June 12, 2003, 12:00 AM

M-commerce is alive and well at Amazon--and providing more than just sales

Amazon has 500,000 customers transacting with it through mobile devices. They are early adopters that tip off the company to technology developments, an Amazon executive said Wednesday at the Retail Systems Conference.

M-commerce may seem to most of the world to be moribund, but not to Amazon.com. Amazon has 500,000 customers transacting with it through mobile devices, Robert Frederick, senior manager of Amazon web services, told his audience Wednesday at the Retail Systems 2003 Conference and Exposition in Chicago. They access Amazon on 87 different kinds of devices, most of which have the Amazon application embedded into the ROM, he said.

Even though the numbers are small--Amazon transacts only a few million dollars a year with m-users--Amazon likes those customers because they are the early adopters that tip off the company to technology developments that Amazon might want to accommodate, Frederick told the “Tap into Unique Markets with Mobile Web Services” session.

Amazon has been conducting transactions over mobile devices since 1999, when it developed an application with the Palm VII devices and later with Sprint PCS cell phones. In 2000, it created partnerships with eight U.S. and three European telecom carriers to offer m-commerce to consumers. The fact that the technology was so primitive but that customers made purchases anyway encouraged Amazon to continue. “It was a horrible experience,” Frederick said, noting that connections rates were at 7.5K, “but we still were seeing customers making purchases over these devices.”

Mobile commerce is part of Amazon’s strategy to be a content provider, Frederick said. In spite of the consumers who make m-commerce purchases, mobile commerce’s prime function remains content delivery, he said. “Information is the killer app in m-commerce,” he said. “We educate customers and give them the information they need. We want them to consider Amazon as the brand they go to when they want information.” Then, when they’re ready to buy, the information and the convenience will bring them to Amazon. “You earn awareness and customer loyalty through convenience,” he said.

Besides providing early signals of coming technology, mobile customers are attractive from a demographic perspective, Frederick said. One-third of wireless web customers have some post-graduate education vs. 17.8% of all wireless users; 39% have incomes of more than $75,000 a year vs. 21.5% of all wireless users; 66% are under 35 years old vs. 43% of all wireless users; and 45% are single vs. 36.5% of all wireless users. “These are customers who have disposable income,” he said. “They are using these devices to make transactions and we want to capture that market share.”

Mobile devices are also useful in sending customers alerts about order status, sales and promotions or to send coupons, especially coupons tied to a location where the customer happens to be at the moment, Frederick said.

Fredrick said, however, that Amazon is not gong to get carried away with trying to force technology to serve a purpose on wireless when a low-tech solution works as well. “We looked at WAP and at compact HTML to create displays on screens, but in reality, the killer app is voice,” he said.

Amazon uses a voice recognition system that allows customers to search, browse and buy and check on order status. “The use of voice recognition has moved each call from dollars to cents,” he said. “We save a great deal in expenses, especially around the holidays.”


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