Mobile commerce on the move

Analysts predict that the latter part of 2000 will see an unprecedented explosion in mobile e-commerce (or so-called m commerce) fueled mainly by three industry segments: financial services, travel, and retail.

And while the established brick-and-mortar players try and stake their m-commerce claim, they face increased competition from pure-play Internet companies trying to displace them with their own mobile commerce initiatives.

One of those companies, VirtualBank, is expected to target high-tech companies that have private-label financial services, with the first business-to-employee deals signed with Compaq, storage giant EMC, and diversified company Textron.

Meanwhile, some of the largest European banks are working with Compaq spin-off Tantau to deploy its mobile service platform in a partnership with Hewlett-Packard. Sweden’s SE Banken expects to have five million customers on-line within three years, while the Helsinki, Finland-based Merita Bank is wrapping up a pilot with Tantau that could result in 250,000 wireless banking customers by the end of the year.

“M-commerce will have a profound effect on the financial services industry,” says Rory Brown, CEO of VirtualBank, a pure-play start-up with US$40 million of backing from General Electric, Nokia, and DaimlerChrysler – plus a private placement of funds from MCIWorld.Com senior executives, including CEO Bernie Ebbers.

Brown points out that Bank of America supports 10,000 physical locations while Charles Schwab, which boasts an increasingly productive e-commerce site, has only 400.

“If you look at the cost of a bank, a brick-and-mortar facility is holding on to a commodity which they earn no money on. Half of it is handed out to people, and the cash on hand is earning no money,” Brown said.

While many companies are still grappling with the problems of wired e-commerce, the demands of the financial services, travel and retail markets are causing them to go further and target the mobile market. This is a necessary step, say analysts, because their market is a workforce of consumers displaying diminishing brand loyalty in order to access their business and personal data wherever they are.

“These are the industries that are time-and location-sensitive,” said Kelly Quinn, a senior analyst at the Boston-based Aberdeen Group.

For traditional companies, the greatest impetus for deploying a mobile solution appears to be keeping their current customers, not attracting new ones. Mark Ebel, director of digital communication services at Minneapolis-based BestBuy, the United States’ number one brick-and-mortar retailer in consumer electronics with annual sales of $12.5 billion, noted that an erosion of electronics purchases from brick-and-mortar stores is already underway.

“More than 500 consumer electronic stores closed in the past year alone,” Ebel said.

In response to this, BestBuy launched its wireless shopping site,, BestBuy’s intention is to use its wireless site as another method to stay connected to its increasingly mobile customer base.

“In this age of geographically diverse individuals who travel and want to provide gifts for family and friends, we believe Bestbuy.byair gives them a local feel,” Ebel said. “The dot-com (component) is a wonderful marketing tool.”

Currently in development for BestBuy are personalized marketing initiatives to alert customers to products and services, and the company also is investigating location-based marketing via global positioning technology soon to be in all cell phones.