In its second-largest acquisition, Amazon buys the company for $970 million.
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In PC web retailing, merchants can use e-mail as a strong marketing tool to push upcoming sales and promotions directly to the end customer. But wireless retailing is pretty much one-way. When end users must pay for all calls, they won’t put up with unnecessary messages from retailers-even if the merchant is offering a great deal on their favorite merchandise. “If it’s on their dime, cell phone users don’t want a lot of telemarketing calls and that means we can’t get our message out to them,” says Sally McKenzie, division vice president, merchandising and operation, interactive media, Eddie Bauer. “The other challenge is pushing promotions and trying to sell when you’re only limited to 200 characters of text and screen that’s only a couple of inches high.”
Eddie Bauer will re-evaluate wireless retailing when the concept is further along. But just figuring out merchandising and marketing logistics aren’t the only reasons most merchants are lukewarm to mobile e-commerce.
In Europe, wireless e-commerce will attract close to 300,000 regular shoppers by 2004 because the wireless systems are national and European countries, telecommunication companies and retailers agree on a common standard: Wireless Area Protocol, a secure specification that runs on all standard operating systems and allows users to access information immediately via hand-held devices.
Europeans see WAP and the continent’s growing number of wireless Internet users as the catalyst for making widespread mobile retailing take off. But not so in the United States, where carriers don’t agree on a common standard and callers still can’t get universal coverage with a guarantee of not having their conversation-or sales order-cut off.
In Europe, centralized systems and shared networking arrangements between carriers allow hand-held unit users to complete secure transactions. But in the U.S., merchants must integrate their core Internet retailing systems with as many as six different mobile commerce platforms or standards, and for many it’s still not worth the effort. “If it was plug-and-play and uniform like it is in other parts of the world, U.S. retailers would be making mobile shopping a much bigger priority,” says Claudine Thompson, a wireless research analyst with eMarketer Inc., New York. “Unfortunately, the infrastructure just isn’t there yet and most merchants still see it as too risky.”
Some merchants are getting past the infrastructure problem by narrowing their wireless retailing programs to existing account holders. CD Now, for example, is rolling out CDNow Wireless because the music retailer, now a part of Bertelsmann Inc., sees web-enabled cell phones as one more way to reach its core customers-18- to 40-year-olds with annual incomes over $50,000-during the holiday shopping season. CDNow is rolling out wireless with ViaFone Inc., a Redwood Shores, Calif., mobile solutions application service provider. Under the program, CDNow customers can use a web-connected cell phone or mobile device to access a special portion of the web store and browse through music selections by category or through a listing of the day’s top 20 selling albums. If shoppers choose, CDNow will send them personalized emails alerting them when their favorite artist has a new release or if a particular CD is going on sale.
But while CDNow sees good marketing potential in launching a mobile shopping strategy, its present program still isn’t ready for prime time. Customers still can’t punch in their credit card numbers to complete a transaction and, unlike PC shopping where the technology enables music lovers to see colorful graphics of CD covers and hear sound clips from their favorite CDs, shoppers can only read terse title descriptions with their hand-held units.
“We know our wireless program is bare bones and doing something like this now is pretty bleeding edge,” says Benam Yerushalmi, senior director of product services, CDNow. “But who’s to say this isn’t the next killer application and a technology we can really be on top of if it takes off?”
Wireless shopping isn’t going to supplant PC-based retailing anytime soon. And the list of big retailers who aren’t moving into mobile e-commerce is lengthy. JC Penney, which was the first big chain to launch an Internet store in 1994, has no immediate plans to roll out wireless e-commerce. And while Wal-Mart is recognized by industry analysts as having the best retail technology infrastructure, it, too, is taking a pass at mobile e-commerce.
Among catalogers and progressive online retailers, Lands’ End, which is using interactive customer service and 3-D modeling technology to attract shoppers, doesn’t see a payback on linking to web-connected cell phones or mobile devices. Likewise, neither do SkyMall and Sharper Image, which were among the early adopters to invest in personalization technology, a rules-based software package that can analyze and predict consumer buying habits.
Where’s the payback?
Before the e-retail shakeout began and Wall Street and venture capitalists started demanding that merchants put profits ahead of technology innovation and branding, SkyMall would have shelled out the $100,000 to $300,000 needed to launch a wireless program. But not now. SkyMall spent almost $500,000 launching a personalization program, yet for cost containment reasons its won’t be making any more big technology investments and that includes making changes to its computer system to handle wireless shopping.
“If there is no immediate payback, we just won’t do it and I think that pertains to other retailers as well,” says SkyMall CEO Robert Worsley. “Retailers are throwing a wet blanket over promising technology such as wireless because they have to emphasize making a profit over everything else.”
Aside from worrying more about the bottom line, finding out just who the real wireless shoppers are is the biggest reason more Internet retailers aren’t being more aggressive with mobile e-commerce. “I don’t think I’ve ever met an actual web-enabled cell phone shopper in the United States,” Narasin says. “If they are out there, I don’t know where they are.”
But those who are in the early stages of a rollout believe they do know and it’s a prime reason they’re moving quickly to sign up with leading wireless services and mobile device manufacturers. Amazon Anywhere, for instance, occupies prime space on three wireless shopping channels and Amazon is working with hardware manufacturers such as Palm Computing Inc. to embed hand-held devices such as the Palm VII Organizers with WAP applications that can provide mobile access to the Amazon site.