April 30, 2007, 12:00 AM

It`s a Small World

Mobile-commerce: What it is, where it`s at and what stands in the way.

Some e-retailers big and small have it-Amazon.com,Overstock.com, Netflix, AmericanGreetings.com, Buy.com, Godiva Chocolatier, GameStop, Moosejaw Mountaineering, Golfio and Capalbo’s Gift Baskets, to name a few. But the overwhelming majority of merchants do not. And that is a presence in m-commerce.

8% of the top 1,000 U.S. brands operate mobile web sites, a new study shows. However, only 2% of brands in the retail sector operate mobile sites, according to the “Top 1,000 U.S. Brands Mobile Web Presence Survey” from multimedia technology and research firm RarePlay.com.

Of the 10 retail categories broken out from 35 brand categories in the study, the standout is electronics: 19% of electronics brands have built and maintain mobile web sites. Other early adopters include home appliances (9%) and apparel (7%). The survey does not break down the percent of mobile sites that offer the ability to purchase products vs. those that are pure marketing vehicles.

Tiny but growing
The presence of e-retailers with mobile sites is growing; but just like Internet adoption in the mid-’90s, e-retailers today are taking baby steps toward initiating a mobile presence, says Ron Knowlton, RarePlay founder and chief technology officer.

“At the moment the majority of m-commerce transactions are limited to mobile device add-ons like ringtones, games, wallpapers and screensavers. Although small, these minor transactions are working to instill confidence in the public’s perception of m-commerce,” Knowlton says. “People now are beginning to feel like m-commerce transactions are secure, and, as a result, we are seeing an increasing number of businesses supporting m-commerce.”

More than three-quarters of the 105 million U.S. households own at least one mobile phone, and, on average, two; household penetration will exceed 85% by 2009, according to Forrester Research Inc., which specializes in technology’s impact on business and consumers. Consumers, especially young ones, are relying more on their mobile phones for voice and text communication, making the time right for e-retailers to begin experimenting with m-commerce, the study suggests.

Mobile commerce is the transaction on mobile phones and PDAs of retail business through pared-down versions of e-commerce sites via wireless Internet access or on shopping portals (also known as decks) on proprietary wireless telecommunications networks. Internet-based mobile sites can be freestanding destinations using one of nine common mobile domain formats-including URLs that incorporate “m” or “wap” or “mobi”-or sites with the same URL as their e-commerce counterparts that manifest as a mobile version via technology that automatically detects if a shopper is coming to the site via mobile device.

How to
M-commerce sites can reside on a retailer’s e-commerce platform or be hosted by an e-commerce or m-commerce technology vendor. The small sites can be created in house or outsourced. They are hard coded in house or out, or built by retailer or vendor staff using template applications.

Retailers decide what products to make available and display on their m-commerce sites and how consumers can access them, often via home page site search boxes. Retailer staff can use the same product descriptions and images, shrinking them to better fit mobile screens, or whittle and downsize to offer a different presentation. Many m-commerce sites also include product reviews and other features.

Many e-retailers and consumer brand manufacturers with mobile sites use them purely as a marketing and branding vehicle-an adjunct to e-commerce operations.

Some, though, have mobile sites that sell or auction products. There are three kinds of m-commerce transactions. First is the purchase of digital content, such as downloading a ringtone directly to a phone. Second is the use of Internet services requiring paid subscriptions, such as searching for titles and placing them in a Netflix queue. And third is the purchase of merchandise-traditional e-commerce but via mobile device.

Presents presence
While buying digital content via telecommunications carriers’ shopping decks is quickly becoming common, the first merchandise e-retailers to have major success in m-commerce will be sellers of gifts and related items, predicts Tamara Mendelsohn, consumer markets analyst who specializes in m-commerce at Forrester Research. “What causes a consumer to make a purchase over their phone when the interface is a little more difficult to use? Time and urgency,” she states. “There are cases where consumers need to purchase something right away, regardless of where they are.”

However, whether or not a purchase takes place, the mobile platform will have a profound impact on e-commerce, Mendelsohn predicts. “The mobile phone will have a huge role in retail simply by providing access to consumer information wherever a shopper may be, such as standing in a store in front of a row of plasma TVs or on their way to the store to buy one.”

The big impact still is a ways off, though, experts say. “There will not be big growth in m-commerce during the next 18 months, it’s safe to say,” says Josh Crandall, managing director of Media-Screen Consulting, a digital media research and consulting firm.

Another mobile expert predicts the same timeframe, adding when m-commerce takes off the growth will be impressive. “Once users are convinced of security and convenience,” says Vikrant Gandhi, strategic industry analyst for mobile communications at research and consulting firm Frost & Sullivan, “and e-retailers install the necessary infrastructure, it will fly.”

As U.S. consumers grow increasingly comfortable with mobile devices, using them for activities beyond voice, the mobile channel stands to exert a greater impact on their shopping habits, according to “U.S. Mobile Commerce 2007: Low Reception,” written by Forrester Research’s Mendelsohn with four colleagues. However, only 12% of U.S. households with mobile phones use their carriers’ data services, which enable most m-commerce activities.

Simple to use
The biggest challenges m-commerce faces are improving the mobile web site user experience and, as with e-commerce, overcoming negative perceptions about information security, says Chetan Sharma, president of Chetan Sharma Consulting, which specializes in mobile technology. And even then, it comes down to the interface more than anything else, Mendelsohn adds.

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