In my July 7 column, I suggested that mobile advertising may become the largest advertising media market of all time.  Here, I suggest that mobile commerce may become larger than eCommerce. 

While that’s quite a leap from where we are today, it seems to me that in just a few years years most people will be using a phone and/or tablet capable of managing business and commerce.  Mobile commerce is already affecting brick-and-mortar & online sales. Compete found that a majority of SmartPhone users (68%) already check prices at competitors using their SmartPhone while shopping online. And, nearly a majority (48%) use their phone to look up customer reviews while standing in the store (Compete, 3Q09 SmartPhone Intelligence Survey, published 1/4/10).

And if conducting commerce (such as buying things, checking account balances, transferring funds and paying bills) becomes easy – or at least as easy as using a notebook PC today – then the sheer number of users will create a large mobile commerce market, perhaps even larger than eCommerce is today.  Here’s why.

Remember that the purpose of mobile advertising is to influence the purchase of a product or service or enhance the brand recognition and reputation of a company.  By the end of this decade, 4-5 billion people will own a cell phone with, perhaps, 50% of these devices being SmartPhones. 

Given this huge user base, there will be a lot of marketing promotions and advertising conducted on these devices, with a number of mobile commerce (mCommerce) applications facilitating the purchase of goods and services -- whether the mobile device is a basic feature phone (buy via text message short code), advanced SmartPhone (buy using one of tens of thousands of applications), or tablet (e.g. iPad).

The mobile commerce landscape can be visualized with the following diagram supplied by Sybase 365:

Mobile commerce is made up of mobile financial services and mobile customer relationship management (CRM).  In the mobile financial services area, here are the more important applications with references to some of the major players:

• mBanking – check account deposit, transfer funds, account management, account alerts, portfolio information & management, customer service via text.  Companies include Bank of America, ClairMail, Firethorn, Kony, mBlox, mFoundry, MCOM, mShift, & Obopay.  Monitise provides a very good online video demonstration.
• mPayments – purchase goods and services, pay a bill using a phone, ticketing.  Many major brands are building mobile-specific apps to serve their clients.  Companies include Firethorn, Sybase 365, Monitise, Digby, Kony Solutions, Pay Pal, Vaultus (now a division of Antenna Software), VivoTech, PayPal and WorkLight.
• mRemittance – airtime on phone, money transfer between people and organizations.  Airtime transfer becomes a token for money transfer.  Companies: Sybase 365, P2P Cash, Obopay, Bling Nation.
• mVouchers – mobile vouchers, coupons and gift cards.  Companies: Sybase 365, Monitise and others.
  

Location plays a key role in mobile commerce because location can assist in the information delivery (“Where’s the nearest ATM?”) or can be used by the mobile to locate the nearest store providing a product/service of interest.  And location can even assist in providing mobile coupons as incentives to use those nearby merchants. Location also enables local weather alerts and allows people to keep track of where their friends are, e.g. at a local flea market.

We’ll also see the use of the phone’s camera to assist in finding products and then buying them.  For example, cameras in phones are getting good enough to scan the UPC on items in stores.  The camera can also be joined with augmented reality software to show the products on sale in a store in which the subscriber points the camera. 

It’s clear to me that when you look at all the possibilities for mCommerce, it means that before too long, every mobile subscriber should be able to do almost any commerce function using their phone or tablet.  And kids who grow up using their mobile for commerce are simply going to continue to prefer that option over others as they age. 

That’s why I believe that eventually, mCommerce could surprise eCommerce to become the largest electronic-based commerce market of all time.

Written By:

J. Gerry Purdy, Ph.D.
Principal Analyst
Mobile & Wireless
MobileTrax LLC
gerry.purdy@mobiletrax.com
404-406-5309
 
Disclosure Statement: From time to time, I may have a direct or indirect equity position in a company that is mentioned in this column.  If that situation happens, then I’ll disclose it at that time.