Consumers Cool to Wireless E-Commerce

Results of two new studies released this week indicate that the future of wireless e-commerce may be less than rosy for the near term.

A report from research and consulting firm Ovum, titled “Mobile E-Commerce: Market Strategies,” says that consumers may not be willing to pay for services simply because they are wireless.

“It’s debatable whether ordinary consumers are actually demanding mobile e-commerce services right now,” said Jeremy Matthews, Ovum analyst and Asia Pacific mobile specialist. “It’s more a case of suppliers sensing an opportunity to make money, and pushing the idea at them.”

Further, Matthews said that wireless e-commerce is not likely to be a moneymaker in the short term. Consumers will probably lag far behind business users, and even businesses will likely not pay a premium for services that are already available using a telephone or PC.

“If suppliers are to survive and prosper in the long term, their early offerings will have to be very targeted and very compelling,” he said.

Note of Caution

The co-author of the study, Ovum senior analyst Duncan Brown, cautions companies about over-investing in wireless applications.

“Potential mobile e-commerce players have to realize that at this point in time, good substitutes for their services already exist,” Brown said.

Brown added, “Old habits die hard. For instance, what’s to persuade someone to order a pizza using a mobile application, rather than just picking up the phone? There would have to be significant value-add to change habits; perhaps discounts, an up-to-date menu on screen, easy selection of pizzas and toppings with a few key presses, and no busy signals or overworked counter staff.”

Proponents of M-Commerce Disagree

Even though Ovum researchers point out that a framework for trusted and secure payments is not yet in place, some industry heavyweights are already enthusiastically touting the benefits of wireless e-commerce.

Earlier this month, Amazon.com CEO Jeff Bezos commented that m-commerce is “going to be the most fantastic thing that a time-starved world has ever seen.”

In fact, according to Bezos, wireless Internet will permanently change how people shop. The advantages of being able to do errands while sitting in a doctor’s office or hear from a friend about a book and buy it on the spot are going to be irresistible, he said.

Others are taking a more tempered approach. Mohan Vishwanath, vice-president of Yahoo! Everywhere, believes that it is too soon to put all the eggs in one wireless basket.

“Mobile commerce is still a very, very early thing,” Vishwanath said. He pointed out that some applications need to be viewed on a full size color PC screen and may not translate well to a wireless device — though simple transactions such as buying movie tickets may become commonplace.

Higher Bandwidth Adds Boost

Meanwhile, another study, “Content and Applications for the Wireless Internet,” from ARC Group, asserts that the emergence of higher bandwidth will lead to greater confidence among mobile users.

The number of wireless users browsing the Internet using their handsets will total over 600 million within five years, the study predicts, and the total number of mobile users will reach more than one billion worldwide, exceeding the number of fixed Internet users.

Nevertheless, questions remain whether the companies providing products and services via mobile devices will be able to generate enough enthusiasm for m-commerce to justify their investments.