Introducing m-commerce... Shopping via Mobile Phone
You may be content to shop online. Or, you may be the type who enjoys the occasional (or, God help you, chronic) visits to Home Shopping Network or QVC on the television. Perhaps you're old-school and prefer mail order or picking up the land-line to place orders with some underpaid Indian telephone attendant who will gladly take your credit card information and shipping address. I don't know - maybe you shop at Circuit City.
What if the world was about to change?
What if manufacturers realized that verbalizing or typing in orders was simply too much work?
What if you just had to click the equivalent of "Me want. Send now." and it arrived at your door?
Such is the dream of m-commerce proponents. M-commerce is short for Mobile Commerce, and like e-commerce before it, it aims to make purchasing goods much more of a "reactive" and easygoing experience. Let me paint a picture:
You're riding on the 'L' train in Chicago and see a billboard. The Billboard says "Edible remote controls - 5 packs in fruity flavors! Order now with code: R5FF7Q" Wow, edible remote controls - what a concept! I've got to have it! You pop open your cell phone, click on a QuickShop icon, enter in the 6-digit alphanumeric, select quantity, hit 'confirm' and - BANG - the product ships to you. Sweeeet (literally!)
You see, the phone already has your preferred shipping address stored. Credit card info is on file with the system and all you really need to do is indicate the product you'd like to ship. Everything else... well, it just happens.
THIS is the dream of retailers everywhere. Tapping into the impulse buyer and providing a way to elicit new ways for them to make purchases (act upon their impulses). Is this a Good ThingTM? I don't know. Like anything else (credit cards, bank loans, chewing gum) it can be used for good or evil. It's up to whether you are a controlled person. The convenience certainly cannot be denied.
But What About Security?
Security is certainly an issue, but not one that is very difficult to overcome. Biometric fingerprint readers are already starting to show up in consumer-level products everywhere and with the advancement of technology, it won't be long until that type of feature is readily available on most cell phones. Right now in fact, Sharp and a company called Pantech already have models under development that will read fingerprints to lock and unlock the phone. Biometric security isn't necessarily foolproof, but neither are credit cards or signatures. I don't know about you, but that pretty much makes all of this e-commerce "theory" look like a very realistic potential.
For years retailers have been discussing ways to modify the current system and "free" the consumer from the current constraints of shopping at a location or having to go somewhere to seal the deal. Here are some interesting progressions that have taken place to direct the market towards these ends:
- 1974 saw the first implementation of the UPC code, created by George L. Laurer
- By the mid-1990s coupons in the US and abroad were integrated into most retail systems to facilitate discounts via automated scanning.
- In 1994, the first Integrated Automated Fingerprint Identification System (IAFIS to you CSI fans) competition was held - setting in motion the dawn of fingerprint scanners and biometric systems (not to mention the large databases that store the data).
- In 2005, the UCC mandated all retail systems recognize both UPC and the expanded EAN system so that the system could be utilized worldwide
- In 2006 iTunes set an unheard of $17.56 million dollar per week average for a micropayment-based transaction system. 2006 and 2007 also saw the realization of Microsoft's Xbox 360, Sony's PS3 and Nintendo's Wii - all micropayment-based systems
You may wonder what all of these items have in common. The answer is that they form the groundwork of a commercial system whereby consumers are able to purchase goods through the use of mobile devices.
So What's the Hold-up?
Are the cards stacked against m-commerce? Yes and no. There are certainly details to be ironed out and systems to be put into place, but ultimately I believe the market can bear it and will, in fact, make demands for it sooner or later. The general "hold-up", as it were, can be any of a number of things - any one of which is a stumbling block to moving forward with m-commerce:
- A Unified System of Relating Product IDs to Consumers
In order for m-commerce to truly function, there needs to be a single, unified system of taking the manufacturer's product ID and the customer's mobile purchasing method - and connecting the two. Any time we speak of unification, we run into past examples where this simply didn't happen: VHS and Betamax... DVD-Audio and SACD... BD and HD DVD... Sonny and Cher - the list goes on. The bottom line is that there are two potential futures: a disjointed enterprise of Verizon Store Product ID vs. Sprint Store Product ID vs. Cingular Store Mobile ID... or the more sensible universal clearing house where all manufacturers can enter in the product IDs and information and each mobile entity taps into the repository (each having their own opportunity to sell based on their own installed user base of products). It worked for UCC and UPC codes and with ICANN and the Internet - why not m-commerce?
- A Compatible Clearinghouse for Accepting Payments
Just as having a unified system for connecting consumers to products, the system that takes payments and routes them to the manufacturer may also need to be unified - or not. This isn't as clear cut, provided that individual mobile companies don't try to complicate things by demanding different payment schemes and markups on items. A system must be in place that handles massive amounts of transaction from each carrier's point of origin. My suggestion would be to implement a flat markup based on dollar amounts (similar to VISA or Mastercard) and be done with it. Charging monthly for the "privilege" of using your mobile device to purchase products is not only shortsighted - it's foolish. Any CFO that doesn't see the writing on the wall in that respect should be fired or replaced with a hedgehog. At least you'll have a good place to wipe your feet when the company folds. Keep in mind also, that global systems are already in place such as PayPal (which currently accepts text messages!) and Google Checkout, so this step isn't as far away as we might think.
- A Compatible Clearinghouse for Placing Orders
While it is possible that the same system that takes payments may also be able to route orders to the manufacturers, my guess is that there will be more of an interaction between two very different systems (or groups of them). Order placement is an entirely different animal than payment processing and we'll have to keep our eyes open to see who fits that bill.
- Good Marketing and Erasing "The Security Equation" from the Minds of Consumers
The issue of Security is a big one - but it's not as big as people think it is. That is to say, there are thousands of people willing to give their credit cards over to a pimply-faced teenager making $7.50/hour at a strip mall, but the second you mention fingerprint ID locks on a cell phone they clamor to identify that there are ways the system could be hacked. Are you sure you trust that 16 year old you just handed your $5000-limit credit card to? Guess again. Security is an issue, but if the marketing and advertising of how well the security works is well-managed, then the consuming public can understand how safe it really can be. This may be hard, because as cool of a story m-commerce makes, it will only take one example of a successful hack to make front pages everywhere. If you don't believe this - count the number of articles this year that referenced the deaths of 3000+ soldiers in Iraq over three years vs. the number of articles talking about the fact that over 40,000 people this year alone have died on US soil in car accidents. Sensationalism is popular in this country, regardless of your political leanings. One serious consideration for m-commerce shopping and transactions will be whether transmission of the ordering data will need to be sent using different encryption methods than those currently in place with existing mobile networks.
- M-Commerce Needs a Leader
Back when Apple Computer launched iTunes in 2003, it began - almost single-handedly - the MP3 revolution. They didn't create MP3, nor did they create the MP3 player, however the packaging and leadership of Apple markedly changed the playing field for downloadable music. The same needs to happen for m-commerce (no, not Apple, but the concept). M-commerce needs a large company with a compelling product lineup to take control and allow mobile ordering of products through a unique and easy-to-use system. This will take coordination with hardware manufacturers as well as the back-end infrastructure to allow it to happen. Once a few pieces are in place, however, the inevitable locomotive of mobile-sales products will come barreling down on the masses. It's simply too cool to pass up, and so when one begins, more will follow.
The Next Steps
Unfortunately, the next steps seem to involve waiting. With Apple's new iPhone I had hoped they might break through into this new way of thinking, but indications of this are unclear. They certainly seem poised for m-commerce, however we have not yet seen clear direction from them that this is something being pursued on a large enough scale as to seem significant. In addition, they have done several things to limit their influence:
- Limiting the iPhone to Cingular for a long period of time means that the fragmentary issues discussed above are occurring which will prevent the system from getting widespread adoption
- Pricing the product at $499 and $599 makes for a product that is most certainly NOT geared towards the average consumer - something that m-commerce simply must penetrate in order to be successful
- M-commerce, in order to be more widespread and accepted must be MORE than simple Internet access via mobile PC/phone. It has to be simplified. We have yet to see if Apple's iPhone has the muscle and influence to make this happen - so far it appears to be very niche.
The good news, is that should Apple decide to pursue some form of m-commerce, even on a smaller scale, even a modicum of success may be enough to spark the revolution.
Here's to a revolution!
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