In its second-largest acquisition, Amazon buys the company for $970 million.
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Furthermore, she says consumers typically order out two times a month, an opportunity for food sellers to tap into with a mobile service. Leskun says putting a brand on a wireless device that allows consumers to set preferences for menu items, payment and delivery, avoid busy signals and being placed on hold, and insure order accuracy by putting the power into the consumers’ hands can pay off in loyalty in the long run. “4 p.m. is a decision point at which consumers decide what they want to eat for dinner. And that decision point is worth $136 million a day,” Leskun says. “If I could have my brand in your pocket, literally, clearly I’d have a chance to increase my market share.”
Leskun and Orton Katz also say that because the mobile orders connect directly to the line orders, it can save retailers the labor costs of taking manual orders. Automating a percentage of the roughly 4 billion annual pizza orders could result in a significant profit improvement, Motorola argues.
Aiming to lure the gift-buying consumer segment that wants immediacy, location, use of spare time and personalization, New York-based Godiva Chocolatier introduced a mobile commerce program in May 2001. E-business developer Fry MultiMedia and software company Ecliptic Systems helped Godiva develop the program, which allows consumers to buy chocolate via web-enabled cell phones and PDAs. Godiva sees the addition of m-commerce as its way of expanding its channel access. The current wireless service connects with the MyGodiva web site function that saves names and addresses of gift recipients, billing information, important dates and order history. And it also expands on Godiva’s initial foray into wireless when it started providing in October 2000 wireless access to identify the nearest of Godiva’s 250 boutiques and 2,500 specialty and department store counters. Godiva declines to disclose the results of its wireless program.
Amazon.com also introduced a mobile commerce effort in July 2001 with AT&T Wireless, giving AT&T PocketNet customers access to Amazon’s wireless web site. The service uses the Amazon Anywhere wireless platform, which incorporates many Amazon.com features such as 1-Click ordering, recommendations, customer reviews and all product searches. Amazon Anywhere has alliances with 12 major mobile phone carriers and service providers worldwide. Amazon, too, has been mum on the progress of its m-commerce service.
But even though early adopters are not reporting massive consumer response, keeping m-commerce on the radar screen could be important to retailers if telecom services emerge to support it. In spite of its experience, Barnes & Noble, for instance, is not ruling out m-commerce for the future.
Experts who think m-commerce will develop like online shopping say simple transactions that consumers don’t have to touch and feel, like flowers, CDs and books, are likely to be among the first m-commerce items in demand. 1-800-Flowers’ Latimer is one such believer. “Our view was that the wireless Internet would develop the same way the Internet did,” he says. “First things were free, then you started doing easy transactions like buying pizza and movie tickets. Once that happens, our category should be one of the first for shopping.” 1-800-Flowers is still evaluating the market and has not made plans to re-establish its m-commerce plan. “There is no major consumer demand right now or any sales opportunities that we are missing,” Latimer says.
E-Marketer’s Macklin agrees that wireless carriers that have the capabilities to develop mobile commerce portals, similar to Yahoo and AOL on the Internet, could attract retailers and build an m-commerce community as a first step toward getting consumers used to the idea of ordering goods and services from wireless devices. That would mean a major portal or services provider would market a feasible m-commerce solution to a large and active user base. Think AOL, Yahoo and MSN customer base development. It took some time but now these are huge organizations that push all kinds of technology, shopping and marketing efforts.
But technology has to catch up with the idea of m-commerce first. “To support the idea of shopping with a mobile device, we’ll have to see more convergence with technology platforms,” says Latimer. “Right now the phones are not that easy to navigate. Wireless screens are small. But the devices will get better.” Food.com’s Orton Katz reiterates that the devices are improving the odds for future m-commerce applications. “New phones are coming out with web access, bigger display screens and integrated PDA and cell phone functions. People already are saying the upcoming Trio and Nokia Clamshell are going to be hot products with consumers,” Orton Katz says.
Even with the technology and service offerings, it’s the pitch to consumers that will make or break m-commerce. Until consumers see a clear use for ordering items and services over their cell phones, PDAs or wireless laptops, retailers would be wise to hang onto their development money.
Industry analysts say there may be other ways to entice the consumer into mobile commerce. “We’re skeptical about transferring traditional e-commerce items like CDs and books because there’s no instant gratification; they still have to wait for delivery,” says Adam Zawl, mobile commerce analyst at the Boston-based Yankee Group. “The real question is what will incent someone to actually use the phone to make a purchase?” More reasonable applications in the near-term, says Zawl, include receiving a wireless alert when items are available, such as when a new song is released, or alerting a consumer that he is being outbid on eBay. “Receiving alerts for new items and auctions have the time element where it makes sense to consumers to be contacted on a wireless device,” says Zawl.
E-marketer’s Macklin also notes that a first step to getting consumers used to mobile services is by basic marketing. “In Europe, they promoted the Lord of the Rings film on wireless networks.” And he says a major alcoholic beverage company has talked of targeting mobile users for a basic brand campaign in North America. Macklin also says retailers could ask customers if they’d be interested in receiving coupons through their mobile devices so they could use them at the store. “Those types of things take advantage of always being on wherever the customer is with their wireless device,” he says. “It’s the obvious place where retailers should take advantage.”