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.