In its second-largest acquisition, Amazon buys the company for $970 million.
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Like Moosejaw, AG Interactive, a division of multi-channel American Greetings Corp., is blazing the m-commerce trail. AG Interactive began experimenting with m-commerce a few years ago, but revenue was insufficient to support the program. Today the program is going strong, with digital content-ring-tones, wallpapers, animations, e-cards and more-selling via mobile phonethrough most of the major wireless telecommunications carriers.
Because of the ubiquity of mobile phones and a massive cultural shift from formal to impulse communication, there is a growing market for electronic commerce via mobile phones and other handheld devices, says Bryan Biniak, senior vice president at AG Interactive. “Though it represents only a small portion of the overall wireless revenue of telecommunications carriers today, revenue is on the rise from wireless data connectivity and services like mobile web browsing, shopping and other carrier portal visits, and text messaging,” Biniak says.
While use of wireless data services in general is on the rise, American e-retailers, technology vendors, consultants and researchers have varied opinions on m-commerce. One thing most of them do agree on, though, is that at some point m-commerce in this country will be ubiquitous and routine. Some say as soon as 2008, others several years later.
There are more than 200 million mobile phones in use in the U.S. today, many of which come preloaded with technology to enable some form of Internet interactivity-instant messaging, e-mail or web browsing; 15% have all three capabilities, Telephia reports.
At least 100 million phones in use today in the U.S. are “download capable,” according to investment firm Piper Jaffray & Co., meaning they are able to connect to a wireless carrier-based site or Internet site and download digital products such as ringtones, images and games. Most of the major wireless carriers operate sites on their networks-as opposed to on the Internet-on which users can purchase digital content, paying for it via their mobile service accounts.
Further, carriers have begun adding shopping portals, or decks, to their user interfaces. Mobile phone users access the shopping area which enables them to link to m-commerce sites-either wireless carrier-based versions of sites or Internet-based mobile-enabled sites-of retailers that have agreements with the carriers.
New browser software
A technological key to m-commerce, just like e-commerce, is the browser software-the interface between shopper and merchant. In recent years, a steadily increasing number of mobile browser companies have been successful at getting their browsers on billions of mobile phones worldwide. These vendors include Access Co. Ltd., Bitstream Inc., Microsoft Corp., Nokia Corp., Openwave Systems Inc., Opera Software and Palm Inc.
To complement mobile browsers, another m-commerce technology has been flowering: mobile payment software and systems. Companies such as Click&Buy;, Obopay Inc. and UnWired Buyer Inc. already have come to market with mobile payment software that enables users to store payment and contact information in a secure account then use that account to complete purchases via mobile phones.
The development of mobile phone-based payment systems is another step in the downsizing of items Americans carry or maintain, some experts say. Retailers paying attention to the younger generation are seeing watches disappear from the wrists of teens and young adults, paper address books and calendars in the trash, land-line telephones vanishing, and soon wallets and credit cards staying at home, says John BaRoss, vice president of global sales and strategic development at Click&Buy;, operated by Webpay International AG. The company’s e-payment technology is used by 6 million consumers and 6,000 merchants, it says.
“All of these common tools and tasks are being consolidated on mobile phones, which younger people everywhere continuously rely on,” BaRoss says. “In Asia, for example, it is a matter of routine for people to point their mobile phones at vending machines and via embedded RFID wireless technology pay for drinks and snacks. Mobile devices are on their way to becoming the gateway to virtually everything-the alarm clock that wakes you up, the place where you access your e-mail and instant messages, your only electronic communication vehicle, your shopping mall, and much more.”
Making the call
There have been constraints in the past, like device and data network capabilities; but now, as has been clearly proven overseas, m-commerce can be done, says Levi Shapiro, director at Telephia. Some U.S. e-commerce players, including Moosejaw Mountaineering, American Greetings Interactive, GameStop’s EB Games, GiftTree.com, Buy.com, Become.com, PriceRunner (see story, page 38) and eBay (see story, this page) already are up and running with m-commerce or related systems or are in the final phase of readying a launch. By Christmas the market should see more pioneering retailers in m-commerce, Shapiro adds.
Sales of digital content products via m-commerce in the United States are increasing significantly, growing 40.9% from $1.8 billion in Q3 2005 to $2.6 billion in Q1 2006, according to Telephia. An increasing number of U.S. retailers are hitting the mobile platform with digital content products; some have recently begun selling merchandise via mobile phone, the firm reports.
Regarding demographics, while women are greater consumers of digital content products in general, users of mobile shopping and auction sites are twice as likely to be male; further, four out of five are 25 to 54, with African Americans more prominently represented than in the overall wireless subscriber universe, Telephia says.
Even if a retailer cannot yet make an end-to-end m-commerce site a reality, just having a mobile presence of any kind, such as text message order tracking, coupon delivery or customer service, is important, Shapiro asserts. “It enables retailers to maintain an even closer relationship with customers and gets the retailers’ brand names literally in the hands of millions and millions of people.”