FOCUS on mobile commerce

In Chapter 1 we explained that e-commerce refers to both informational and financial transac­tions through digital media. Similarly mobile commerce (m-commerce) refers to the use of wireless devices such as mobile phones for both informational and monetary transactions.

While fixed access to the Internet has dominated to-date in many developed countries, in future this situation will change due to the ubiquity of the mobile phone and the adoption of higher-speed services and more sophisticated handsets. In some countries such as Japan and China, the majority of web access is via mobile phone and we can expect to see increased mobile use in all countries. In China there are more mobile subscribers (over half a billion) than the whole US population (Belic, 2007) and according to the regularly updated Comscore panel data (www.comscore.com), use of the web by mobile devices in Japan is equal to that of traditional computer access.

Adoption and potential for mobile commerce around the world ^{[1] [2]}

1. Wireless Internet access standards

The capabilities of mobile phones have evolved tremendously since the first generation brick-like phones were introduced in the 1980s. There is a bewildering range of data transfer standards which are summarized in Table 3.6. Many subscribers are still using the second- generation GSM technology which does not permit Internet access, but many have the option for 2.5G web access via WAP. The 3G and 3.5G phones are sometimes known as video phones since they support video calls and broadband speed access

A further standard term associated with mobile Internet access is ‘Wireless Application Protocol’ or WAP phones. This offers the facility to access information on web sites that has been specially tailored using Wireless Markup Language (WML) for display on the small screens of mobile phones. There was a tremendous amount of hype about this access mode around 2000 when they were introduced since they seemed to provide all the benefits that have been provided by the World Wide Web, but in a mobile form. But levels of product purchase by mobile phone and content access proved very low in comparison with the Inter­net, even for standardized products such as books and CDs. Many m-commerce providers such as Sweden’s M-box went into receivership. However, analysts expect that with new access platforms, such as 3G, this will change.

One other form of mobile access popularity is Japanese i-Mode standard which uses a derivative of HTML for content display. Mobile-phone ringtones and other music down­loads are the most popular i-Mode purchases, followed by other paid-for information services such as dating. The strength of the proposition is indicated since over 30 million Japanese were using this service less than two years after its launch. It was subsequently made available in European countries, but providers who adopted it in Germany, Russia and the UK ended the service in 2007 since flat-rate access to 3G services proved more appealing.

2. Wireless access devices

The main mobile access devices that site owners and marketers need to consider support for in their customer and partner communications include:

• Mobile phones using short-code response to campaigns or interactive sites based on WAP or use of rich-media streaming supported by broadband 3G technology.
• Personal digital assistants or smartphones such as the BlackBerry and Windows mobile ‘Pocket PC’ phones.
• Traditional PCs such as laptops accessing the web over Wi-Fi.
• Gaming platforms with a lower screen resolution accessing the web via Wi-Fi such as the Nintendo DS Lite or Sony PlayStation Plus (PSP).

3. Popularity of mobile applications

Mobile technologies have been touted for many years as the future for Internet access. They are widely used, but primarily for text messaging within Europe and the US. Mobile phones are important in terms of paid content services due to their popularity in some countries such as Japan. They distribute more content ($31 billion) than the total global content on the Internet ($25 billion led by pornography and gambling) and more than Hollywood Box Office’s annual $30 billion (Ahonen and Moore, 2007).

The benefits that mobile or wireless connections offer to their users are ubiquity (can be accessed from anywhere), reachability (their users can be reached when not in their normal location) and convenience (it is not necessary to have access to a power supply or fixed-line connection). In addition to these obvious benefits, there are additional benefits that are less obvious: they provide security – each user can be authenticated since each wireless device has a unique identification code; their location can be used to tailor content; and they pro­vide a degree of privacy compared with a desktop PC – looking for jobs on a wireless device might be better than under the gaze of a boss. An additional advantage is that of instant access or being ‘always-on’; here there is no need to dial up a wireless connection. Table 3.7 provides a summary of the mobile or wireless Internet access proposition. There are consid­erable advantages in comparison to PC-based Internet access, but it is still limited by the display limitations such as small screen size and limited graphics.

Some examples which show the potential power of future mobile applications are suggested through an initiative by Google explained in the box.

3.1. SMS applications

The importance of SMS messaging by businesses should not be underestimated. Texting has proved useful for business in some niche applications. For example, banks now notify cus­tomers when they approach an overdraft and provide weekly statements using SMS. Text has also been used by consumer brands to market their products, particularly to a younger audi­ence as the case studies at text agency Flytxt (www.flytxt.com) and Text.It, the organization promoting text messaging (www.text.it), show. Texting can also be used in supply chain management applications for notifying managers of problems or deliveries.

For companies marketing themselves electronically, SMS is potentially a great way to get closer to customers, particularly those in the youth market who are difficult to reach with other media. However, it is important that companies that follow this path respect the opt- in and privacy legislation which is described in Chapter 4.

These are some of the SMS applications showcased on Text.it (www.text.it):

1. Database building/direct response to ads/direct mail or on-pack. This is one of the most significant applications. For example, Ford engaged its audience when promoting the Ford Ka by offering consumers to text in a unique code printed on their postcard for entry into a prize draw.
2. Location-based services. Text for the nearest pub, club, shop or taxi. In London you can now text for the nearest available taxi and pay the congestion charge through texting once accounts are set up via the web!
3. Sampling/trial. Nestle used an opt-in SMS database to offer samples for a new chocolate bar to consumers in its target group.
4. Sales promotions. Timed e-coupons can be sent out to encourage footfall in real and virtual stores. Drinks brand WKD offered its consumers to ‘Peel Off and Win’ on its bottles. The competition offered prizes of 3,000 football club shirts, mini footballs, 10,000 referee cards, and 1m exclusive ringtones and logos designed by WKD. Half a million people played the game, a campaign response rate of 3%. A 3,000-strong opt-in database of the company’s 18-24-year-old customer base was created. The company plans to use this data­base to trial new WKD variety Silver.
5. Rewarding with offers for brand engagement. Valuable content on mobiles can be offered via SMS, for example free ringtones, wallpaper, Java games or credits can be offered to consumers via text.
6. Short codes. Short codes are easy to remember: 5-digit numbers combined with text that can be used by advertisers or broadcasters to encourage consumers to register their interest. A similar approach is Quick Response (QR) code which is a kind of barcode published in newspapers or billboards which can be scanned by a mobile phone camera and then linked directly through to a web site. It does require specific software. Figure 3.22 shows an example.
7. Offering paid for WAP services and content. Any service such as a ringtone delivered by WAP can be invoked from a text message. For example, Parker’s Car Guides now prints ad text ‘go parkers’ to 89080 (a short code) for quick access to the Parker’s WAP site which provides car prices on-the-go, at £1 for 10 minutes.

SMS messaging has recently been augmented by Picture Messaging or Multimedia Messaging Services (MMS). While volumes have been relatively low initially, the overlap between text messaging and e-mail marketing will decrease as there are more handsets with larger screens.

The integration of SMS alerts with social networks has proved popular, as the box shows.

3.2. Wi-Fi (‘wireless-fidelity’) mobile access

‘Wi-Fi’ is the shorthand often used to describe a high-speed wireless local-area network. Most Wi-Fi networks use a standard protocol known as 802.11 a,b, g or n, which offers data rates of up to 300 Mbps, which is relatively fast compared to ADSL, although this depends on signal strength. Wi-Fi can be deployed in an office or home environment where it removes the need for cabling and adds flexibility. However, it has attracted most attention for its potential for offering wireless access in cities and towns without the need for a fixed connection. The Intel Centrino mobile chip launched in 2003 offers facilities to make Wi-Fi access easier for laptop users.

In 2002 some airports, cafes and hotels started offering Wi-Fi ‘hotspots’ which allowed customers access to the Internet from their laptops or other mobile devices without the need to connect using a wire. Such hotspots have now become widespread. For wireless local-area networks (WLANs) additional hardware is needed. For example, home users need to buy a wireless router (sometimes with firewall included) which connects to the Internet and shares the Internet and local network access with all PCs in the house which contain wireless cards to receive the signal. Other devices can also be used: for example music or video streamed from the Internet can be played on appropriate devices. Transmission is limited in home applications to around 100 m line-of-sight.

3.3. Bluetooth

Bluetooth is another wireless technology, this time used for short-range data transmission between devices. Applications of Bluetooth include wireless keyboards and beaming data between a PDA and a desktop or a laptop and a printer. Transmission distances between Bluetooth-enabled devices were initially limited to 10 m, but can now be up to 100 m, so there is now the option for using the technology for networking like Wi-Fi. However, Blue­tooth is significantly slower than the main Wi-Fi standard at 723 kbps, so usage for WLANs will be less common.

3.4. Bluetooth wireless applications

Bluetooth technology has potential for different forms of local marketing campaigns known as proximity marketing: (1) viral communication, (2) community activities (dating or gaming events), (3) location-based services – electronic coupons as you pass a store. It is currently in its infancy, but some trials of bluecasting such as that shown in Figure 3.23 where sample music tracks are downloaded and in Mini Case Study 3.6 have been successful.

Bluecasting has also caused concern over permission where the user does not proactively agree to receive communications as with the examples above, but instead the message is sent to any local mobile where Bluetooth is set up to detect connections. Bluejacking involves sending a message from a mobile phone (or other transmitter) to another mobile phone which is in close range and set up to connect with other bluetooth devices such as from a store to customers.

Bank HSBC used this approach in a 2007 trial to offer one of its investment products to passers-by to its Canary Wharf branch who had their phones set to receive Bluetooth messages. The risks of this approach can be seen from the write-up in Finextra which was headlined ‘HSBC spams passersby in mobile marketing ploy. Although the UK Information Commissioner has acknowledged that the technique isn’t covered adequately by privacy rules, obviously care needs to be taken since this technique could be seen as intrusive.

Google is also innovating in this area. You may have read of its first forays into Google Classifieds where ads are placed in newspapers and magazines or Google Audio ads where you can place ads across US radio stations. But did you read about the trial of an interactive billboard where an eye-tracking technology was used to measure the number of eyeballs viewing the ad? You can see the next steps would be iris recognition technology identifying the passer-by from a global con­sumer database and then tailoring ads.

The advent of new mobile technologies for customers to access con­tent poses a difficult dilemma for organizations that have adopted e-commerce since, to be competitive, the decision to adopt must be made before the extent of its impact is apparent. These issues apply, in particular, to business-to-consumer companies since the content made available for new access devices has mainly been targeted at consumers. Imagine you are the e-commerce manager or brand manager at a consumer company: what would be the benefits and drawbacks of updating your e-commerce systems to m-commerce? The benefits of deciding to invest could include:

• Early-mover advantage
• Learning about the technology
• Customer acquisition
• Customer retention
• Improving corporate or brand image.

However, it will be difficult to estimate the number of new customers who may be acquired and the profitability of the project may be sacrificed to achieve the other benefits above. As new technologies become available, companies need to assess the technology, understand the services that may be relevant to their customers and work out a strategy and implemen­tation plan. It also becomes necessary to support development across multiple platforms, for example retailers such as WH Smith Online use a database to generate book catalogue con­tent for display on web, mobile or interactive digital TV platforms.

Although it may appear there is a divergence in access devices from PC to phone to TV, in the long term most commentators expect technology convergence to occur.

Mougayer (1998) identifies different types of convergence:

• Infrastructure convergence – this is the increase in the number of delivery media channels for the Internet such as phone lines, microwave (mobile phones), cable and satellite. These are now often being used in combination.
• Information appliance (technology) convergence – the use of different hardware devices to access and deliver the content of the Internet.
• Supplier convergence – the overlap between suppliers such as Internet service providers, online access providers and more traditional media suppliers such as the telecommunications and cable companies.

3.5. Strategies for mobile commerce

Different types of strategy can be identified for two main different types of players. For portal and media owners the options are to migrate their own portal to a text version (the option followed by the BBC for example (www.bbc.co.uk/mobile/). The BBC offers a stan­dard (WAP) version which can be used on all mobile devices, and is the fastest and cheapest option, and an Enhanced (XHTML) version has been designed for use on 3G phones which includes both video and audio downloads. There is also a PDA version and the standard desktop version so that is four different versions that have to be supported.

Mobile sites can also be made available through a .mobi domain where a WAP site is available for download of content. The example in Figure 3.24 shows a feed of news items repurposed for mobile.

Alternatively, an organization may decide the cost of repurposing is too high and they may wait for users to access the web with 3G devices which will require less repurposing since the screen resolution is higher. As explained in Chapter 11 a stylesheet can be defined to simplify the design of visitors to the web site who are accessing the web through a mobile device.

Revenue models for mobile access for site owners are similar to those described for pub­lishers in Chapter 2. They may include advertising, sponsorship or subscription for individual content items or be on a subscription basis.

For destination sites such as retailers, banks and travel companies, mobile marketing options include:

• marketing communications (to support purchase and support) using banner advertising
• e-commerce (sale of products on-site)
• brand building – improving brand image by being one of the first suppliers to offer an innovative service.

Source: Dave Chaffey (2010), E-Business and E-Commerce Management: Strategy, Implementation and Practice, Prentice Hall (4th Edition).