It’s been fifteen years now since the Global Mobile Commerce Forum launched in 1997, at a hotel in Heathrow Airport. They talked about “the delivery of electronic commerce capabilities directly into the consumer’s hand, anywhere, via wireless technology” and “a retail outlet in your best customer’s pocket”. In a rather quaint and rare example of a forecast that was horribly understated as the dot com boom got underway, they even predicted that there would be as many as 150 million mobile telephony users by the year 2000. Ah, we were innocent then!
Of course many things have changed since then. Mobility has not only become the dominant form of telephony, but it has become the dominant form of computing. It has become integrated with music and TV. More people access the Internet on a mobile device that through any other mechanism today. Furthermore, the retail industry has been completely transformed. The book business, and the music business, once stalwarts of the high street, have been replaced with mobile phone stores and electronics stores. Online sales as a channel have become increasingly important for retailers, and the online-instore mix has become a critical part of strategy for retailers. The third thing that has changed of course is the Internet, and in particular search and social networking.
Furthermore, each of these businesses – mobile, internet and retail – is itself being changed by the others. The core business of mobile – voice and messaging – is going away; the core business of the internet – desktop – is going away; and the core business of retail – in-store – is at best changing fundamentally, and at worst it too is going away. For mobile, the business is shifting to data, and to integrated two sided service models. While customers will continue to pay for connectivity, margin will come from value added services provided by partners such as retailers. For the retailers themselves, much of that business is shifting to the mobile platform. For internet businesses, two shifts are happening – first, everything is going mobile, and second, display advertising is becoming less effective and less lucrative. That last trend is requiring internet businesses to become more deeply involved in the commercial transaction.
So how are the players positioned? Arguably retail has the most to lose. As a sales and marketing company, acting as middleman between manufacturer and the consumer, there is a strong argument to be made that retail as we know it will completely cease to exist. In a sense, we could see retailers as specialized logistics companies, creating a fulfillment experience (shopping) that is desirable and attractive, and achieving economies of scale that create efficiencies in the market. For the mobile service provider, connectivity as a commodity isn’t going away, and therefore there is a core business that will sustain it. For the internet companies, there is an exceptional capacity to handle and understand data at scale, and a global reach that gives it enviable distance from regulators, notwithstanding US and European attempts to rein them in. That – the understanding of big data – is an essential skill that mobile operators and retailers are only now getting to grips with. The pervasive connectivity that is exclusively the domain of the Internet service provider (in IBM speak their businesses are interconnected, instrumented and intelligent) is something that mobile service provider and retailers are trying desperately to achieve, mobile service providers through network analytics, and retailers through loyalty schemes and online services.
For any one player to be successful, they will need to become excellent at all three. Mobile service providers need to understand how to run an internet business, and how to be exceptional at sales and marketing. Internet businesses need to understand more deeply the dynamics of retailing (not merely advertising) and figure out how mobile behaviour is different from desktop behaviour, and how they can make the mobile experience exceptional (which they did successfully for desktop). Retailers have to understand the transformational opportunity of online, how to leverage their uniqueness (sales, marketing, store network and logistics capability), and how to do that on the mobile platform.
In another 15 years, who knows where we’ll be. We’re predicting billions of smartphones within five years, but will we be doing anything different with them than playing angry birds, and skyping instead of calling? Payments is becoming increasingly relevant – perhaps credit cards will be anachronistic, and banking will become a fourth circle in the venn diagram above. Context aware computing offers tremendous potential. For now, however, the opportunity in mobile commerce is significant, real, and immediate. Enough people have smart phones with rich functionality and great connectivity. Who can innovate that to make mobile commerce a genuinely exceptional experience?