M-COMMERCE: DISTINCTIONS FROM E-COMMERCE


M-COMMERCE: DISTINCTIONS FROM E-COMMERCE

There are two user -oriented core dimensions on which m-commerce has an advantage over e-commerce: "mobility" and "locatability". Simple CIP devices offer mobility. Mobile data networks that employ geographical positioning systems or use network elements to pinpoint the " cell " where the user is offer locatability. With locatability, CIP devices are transformed into CLIP (communication, location, information, payment) devices. Taken together, these two dimensions create a range of distinctions between m-commerce and conventional e-commerce (see Table 1).

Table 1: Distinction between m-commerce and e-commerce

Dimension

E-Commerce

M-Commerce

Core Dimensions

Mobility

Limited: User can transact from locations with Internet access.

Ubiquitous: User can transact from anywhere in mobile network area.

Locatability

Client-specific: Client computer locatable via IP address.

User-specific: User, device, and geographic location can be identified.

Behavioral, Strategic, and Leadership Dimensions

Key customer concern

Money: Because of "free Internet" culture, e-commerce users are money conscious.

Time: Evolving from mobile telephony culture, m-commerce users are time conscious. They are used to paying for mobile services.

Customer location and market served

Fixed Locations: Customers can be served at locations where they have Internet-linked computer access.

Ubiquitous and Global: Customers can be served anywhere within the mobile network coverage area.

National and regional leadership

USA-centric: E-commerce evolved in USA.

Europe and Asia-centric: Scandinavia and Asian nations (Japan) lead in m-commerce.

Industry leadership

New Players: Newer companies such as Yahoo, AOL, Amazon.com, Dell, Cisco, and FreeMarkets have emerged as E-commerce leaders .

Transformed Old Players: Older players such as FSPs, Mobile Device Makers, WSPs, and Banks have chance to grab leadership. 1

Source: Authors' research

Do the differences between e-commerce and m-commerce outlined in Table 1 translate into differences in terms of business strategies for these two types of Internet-based commerce? We believe that m-commerce strategies will be different from e-commerce strategies in significant ways. In particular, we focus on three aspects of the customer relationship ‚ personalization, permission, and specification ‚ where m-commerce is likely to differ from e-commerce.



PERSONALIZATION, PERMISSION, AND SPECIFICATION

Personalization

M-commerce firms can link stated individual characteristics with a user -centric database. Although such linkages can be made in traditional e-commerce, they go further and deeper in m-commerce. Through relational links with mobile phone usage databases and to geographic positioning data, the scope and depth of a user-centric m-commerce database can be much greater than in the case of conventional e-commerce. M-commerce systems, thus, provide a perfect platform for delivering one-to-one marketing.

Personalization is about creating services that tailor the end-user experience to the idiosyncratic needs of the individual subscriber. In m-commerce, intelligent personalization platforms can be devised to learn from both user preferences and past behavior of the user. There are, of course, challenges in terms of optimizing the interaction path , enabling users to reach the services they want with as few buttons as possible, and presenting information in a compact form scaled for the smaller CIP device. Since the CIP device that enables access also serves as the customer's wallet (M ƒ ¼ller-Veerse, 1999), m-commerce platforms can also serve as universal payment systems. Overall, m-commerce applications have the potential to provide a much more comprehensive and intelligent level of personalization than e-commerce applications.

There are of course risks associated with enhanced levels of personalization. Losing the mobile CIP device could have consequences that are worse than losing a wallet. That is why security and authentication have taken on a renewed urgency in m-commerce settings (Wolverton, 2002). In the design of 3G devices, for example, strict security standards have to be incorporated.

Permission

Extending the Peppers and Rogers (1993) work on one-to-one marketing to the e-commerce arena, Godin (1999) introduced the concept of "permission marketing" to refer to a way of approaching customers intimately and personally by obtaining prior permission regarding the types of communications they would like to receive. In distinguishing older forms of marketing ‚ disparagingly termed as "interruption marketing" ‚ from permission marketing, Godin states:

Interruption Marketers spend all of their time interrupting strangers, in an almost pitiful attempt to bolster popularity and capture attention. Permission Marketers spend as little time and money talking to strangers as they can. Instead, they move as quickly as they can to turn strangers into prospects who choose to "opt-in" to a series of communications.

To be really useful, m-commerce applications require a much more comprehensive scope and depth of permission than e-commerce applications. For instance, m-commerce users must give permission to use their geographical location to pinpoint nearest service delivery points and also give permission to charge their purchases and service usage fees to their mobile network accounts or to prespecified credit or debit cards.

Specification

In e-commerce, distinctions have emerged between the "home" and "work" roles of users. In many instances, users are free to use any type of e-commerce services from their home terminals but are barred from using personal services, such as shopping or browsing pornography, by the firewalls surrounding their office terminals. M-commerce challenges these distinctions. Questions such as the following arise: Is it possible to determine whether the individual is at work (on duty) or not (off duty)? Is it even preferable or necessary to maintain this distinction? If the segmenting, targeting, and positioning strategies for m-commerce are approached using the traditional distinctions between B2B and B2C marketing, this could create confusion and problems. M-commerce providers have to serve the user in multiple roles (on duty/off duty) and at varying locations (home/work/traveling/shopping/elsewhere) in a dynamic fashion. M-commerce portals have to be ready to handle the user's dynamic specification of the role-location combination s/he prefers . In some cases, the m-commerce provider will have to dynamically infer the role-location specification, depending on the context of the interaction. And in still other cases, the m-commerce merchant would specify the segmentation style, and the m-commerce portal would have to handle such merchant-specified role-location combination. Thus, the m-commerce portals will have to become "dynamic specification hosts ". To become an effective and efficient specification host, the m-commerce portal will have to gather a lot of valuable , owner-specific information as well as service-capability and timing information from service and content providers.

Revisiting the M-Commerce/E-Commerce Distinctions

Based on the foregoing discussion about personalization, permission, and specification, some further distinctions between m-commerce and e-commerce can be made (see Table 2). In essence, m-commerce extends and elaborates the potential of personalization, permission, and specification that e-commerce provides. Without substantial extensions of these three dimensions, the very rationale of m-commerce becomes questionable. Just as a fixed telephone system with widely dispersed private and public phones cannot fully substitute for a system with universal mobile telephony, similarly an e-commerce system with a wide distribution of terminals cannot fully substitute for a fully developed m-commerce system. Just as mobile telephony represents a wholly distinct communication pattern from fixed telephony, so does m-commerce represent a wholly distinct transaction system from e-commerce.

Table 2: Personalization, permission, and specifications in m-commerce and e-commerce

Dimension

E-Commerce

M-Commerce

PERSONALIZATION

User-centric database

Slow Evolution: Evolves from navigation and transaction behavior of the user

Fast Evolution: Evolves from daily communications and linking of multiple databases

Tailoring of services and content

Somewhat Limited: Depends on inferences about user's preferences, roles

Possibly Extreme: User revealed preferences, inferred roles and preferences, and location factors can be used to tailor offerings

Learning and intelligence

Limited: Based on collaborative filtering, profiling

Extensive: Based on collaborative filtering, profiling applied to multiple databases

PERMISSION

Scope of permission

Relatively Narrow: Merchant-specific, defined in User Agreement

Relatively Broad: Often unspecific and location based

Depth of permission

Relatively Shallow: Very specific transactions and charges are permitted

Relatively Deep: Extensive range of transactions and payments are permitted

SPECIFICATION

Role demarcation

Sharp: Especially in firewalled work environments

Blurred: Difficult to tell whether user is on or off duty

Nature of role specification

Static: Determined by the location of the client terminal

Dynamic: Depends on user preferences, merchant preferences, and geographic location

Service or content specification

Somewhat Configurable: Depends on client terminal IP address and revealed user identity

Evolving and Dynamic: Depends on user preferences, merchant capabilities, location characteristics

Source: Authors' research

The distinctions between m-commerce and e-commerce create different strategic imperatives for each of these Internet-based systems of commerce. We turn our attention now to the strategic imperatives for m-commerce, based mainly on the dynamic impacts of personalization, permission, and specification.