Success lies in integrating mobile commerce with on-line and off-line processes, not in simply treating it as an adjunct.

By Rohit Bhagat, James Abraham & Ralph heuwing

There are many reasons not to use it: it's too expensive, it's too slow, it's too clumsy, it's too difficult; it sometimes doesn't work. The 'it' in this case is m-commerce (mobile commerce), or the 'on-air' internet. Interestingly, the same complaints were aired about traditional e-commerce, or the 'on-line' internet, in its early days. And just as the on-line internet overcame these complaints and grew astronomically, so too are the great expectations for on-air internet. Whether or not these expectations are 'too great' only time will tell.

Meanwhile, it would be disastrous to just wait and see. On-air is very different from on-line. And we must start now to find ways to use this new technology to change businesses and industries. As on-air internet has already taken off in some markets, they have much to teach us. Of all these lessons, the most important one is that success lies in integrating the on-air with on-line and off-line processes, not in simply treating it as an adjunct.

Lessons from Other Markets

Japan is one of the most advanced markets in terms of on-air internet penetration. There are over 10 million users, 70 per cent of them using DoCoMo's advanced i-mode service and the rest on WAP. In fact, i-mode is growing at 25,000 users per day. In Europe, though WAP adoption has been disappointing, there were over 5 billion SMs messages sent in July, 2000. These early adopters offer several lessons about this burgeoning opportunity.

1. On-air users get on the Net more frequently than on-line users, though for much shorter times. On-air users are on the Net three-to-five times a day for about a minute or so. In contrast, on-line users get on the Net once a day for about 30 minutes. This points to very different kinds of applications. For example, a 30-minute on-line session is ideal for surfing, whereas a one-minute on-air session is not. Each on-air session must be customised to the user's profile for that particular moment.

2. By definition, the on-air user is not tethered to the desktop and can access the Net anywhere, anytime. Customisation should consider geography as well as user profile. For example, one of the most powerful applications being used in Japan is 'relevant couponing'. When an i-mode user passes by a retail outlet, say a video-rental store, the network can send the user a coupon with the most recent special redeemable at that store.

3. Close to 60 per cent of on-air users are under 30 years of age. That may explain the immediate popularity of applications such as messaging, news, stock ticker, music, and other content services. These services are useful at introduction to capture users and build traffic for m-commerce.

4. What used to be the purview of dotcoms, is now being crowded by the telecom players and device manufacturers. Their core revenue streams from network usage and handset sales anchor their foray into m-commerce. Any venture from other players must be based on business logic strong enough to repel (or partner with) these powerful competitors.

5. M-commerce, e-commerce, and commerce can, should, and must work together. There are no choices of one in lieu of another. Instead, any business must integrate the online and the on-air internet to the real-world offline business.

The Japanese retail chain noted above does this well. Its off-line business is a video and music rental and sales business. It has retail stores geographically distributed across Japan where customers make over-the-counter purchases. These off-line purchases are used to build a user profile for a customised on-line site (myvideostore.com). This on-line site offers news, new releases, reviews, gossip, inventory checks, order-and-delivery, and other content and services specifically relevant to the individual user based on their profile. Then, the on-air services, such as 'couponing' and store locator, use this profile to direct users to the off-line stores. This is the shape of things to come, with businesses transforming themselves using on-air, on-line, and off-line technologies.

Epilogue

These are the early days of m-commerce, as 1995 was the early days of e-commerce. To date, much of the debate in m-commerce has centered on WAP, 3g, 2.5g and other technology issues. While these are important, they are not critical to the business. More important is integrating on-air applications into the business. Success lies in finding ways for on-air to co-exist, and work with, on-line and off-line technologies to steal a lead over the competition.

Then, the most critical of all business questions is whether we can afford to wait until all the complaints we started with are fully addressed. A hint lies in dot history itself. What if India had started that revolution in 1995 instead of 1999?

Rohit Bhagat is the Head of The Boston Consulting Group's e-Commerce Practice, James Abraham is Director, The Boston Consulting Group's India operations, and Ralph Heuwing is the Managing Director of the Boston Consulting Group's India operations.

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