Online retailers are struggling to keep their businesses afloat. Their resources, money and manpower are rapidly declining and the investment community is expressing increasing skepticism, resulting in falling stock prices and bankruptcies. In contrast, the wireless sector is experiencing unprecedented growth. This has been one of the most dynamic years for mobile commerce.
Wireless technologies are being hailed as the next revolution behind the Internet and are being touted as the technologies that will make the Internet omnipresent. Online retailers want and need to capitalize on the wireless trend to survive. What must online retailers do to capture the wireless consumer? The solution involves three key steps: partner, personalize and push.
Partner — Partnerships are the fundamental first step toward establishing a solid m-commerce strategy. Given the embryonic stage of the wireless Internet market, retailers need to build partnerships and alliances with businesses across the value chain. For retailers to offer wireless consumers what they want and make money in the process, they need to have the right set of technology and business partners. Retailers will be required to partner with a variety of businesses, including:
• Wireless carriers and Internet service providers (an increasingly converging area) — those that currently control the customer contact.
• Wireless application service providers — to provide the applications to make transactions over wireless networks.
• Application developers — to develop the specific applications unique to each retailer’s area of business and customer base (i.e., personalization).
• Professional services and systems integration firms — to ensure that their wireless strategies are being correctly implemented and integrated, both from a technology and a strategic perspective.
The purpose of partnering is to provide value-added services to consumers that will lead them to purchase the retailer’s core products. Partnerships will provide online retailers with the expertise to accommodate customers with such services.
Personalize — Personalizing the shopping experience will be the most compelling selling point of m-commerce, as it is the most important service that retailers can provide to customers. Personalization will entail understanding customers’ buying patterns, preferences and various aspects of their personal lives.
For example, through personalization, online retailers can remind consumers of a friend’s birthday or anniversary and suggest a gift idea. Retailers will be able to provide customers with relevant, timely and location-sensitive offers that customers will appreciate.
The customers are not simply “being sold,” but rather are being helped by simplifying their lives. The ability of retailers to notify, customize and inform shoppers about goods and services they are seeking will make wireless retail a proposition that consumers will value.
In contrast, unsolicited, mass-marketed or irrelevant attempts to sell to the wireless consumer will result in a loss of consumers. This would be costly to online retailers since the trend is to focus on retaining customers rather than acquiring new ones. Therefore, online retailers will need to target existing customers for personalization to work, which will further strengthen the relationship with the customer.
Push — The nature of wireless devices makes them more prone to pushing information than other devices. The wireless device, since it is a personal device much more so than any other information tool, is always with the user and can contain very personal information, such as contact lists, daily calendar, to-do lists and birthdays. Online retailers need to establish ways to tightly integrate with a consumer’s personal data.
The current lack of bandwidth, as well as navigation constraints, makes wireless devices an ideal medium to push relevant information. The key to effective pushing links back to personalization. The combination of these two elements is a true value-added service from a consumer’s perspective. The convenience of shopping, or having something delivered to you and sending something to a loved one, all from your mobile phone, makes for a powerful tool that online retailers can use to keep their customers satisfied.
The three-p approach to winning the wireless consumer will enable retailers to cost-effectively provide customers with a value-added service and, ultimately, capitalize on the wireless revolution.
Consider the scale of wireless retail based on these facts:
• The latest report of the U.S. Census Bureau in the Department of Commerce found that U.S. e-commerce retail sales, excluding travel services, financial services and ticket sales agency sales, were $5.5 billion for the second quarter of 2000. This is 0.68 percent of the total $815 billion. For the near future, wireless retail will be a small percentage of the 0.68 percent.
• The penetration of wireless devices is 35 percent to 40 percent. This number is expected to reach about 75 percent by 2005, which indicates a promising market size.
There will be differences in how and when pure online, clicks-and-mortar and traditional retailers will implement wireless strategies. However, capturing the wireless consumer will be an area of competitive advantage for any online retailer that properly deploys wireless solutions. Partnering, personalizing and pushing will bring retailers closer to achieving their goals: survival and prosperity.
• Sohrab Torabi covers mobile commerce as an analyst at Datamonitor, New York, a market analysis firm. Reach him at [email protected].
