In its second-largest acquisition, Amazon buys the company for $970 million.
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But jumping in with a complete m-commerce site is not as risky a proposition as many might think, contends Dan Wright, CEO of mPoria. By year’s end the company will launch its own e-retailing site, a mobile online shopping mall along the lines of Shop.com with numerous e-retailers, mallwide search functionality and direct-to-merchant payment.
Doesn’t get much better
“When it comes to selling via mobile phone, the business model today usually involves an e-retailer aligning with a wireless carrier’s shopping portal via a vendor or other third-party that has relationships with carriers,” Wright says. “Typically both the carrier and vendor each earn commissions on e-retailers’ m-commerce sales, not requiring any initial investment by the e-retailers. So the risk for e-retailers is minimal-they’re only paying for mobile capability if they sell products.”
Additionally, while retailers spend huge sums on marketing across channels, launching a mobile site and having the company name in wireless carriers’ shopping portals means the name will be seen by millions of mobile phone users, which can greatly boost brand awareness, he adds. “For a marketer, I don’t know how it gets a lot better than that,” he says.
But why should retailers get into m-commerce if their web-based sales are growing and they’re in the black? Many mobile communications experts point to the rapidly growing and evolving role of mobile phones in people’s day-to-day lives.
“Even 10 years ago most retailers didn’t consider the Internet as a sales channel. But people’s lifestyles evolved and now the Internet is an integral part of their routine, which includes shopping online,” says Shapiro of research firm Telephia. “Today use of the mobile platform for data and other services is growing even faster than the numbers for Internet use years ago. Most major retailers by now realize they are part of the lives of their consumers. To exclude a major platform that virtually all of their consumers are connected to seems shortsighted.”
There also is the competition. “Retailers’ competitors are looking into this channel,” says Hossein Mousavi, co-founder and vice president of products at mPoria. “If a retailer wants to sit back and see what happens, their competitors may very well come in and position themselves well not only in m-commerce but in the pecking order of mobile shopping portals.”
On the whole, m-commerce customers are connected to the mobile platform around 16 hours each day and do not need a computer to shop, says Curt Barry, president of retail consulting firm F. Curtis Barry & Co. “Retailers should meet the customer in whatever channel they want to shop.”
However, m-commerce is not for everyone, Barry contends. “Certain shopping categories may apply better than others,” he says. “And if a product requires a long, educated decision before purchasing or if there are technical questions regarding the product, then m-commerce is not the path for that retailer.”
Enter the moose
Moosejaw Mountaineering, however, is quite confident it has chosen the right path. Even though e-commerce is booming for the retailer, with web sales growing 61.3% in 2005 to $12.5 million compared with $7.8 million in 2004, according to Internet Retailer estimates, company executives say expanding into m-commerce simply is a must.
The retailer actually delved into the mobile world three years ago using text messaging to expand branding and marketing efforts and maintain routine communication with customers. Since then, thousands of Moosejaw e-commerce customers have signed up for its opt-in text messaging service, Wolfe reports, through which customers obtain exclusive coupons and receive order confirmations, order tracking numbers and loyalty program updates. The service also sends free entertainment content from the pages of its Moosejaw Madness online funhouse.
The company has begun marketing its soon-to-launch m-commerce site to customers via text messaging, its e-commerce site, e-mail and other avenues. “While we have no set marketing budget for m-commerce, we are prepared to invest whatever it takes to form an enduring mobile relationship with our customers,” Wolfe says.
As for what the risks might be if Moosejaw had not gotten into m-commerce, Wolfe has a simple answer: “I have no clue, but I’m not going to find out.”
Playing ‘The Price is Right’ on a mobile phone
Merchants aren’t the only m-commerce pioneers in the United States. Last month PriceRunner launched a mobile version of its comparison shopping site. Now if shoppers aren’t in front of their PCs but want to evaluate prices and features of the 6 million products PriceRunner compares, all they need do is type the product information into a text message and send it to PriceRunner, which generates the comparison information and sends a reply back via text message.
“Shoppers can be in a store examining TVs and wanting to make sure they’re getting the best price,” says Martin Andersen, general manager at PriceRunner U.S. and head of operations at PriceRunner International. The text messaging service is based on technology from UpSnap Inc. “All they have to do is grab their mobile phone and send us some basic information and we’ll let them know prices, retailer names and other information within seconds.”
That’s just the latest from the comparison shopping site. In May it launched a mobile version of its web site using mobile web browser and other technology from Opera Software. When mobile phone users access the site, the system displays the mobile browser-enabled version of the home page and search box. Web pages are optimized and graphics compressed before being sent to phones.
As is the case with m-commerce buying, other countries are far ahead of the United States in m-commerce comparison shopping: European shoppers, for instance, have been using the mobile PriceRunner site since 2002. ValueClick Inc. acquired PriceRunner in August 2004 and today operates the online comparison site in the U.S. and five other countries. Today PriceRunner receives millions of unique visits every month; the company declines to release usage figures on the mobile services, saying it is too soon to obtain meaningful numbers.