The Billion-Dollar Promise of M-Commerce

Two interesting studies just came out on the current state and future potential of m-commerce.

The first study, by The Boston Consulting Group (BCG), is titled “Mobile Commerce: Winning the On-Air Consumer.” It noted that one in five mobile users in the U.S. stop using m-commerce after they try it a few times. Interestingly, though, despite their initial experiences, 80 percent of the people surveyed felt that m-commerce would become an integral part of their daily lives, particularly in the areas of travel, email, news, and shopping. The study predicts, in fact, that revenue generated by business-to-business (B2B) m-commerce transactions alone will hit a total of $100 million by 2003, with $50 million of that coming directly from the value of the transactions.

So, if all these people think m-commerce is going to be so great, why do so many abandon it after only a few attempts? The answer may be found in another new study. The Cahners In-Stat Group concludes that m-commerce has not taken off because the infrastructure to make m-commerce compelling was not in place before the services were released. This study, titled “Mobile Commerce: A Work in Progress,” notes that voice recognition, Bluetooth, and next-generation wireless services should go a long way toward improving users’ m-commerce experiences.

These studies reminded me of my own first experiences with m-commerce and wireless advertising delivered via cell phone. Now, granted, I had more than your average bear’s interest in the topic, so I was probably more tolerant than the typical user, but I, too, had the same “wow!” and then “ho hum…” reaction described in these reports.

Let me be more specific. As much as I loved the idea of m-commerce and wireless advertising, many early advertisers deployed the advertising in ways that didn’t make any sense to me. Grainy corporate logos showed up without a particular context. Companies tried to get me to go to their Web sites and fill something out from my phone. Brand awareness campaigns were focused on name recognition rather than something actionable that I might actually do with my phone. The opt-in categories that I signed up for didn’t map to what I actually received. What’s more, the slow data transfer speeds and hard-to-read screens were frustrating and a major deterrent to using the m-commerce features.

But there were also glimmers of great potential. One night, as my husband and I were wondering where to go for dinner, we were served a coupon for a favorite local restaurant. I found a local store that I never knew existed thanks to its wireless ad. So I, like the majority of the people surveyed by BCG, got a taste of what m-commerce could be; I found it pretty compelling for the long haul but frustrating in its current state.

So, we have the classic early-adopter dilemma. M-commerce players yearn for widespread adoption of Web-enabled devices but know that the technology is not really ready to support a positive experience. Do you encourage people to try a new technology and accept the risk that some will be turned off, or do you wait until the technology is further along? In reality, m-commerce players don’t have the luxury of waiting, especially in a market environment that demands proof of concept as a minimum and actual returns as an ideal. And, fortunately for them, the BCG study indicates that most m-commerce early adopters can see beyond today’s limitations to the potential of the future — which still looks very bright.