Mobile Commerce Basics: What, Why, and How
The internet and other technological advances have certainly changed the way we do things today. Even the most mundane things can now be accomplished through various ways and means, which have a lot to do with technology. Just look at customer behavior, particularly on how they shop and where they shop, and you will see a marked difference from the time before the internet and e-commerce came about.
For a while, e-commerce has been a major catchphrase in business. E-commerce, also known as electronic commerce, was about trading products and services via the internet and other computer networks and electronic systems. These activities include, but are not limited to, banking, insurance, advertising and warehousing. Even transportation transactions were also completed using e-commerce. Basically, e-commerce was broadly referred to as conducting business on the internet.
The evolution of how we transact did not stop there. The increasing usage of mobile and telecommunication devices acted as another precursor to change, and that change led to the rise of mobile commerce, also known as m-commerce.
In this guide, you will understand 1) what is mobile commerce and what are its unique features, 2) what use cases are enabled by mobile commerce, 3) what issues are related to mobile commerce, and 4) what mobile commerce trends we’ve identified.
MOBILE COMMERCE DEFINED
The simplest way to describe mobile commerce would be the buying and selling of products – or the conduct of commercial transactions and activities – through telecommunication and other mobile devices that run or operate on wireless network technologies.
It is safe to say that m-commerce is an upgraded version of e-commerce. In fact, m-commerce has been defined as the conduct of e-commerce activities using mobile or cellular devices. If business transactions involve the use of wireless telecommunication networks, then it is highly likely to fall under m-commerce.
While terminologies such as internet banking, electronic money transfers and online shopping were very exciting and phenomenalin the past decade, what excites consumers now is mobile banking, money transfer via mobile and mobile bookings among many others.
Some fun facts on mobile commerce.
M-commerce vs. E-commerce
Between e-commerce and m-commerce, the latter is the newer concept, seeing as mobile technology had not exploded until about two decades after the internet was able to be used to conduct commercial transactions using electronic systems.
While e-commerce mainly makes use of computers, and requires internet connectivity, m-commerce uses mobile devices such as smartphones, PDAs, tablets and it relies mainly on an internet connection provided by wireless telecommunication networks.
One of the major advantages of m-commerce over e-commerce is portability and flexibility. While internet connectivity is required in e-commerce, that is not the case in mobile commerce since these devices come with their own connection to the internet using telecommunication networks. Since the mobile devices are also smaller and more portable, users can literally conduct commercial activities anywhere, even in places with no electricity. This means, that usage of m-commerce is also broader, thanks to this portability feature.
The rise of m-commerce has certainly boosted e-commerce as a whole, since users are given more options on the platform and tools, and a majority of the limitations that they have encountered in e-commerce do not exist in m-commerce.
M-commerce vs. M-business
There is a growing confusion regarding the concepts of m-commerce and m-business (or mobile business), with many people believing that they are one and the same. The given definition of m-business is that it is the “ability to interact and transact with anyone, anytime, anywhere, using wireless communications”. That definition is already very broad to be applied to m-commerce, which is limited to the “buying and selling of products and services over the internet through the use of mobile or cellular devices”.
Therefore, it can be said that m-commerce is simply one of the many aspects of m-business.
Unique Features of M-Commerce
In order to fully understand what sets mobile commerce apart from e-commerce and m-business, it is a good idea to take a look at its unique features, which can be clearly seen in its advantages.
Mobility and ubiquity
Mobile commerce involves the use of portable mobile or cellular devices, such as mobile phones, smartphones and tablets.
Portability results in closer proximity between businesses and their consumers, meaning it is now possible for businesses to reach their target audience faster. The parties are not restricted by physical or geographical locations when doing commerce, be it purchasing a product, completing a bank transaction, or even bidding on an auction. In addition, the technology and devices that power mobile commerce are also available and readily accessible. As such, the probability of the businesses making a sale is also higher.
In e-commerce, a constant connection to an electric outlet is mandatory to power the devices. Thanks to the increased usage and flexibility of mobile devices which come with their own batteries, shopping via mobile devices is possible even without electricity.
Comfort, convenience and spontaneity
Many people prefer making their purchases over their desktop or laptop computers, in the comfort of their own homes or offices, instead of making that trip to the physical store or location of the goods or services that they want to buy.
However, there are even more people who find it more convenient to do their shopping on their mobile phones, and they can do this while sipping some latte at a coffee shop or even in a bus or train as they travel. There is no need to rush home or to the office to access the computer in order to buy something. All users have to do is whip out their tablets of phones and do their shopping from there.
This is a nice presentation on the Mobile Commerce Playbook which provides a deeper look into m-commerce.
USES OF MOBILE COMMERCE
Aside from making purchases through apps on mobile devices, other m-commerce examples include purchase of ringtones, games and music online. Mobile ticket bookings and mobile parking meter payments are also m-commerce applications. While large purchases, such as purchase of real estate and automobiles, are still being worked on, there is no doubt that there will soon come a time when these major transactions may also be completed on mobile devices.
The most common products and services on mobile commerce that are seen today are:
- Mobile banking. Inquire about your bank balance, manage your bank accounts, remit money and transact with your bank through your mobile phone.
- Mobile browsing and purchase. Shopping can now be done on your mobile device and if something catches your eye, you can immediately purchase it while browsing. This is made faster and easier if the merchant has an app, instead of browsing their website on your phone.
- Mobile content purchase and delivery. This is no longer a new concept, since this is one of the earliest forms of mobile commerce. You can purchase mobile content such as music, games, movies, ringtones, wallpapers and even apps, and they will be sent directly to your mobile phone.
- Mobile ATM. Automated Teller Machine (ATM) transactions, specifically, cash-in and cash-out transactions, are now considered for widespread mobile application. At present, only a select countries and mobile companies (such as Hungary’s Vodafone) allow the payment – through cash or bank card – of phone bills.
- Mobile money transfers. Now, money can be transferred through the use of mobile devices.
- Information and location-based services. Sometimes users may not necessarily want to purchase anything, but they would still be interested in receiving information, such as news, local weather, stock and financial quotes, movie and TV programming schedules, traffic reports and even sports scores.
- Mobile advertising. People check their mobile phones more often than they do their desktop computers, so marketers and advertisers believe that they will be able to catch the attention of their target consumers better if they send the promotional and marketing materials directly to them through their mobile devices.
- Mobile ticketing, vouchers and coupons. Tickets, vouchers, coupons and even loyalty cards are now sent to users on their mobile phones. Since they are in digital form, all that is required would be to present these tickets, vouchers or cards, in order to get the service or benefits that they entail.
Mobile commerce may be conducted using a mobile phone, a smartphone, a tablet, a phablet, a notebook or, in some cases, a laptop. Basically, any device that has these two features may be used to support mobile commerce:
- Portable and mobile
- Has the ability to gain access to a network
When we speak of mobile commerce, the first devices that come to mind are mobile phones. Mobile devices, as a whole, are known for their ubiquity, identifiability, and context awareness. In other words, mobile device users can access the resources that they need from practically anywhere. All users of the cellular network make use of a Subscriber Identification Module (SIM) card, which serves as their unique identity when accessing the network, and mobile devices are also designed with the ability to be geo-located.
There are a number of reasons why more users prefer using mobile devices in transactions and commercial activities.
- Mobile devices improve efficiency. The use of mobile devices will reduce the costs usually associated with the delivery of goods and services, such as warehousing and storage costs and the cost of maintaining physical locations and stores of businesses.
- Mobile devices promote timeliness. If you have a mobile device, transactions may be done in real-time, and this also spurs the businesses to get right away to fulfill their end of the transaction.
- Mobile devices improve communications and relationships between the parties involved. The instant connection made through mobile devices results in better relations between businesses and their suppliers, sellers, customers and distributors. It also cuts through the time (and costs) that would have been used or spent on dealing with middlemen, since communication is done directly. Customer loyalty and retention are also strengthened.
- Mobile devices offer a wider “reach”. From the looks of things, the use of mobile devices is not a passing trend. In fact, we can see it playing an even bigger role in business in the future, and so we expect more businesses to adopt mobile commerce, if only to be able to enter bigger markets and reach a wider target audience.
ISSUES ON MOBILE COMMERCE
Mobile commerce is not perfect, just as e-commerce is not without its challenges and problems. It is then up to adopters of m-commerce to deal with these issues accordingly.
Security and Privacy Issues
This is a concern that is also seen in e-commerce, or practically any transaction over the internet. Users still harbor a certain level of distrust when it comes to internet and network security, and this has translated over to mobile commerce. It is for this reason that, although there are capabilities available to mobile users, they do not make use of them. They simply do not have enough trust that they are protected or that the content they will download is completely safe to use.
Apps, for instance, are often met with skepticism by users. App developers are thus becoming increasingly motivated to create apps that will dash away all the doubts of users regarding their security.
Users are naturally protective when it comes to sharing their personal information and payment details. Incidents of identity theft and hacking that lead to stolen money certainly are not helping.
Mobile Website Design Issues
Adopters of mobile commerce have one important aspect that must be paid attention to, if they want to make a success of their mobile commerce efforts and, in the process, even help their traditional sales. That is to make sure that they have a mobile-friendly website.
Certainly, the biggest hurdle would be the small screen sizes. There is only so much that you can fit on a small screen size, but still be able to fully convey the message that you want. Therefore, adopters of mobile commerce need to pay attention to the design of their mobile websites.
Studies show that consumers’ purchasing decisions are affected by how mobile-friendly – or unfriendly, for that matter – the website is. There are businesses that think that, as long as their websites are viewable on the small screens of mobile devices, that is enough. Apparently, that is not the case, because users also tend to be put off from making any purchase when they come across a mobile-unfriendly website.
While the general concepts are the same, mobile commerce also calls for marketing that is specifically designed for mobile use. This is called mobile marketing, which covers mobile email marketing and mobile content marketing. Marketers must adapt their strategies while taking into account the implications of making that shift to mobile. After all, the customer experience of mobile users will be slightly different from that of consumers in traditional methods of doing business.
TRENDS IN MOBILE COMMERCE
Mobile commerce is here to stay, and so industries have two choices: to adopt mobile commerce or stay away from it completely. However, competitiveness would dictate that they should consider adopting mobile commerce, considering how a larger part of the world now uses mobile devices even for simple activities such as making bank balance inquiries.
Ever-increasing mobile internet usage
According to the International Data Corporation, 44% of the population of the world – that is around 3.2 billion people – will have internet access before the end of 2016 and, out of those 3.2 billion people, 2 billion are mobile users. This number is predicted to increase by more than 25% annually over the next five years.
If you look at smartphone subscriptions, you will notice that the numbers are growing. Today, the estimated number of global subscriptions is around 2.6 billion. That number is predicted to increase up to 6.1 billion in less than 4 years. And we are talking here of smartphone users only, which account for roughly 70% of the total number of mobile or cellular phone users all over the world.
Global mobile expansion
It is no longer just the western world that is making use of mobile devices, internet and mobile technology for its commercial transactions. Emerging markets, particularly in the Asia Pacific and the Middle East, are commanding attention. China, India and Indonesia are seen to be taking on bigger roles in mobile commerce, as their wireless networks are growing and expanding.
By 2020, it is forecasted that Asia Pacific, Africa and the Middle East will comprise 80% of all new mobile or cellular subscriptions.
Shift of marketing efforts to mobile
Even advertisers and marketers are now slowly integrating mobile marketing to their plans and programs, with advertisers taking more note of the market’s online behavior. Online advertising is certainly becoming more pronounced, and many companies are actually starting to transition to online advertising, while only maintaining a minimum investment in traditional marketing methods.
Introduction of new mobile devices and applications
Manufacturers of mobile devices are certainly on a roll, churning out new products almost every quarter, with their features becoming increasingly advanced and with more functionalities. Mobile app developers are following suit, designing m-commerce applications to be functional and user-friendly on any mobile device.
Development of new technologies
It seems that the most brilliant minds on the planet are coming out with new mobile technologies to facilitate the conduct, or processing, of transactions. For example, new payment options that are designed to integrate seamlessly with mobile applications are developed. The mobile wallet, for one, allows users to conduct monetary transactions using their smartphones.
One other technology that has been developed and is increasingly seen as an excellent tool in m-commerce is Near-Field-Communication, also referred to as NFC. Instead of mobile devices connecting through a wireless network, they need only have to be in close proximity with each other.
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