In its second-largest acquisition, Amazon buys the company for $970 million.
When it comes to getting as close as possible to customers, tiny text messages hit the bull’s-eye.
E-commerce without the Internet: That may have sounded like an absurdity to many retailers in 2007, but in 2008 it became a reality-one giant leap for m-commerce.
Amazon.com Inc. was the Neil Armstrong of text message retailing when last spring it introduced TextBuyIt. QVC Inc. followed in the fall with QVC Text Ordering. The key: Purchasing merchandise through text messaging does not require a mobile web site or even mobile Internet access because text messages flow through wireless voice connections.
So, for example, a consumer is relaxing on her couch watching a QVC program. The hosts are showcasing a product she decides is for her. She already has an account with default payment and shipping information and has registered her mobile number with the retailer. She texts ONAIR to QVC’s short code-an abbreviated phone number used in text messaging. Within seconds she receives a reply text message asking her to confirm her order, which she does with a second text message. QVC sends a final text message confirming her order and informing her of an estimated delivery date. That’s it.
The use of text messages by retailers is growing. Some retailers, such as Moosejaw Mountaineering, were sending marketing text messages as far back as 2004. Last year, though, there was a bumper crop of texting efforts.
Amazon.com and QVC offer text message purchasing. Some other retailers have experimented with advertising short codes on TV and in magazines to enable consumers to receive free samples of merchandise. Most retailers using texts today, though, do so to market products or offer promotions, as well as establish perhaps the closest connection possible with customers, since most consumers are almost never without their mobile phones.
And most consumers are now texting-it’s no longer the province of frenetic teens. 77% of the 259 million U.S. mobile phone users subscribe to or purchase text message capability, research firm Nielsen Mobile reports.
In fact, text messaging has become so pervasive that U.S. mobile subscribers now send and receive more text messages in a month than they do phone calls–an average of 357 per month in Q2 compared with 204 phone calls, Nielsen Mobile reports.
What’s more, many text messagers like to shop on the web. 20%, or 51.8 million, spend more than $1,000 online annually versus 17% of all mobile phone users, Scarborough Research reports.
Buying sans the web
The big news in texting last year came when Amazon.com introduced TextBuyIt.
Amazon.com customers who have accounts with default shipping and payment information via the e-commerce site can find a product they’re looking for and complete a purchase using TextBuyIt.
A customer sends a text message to the short code AMAZON (262966) with the name of a product, search term or UPC bar code number, or ISBN code for books, and within seconds Amazon.com replies with a list of products that match the search, along with prices.
To buy an item, a customer replies to the text message by entering only the single-digit number next to an item. The customer then receives a brief phone call from Amazon.com with the final details of the order, then confirms or cancels the purchase.
When a customer purchases something for the first time using TextBuyIt, Amazon will ask for an e-mail address and the shipping ZIP code on the Amazon.com account. With this information, Amazon.com uses the customer’s default settings for payment method, shipping address and shipping speed to complete the first purchase and future purchases from the same phone.
“You do not have to transact personal or financial information using the phone–that breaks down a common online barrier,” says Vidya Drego, senior analyst at Forrester Research Inc.
QVC decided to make purchasing items shown on its television shows simpler and faster by launching QVC Text Ordering, which relies on sending brief phrases to the retailer’s short code. The program enables shoppers to bypass getting off the couch and going to a computer or making a phone call and talking with an agent.
“Once registered with the service, our customers can purchase an item in just two text messages,” says Bob Myers, senior vice president of platforms and broadcast technology at QVC, which is using m-commerce technology from QWASI Inc.
To register for QVC Text Ordering, a customer texts JOIN and her QVC customer number or e-mail address on file to QVC’s short code, QVCGO (78246). The customer then receives a text message back from QVC asking her to verify the account, which includes her default shipping and payment information. After verification, QVC sends the customer a final text message, informing her she now is set to place orders.
To make a purchase, the customer texts a product number to QVCGO. QVC sends a text message back with the item number and price and a request to verify the purchase. After the customer verifies the purchase, the retailer sends her a final text message confirming the order and providing an estimated delivery date.
The customer also can text TSV to the short code to purchase “Today’s Special Value,” and ONAIR to buy what currently is on TV. Additionally, QVC is taking text message m-commerce beyond purchasing. A customer can add items to her e-commerce site-based wish list by texting WISH and an item number or WISH and TSV or ONAIR to the short code.
Amazon.com and QVC are far ahead of the pack in using text messages in m-commerce. Most of the action centers on using texts in marketing campaigns.
In October, apparel and accessories retailer Karmaloop.com launched its first mobile marketing campaign, an exclusive for customers who opted in as the retailer in April began collecting mobile phone numbers during checkout. Customers proved eager to receive mobile messages: more than 100,000 volunteered mobile phone numbers between April and November.
All text messages are limited to 160 characters, including spaces. The October Karmaloop.com message was simple: “Karmaloop.com. Get 20% OFF! Enter code: MLUCKY. 3-day exclusive! Off regular + sale items only!”
The retailer racked up $89,000 in sales. It paid its m-commerce technology provider CardinalCommerce Corp. $3,800 to manage the campaign. The campaign achieved a 4% conversion rate and a $220 average order value. What’s more, only 2% of customers opted out of receiving future text messages, a considerable success versus what mobile experts say typically is between 5% and 10%.