What is the role of m-commerce in business, and what are the most important m-commerce applications?

Walk down the street in any major metropolitan area and count how many people are pecking away at their iPhones, Samsungs, or BlackBerrys. Ride the trains or fly the planes, and you’ll see fellow travelers reading an online news­paper, watching a video on their phone, or reading a novel on their Kindle. As the mobile audience has expanded in leaps and bounds, mobile advertising and m-commerce have taken off.

In 2019, retail m-commerce will account for about 48 percent of all e-commerce, with about $270 billion in annual revenues generated by retail goods and services, apps, advertising, music, videos, ring tones, movies, televi­sion, and location-based services such as local restaurant locators and traffic updates. M-commerce is the fastest-growing form of e-commerce, expanding at a rate of 30 percent or more per year, and is estimated to grow to $500 billion by 2022 (see Figure 10.9) (eMarketer, 2018d).

The main areas of growth in mobile e-commerce are mass market retailing such as Amazon; sales of digital content such as music, TV shows, movies, and e-books; and in-app sales to mobile devices. On-demand firms such as Uber (described earlier in this chapter) and Airbnb are location-based ser­vices, and examples of mobile commerce as well. Larger mobile screens and more-convenient payment procedures also play a role in the expansion of m-commerce.

1. Location-Based Services and Applications

Location-based services include geosocial, geoadvertising, and geoinforma­tion services. Seventy-four percent of smartphone owners use location-based services. What ties these activities together and is the foundation for mobile commerce is the global positioning system (GPS)-enabled map services avail­able on smartphones. A geosocial service can tell you where your friends are meeting. Geoadvertising services can tell you where to find the nearest Italian restaurant, and geoinformation services can tell you the price of a house you are looking at or about special exhibits at a museum you are pass­ing. In 2019, the fastest-growing and most popular location-based services are on-demand economy firms such as Uber, Lyft, Airbnb, and hundreds more that provide services to users in local areas and are based on the user’s location (or, in the case of Airbnb, the user’s intended travel location).

Waze is an example of a popular, social geoinformation service. Waze is a GPS-based map and navigational app for smartphones, now owned by Google. Waze locates the user’s car on a digital map using GPS and, like other navigation programs, collects information on the user’s speed and direction continuously. What makes Waze different is that it collects traffic information from users who submit accident reports, speed traps, landmarks, street fairs, protests, and even addresses. Waze uses this information to come up with suggested alterna­tive routes, travel times, and warnings and can even make recommendations for gas stations along the way. The Waze app is used extensively by Uber and Lyft drivers and more than 50 million other drivers in the United States.

Foursquare and new offerings by Facebook and Google are examples of geo­social services. Geosocial services help you find friends, or your friends to find you, by checking in to the service, announcing your presence in a restaurant or other place. Your friends are instantly notified. About 20 percent of smartphone owners use geosocial services.

Foursquare provides a location-based social networking service to over 60 million registered individual users, who can connect with friends, update their location, and provide reviews and tips for enjoying a location. Points are awarded for checking in at designated venues. Users choose to post their check­ins on their accounts on Twitter, Facebook, or both. Users also earn badges by checking in at locations with certain tags, for check-in frequency, or for the time of check-in.

Connecting people to local merchants in the form of geoadvertising is the economic foundation for mobile commerce. Geoadvertising sends ads to users based on their GPS locations. Smartphones report their locations back to Google and Apple. Merchants buy access to these consumers when they come within range of a merchant. For instance, Kiehl Stores, a cosmetics retailer, sent spe­cial offers and announcements to customers who came within 100 yards of their store.

2. Other Mobile Commerce Services

Banks and credit card companies have developed services that let customers manage their accounts from their mobile devices. JPMorgan Chase and Bank of America customers can use their cell phones to check account balances, trans­fer funds, and pay bills. Apple Pay for the iPhone and Apple Watch, along with other Android and Windows smartphone models, allow users to charge items to their credit card accounts with a swipe of their phone. (See our Learning Track on mobile payment systems.)

The mobile advertising market is the fastest-growing online ad platform, racking up a forecast $90 billion in ad revenue in 2019 and growing at 20 percent annually. Ads eventually move to where the eyeballs are, and increasingly that means mobile phones and, to a lesser extent, tablets. Google is the largest mo­bile advertising market, posting about $23 billion in mobile ads or 60 percent of its total ad revenue, with Facebook number two with $19.4 billion (90 percent of its total digital ad business). Google is displaying ads linked to cell phone searches by users of the mobile version of its search engine; ads are embedded in games, videos, and other mobile applications.

Shopkick is a mobile application that enables retailers such as Best Buy, Sports Authority, and Macy’s to offer coupons to people when they walk into their stores. The Shopkick app automatically recognizes when the user has en­tered a partner retail store and offers a new virtual currency called kickbucks, which can be redeemed for store gift cards.

Fifty-five percent of online retailers now have m-commerce websites— simplified versions of their websites that enable shoppers to use cell phones to shop and place orders. Virtually all large traditional and online retailers such as Sephora, Home Depot, Amazon, and Walmart have apps for m-commerce sales. In 2019, more than 66 percent of m-commerce sales will occur within apps rather than mobile web browsers. Browser commerce has, at least for mobile users, become app commerce.

Source: Laudon Kenneth C., Laudon Jane Price (2020), Management Information Systems: Managing the Digital Firm, Pearson; 16^th edition.