Groupon says its focus is on the bottom line, rather than top-line growth.
Ben Narasin is a CEO who’s willing to try risky new technologies and cut speculative business deals when others won’t even touch them. But Narasin, head of Fashionmall.com, draws the line at wireless retailing. “All I hear about is wireless e-commerce these days, but it’s one technology I’m going to take a pass on until it’s further along,” Narasin says. Narasin isn’t usually so cautious. He didn’t hesitate to buy Boo.com, the multi-language, but bankrupt, apparel portal launched by Goldman Sachs and other high-profile investors last year. And New York City-based Fashionmall is the web’s most frequently shopped clothing boutique because Narasin is a big believer in the payoff of conventional Internet retailing, where merchants can use multi-media, killer content, personalization technology and secure order taking to attract shoppers.
Wireless e-commerce is so new that only a handful of retailers are even willing to give it a try. With traditional web shopping, customers using PCs and modems can complete a transaction in just about two minutes. In contrast, shoppers have no guarantee that an order placed through a web-enabled cell phone will even be accepted because of call cut-offs, scratchy connections and other troubles that plague the nation’s wireless infrastructure. “I just don’t see the payoff with wireless retailing like I do with our present program,” Narasin says.
These days it’s hard for web retailers not to hear a lot about wireless retailing. Every technology company from IBM-which aired a commercial during the Olympic Games depicting a young woman using her cell phone to purchase a soft drink from a vending machine-to numerous wireless carriers are trying to recruit retailers by hyping the convenience of the mobile Internet. “The potential of wireless e-commerce is pretty limitless,” says Knox Bricken, wireless technology analyst with the Boston-based Yankee Group. “It represents a whole new dynamic for retailers to reach customers.”
But American e-retailers aren’t buying it yet. While mobile e-commerce is becoming big in Europe, where retailers such as McIntyre & King, a London home furnishings chain, are investing heavily in developing wireless shopping sites, U.S. merchants are limiting their mobile-device programs to a handful of customers or using the wireless Internet strictly as a marketing and shopping comparison tool.
Shop online, buy offline
FTD.com, a member of the AT&T Wireless Services shopping channel, launched a wireless retailing program just in time for Mothers Day. Customers could use web-enabled cell phones to read text messages about floral arrangements and specialty gifts for Mothers Day. FTD customers could also qualify for a 10% discount if they used a cell phone to complete the purchase.
But while FTD says the program was a success-Internet orders for Mothers Day grew 137% over 1999’s Mothers Day-sales generated by its wireless program weren’t entirely completed over the Internet. FTD shoppers could compare prices and read text descriptions of floral merchandise using web-enabled Ericsson or Motorola cell phones, but the transactions were completed offline. Once a shopper selected an arrangement, the call was forwarded to an FTD call center, where the order was placed and paid for.
FTD.com plans to add full e-commerce capability to its wireless program-eventually. But for now it is content to use the mobile Internet as a marketing tool. “There is great potential in wireless retailing, but it’s going to come in stages,” says FTD.com CEO Michael Soenen. “For the time being, we’re looking at it as an up-and-coming distribution channel.”
Translation: FTD is going to wait to see if wireless develops. So are most other Internet retailers. When PC-based shopping took off, most traditional retailers and catalogers kept to the sidelines while virtual startups marketing commodity products such as books and music took the lead in selling over the Internet. But with PC retailing, even the first-to-market web stores knew who their potential audience was: the 20 million to 30 million households with personal computers, modems and access to the Internet. And the audience was showing a nascent proclivity to transact business on a network-and had confidence that the technology to complete the transaction was reliable.
That’s not the case with wireless retailing. For one thing, consumers have not shown a willingness at all to use a cell phone to shop-other than to place orders at 800 numbers, as they already do with wired phones. And for another, a high likelihood exists that a call will be cut off in mid-transaction. After all, who hasn’t experienced the frustration of losing a cell-phone call mid sentence?
Hold the phone
So even the most aggressive web merchants are saying “hold the phone” on wireless. Eddie Bauer, for instance, is usually not afraid to try out new ventures it thinks will boost sales and retain customers. Eddie Bauer was among the first business-to-consumer web sites to try out portals, banner advertising and interactive marketing agencies as a way to build up its brand and retain customers.
But while Eddie Bauer endorses the idea of merchandising its casual clothing, outerwear and housewares through new media such as the wireless Internet and interactive TV, it won’t begin building a full-blown program anytime soon. The prime reasons: lack of shoppers and the challenge of marketing merchandise through limited text screens and simple cell phone menus.
Web shoppers are impatient. They will wait less than 10 seconds before clicking away if a retailing site fails to grab their interest. Cell phone users, many of whom already pay a premium for using their phones when roaming, are even more picky.