major growth hormone for e-business.

People are instinctively
mobile

The development
of the wired economy has been counter-intuitive to the natural flow of
information and goods between consumers and suppliers. The cellphone removed
the physical constraints caused by the wires that connected users to the
‘network’ – at least for voice. Data users have largely remained unable
to connect to the ‘Net’ without wires. That is about to change. Companies
that do not mobilize goods and services using wireless technology will
be investing in a counter intuitive strategy that is destined to fail
in the context of an electronic economy.

The common thread through
business transactions is that time is money, convenience is important
and given the complexities of everyday life, creation of ‘free’ time is
highly desirable. An e-business model that forces people to come to it
rather than e-business coming directly into the hands of individuals will
fail to exploit the full global opportunities of the market. A wired e-business
model forces such a constraint. A wirelessly enabled e-business model
does not suffer from this shortcoming.

Mobile e-commerce pilots
and services

Nokia has
its ‘Dial A Coke’ concept for vending machines, where choice is made by
phone and billed by the cellular operator. A car wash in Helsinki also
works in a similar way. Peoples Phone of Hong Kong is launching a service
allowing bill payment by credit card via mobile phones. Mobistar of Belgium
demonstrated loading ecash onto Proton smart cards over mobile phones.
Telenor of Norway is running a public trial allowing users to select and
pay for cinema and theatre tickets by mobile phone. About 1,000 Barclay’s
Cellnet customers can load a modified Barclaycard with up to A$100 of
ecash. Investors in Singapore can securely buy and sell stock using mobile
phones. Australian banks are beginning trials of trading using GSM’s Short
Message Service (SMS) facility.

The mobile wallet concept

Banks and
retailers will want to sell ‘mobile wallet’ services direct to customers,
giving them an incredibly powerful distribution channel and an easier
way to promote special services or options to more qualified, loyal consumers.
Mobile automatic teller machine functionality will allow banking to come
to people anywhere, anytime while reducing delivery and support costs
of services by as much as 15 per cent. The customer should be able to
access account balances, make transfers, pay bills and send electronic
cash into and out of a mobile phone.

Airlines can exploit the
mobile wallet concept by enabling travelers to find and ticket flights.
The airlines can then provide flight information directly through to a
mobile phone to the ticket holders. The ticket will be a piece of electronic
code, stored on a smart card in the handset. By simply waving the phone
at the detection equipment in the gate area people will be able to quickly
board the plane.

Early e-commerce scenario

One early
scenario sees the cellphone subscriber conducting purchasing negotiations
with the seller using conventional voice. When a deal is agreed, the seller
sends an SMS confirmation that lists the items and confirms the price
and other details. The subscriber accepts the order by simply using the
smart card in cellphone and pressing OK.

Businesses cannot afford
to ignore mobile ‘communicators’ as an e-commerce channel. Leading companies
will evaluate how they can capitalize on the e-commerce opportunities
provided by the latest mobile developments. The wired world may have built
the internet, but the wireless world will deliver it to the world.

Geoff
Johnson, Research Director
GartnerGroup

Geoff Johnson is a research director based in GartnerGroup’s Brisbane
office.

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