Tuesday, July 10, 2001

Mobile To Comprise Only A Sliver Of Online Shopping

Jupiter Media Metrix, a global leader in Internet and new technology analysis and measurement, reports that although the US has had the largest base of cell-phone users in the world, less than $4 billion in shopping and travel will be transacted on Internet-capable mobile phones in 2006—representing less than two percent of all online shopping. According to a new Jupiter wireless research report, consumers' interest in purchasing items using a wireless device is not a priority, as only seven percent of consumers express a desire to transact with a mobile phone. Jupiter analysts predict, however, that shopping-related content on mobile devices will influence transactions online via PCs and off-line in brick-and-mortar stores—sales that will be valued at $39 billion in 2006.

"Limitations of wireless devices and slow networks are being used as unacceptable excuses for the slow growth in US mobile commerce. The actual culprit is consumer apathy," said Dylan Brooks, Jupiter analyst. "With the number of US consumers conducting wireless transactions not expected to exceed one million until late 2002, carriers and merchants must change strategies to focus on simple text messaging and text-enhanced voice services until Americans are more comfortable using the wireless Internet. Influencing mobile users with timely and location-based research or promotions sent to wireless devices will be key to successful mobile commerce."

Additional key findings and forward-looking analysis from the latest Jupiter mobile transactions research, entitled Mobile Commerce: Profiting Despite Consumer Apathy, include the following:

- According to Jupiter analysts, mobile commerce will be driven by a desire for instant gratification, not extensive research, which fueled the early adoption of online commerce. Therefore, mobile commerce revenues will be characterized by time-critical purchasing. Top wireless commerce categories will be those that benefit from personalization, time- and location- sensitivity. Jupiter analysts project that US mobile merchant revenues will total only $22 million in 2001 and will be driven largely by occasional sales of entertainment and airline tickets, flowers and other timely gift items.

- A March 2001 Jupiter Consumer Survey confirmed Jupiter's earlier projections: 1.4 percent of consumers who own Internet-ready wireless devices (less than 100,000 of 6.25 million people) had made a purchase using the data capabilities of their handset or PDA in 2000. Because the number of US wireless users conducting transactions will not pass one million until late 2002, Jupiter analysts advise mobile commerce ventures to focus on bridging the wireless world with online commerce, catalog sales and off-line retail efforts. Jupiter analysts believe that Internet-capable handhelds will play important roles in user identification, promotions and as a way to maintain unified customer contact for transactions both online and off-line.

- Consumers who already buy goods and services online avoid shopping via wireless devices chiefly because of concerns over the cost of access, with 36 percent reporting that it discourages them from shopping wirelessly. While most wireless carriers have yet to show a willingness to offer low-cost unlimited usage data plans (packet data carriers like AT&T excepted), Jupiter analysts believe that carriers and commerce sites can address shoppers' concerns over wireless shopping access costs. Wireless carriers must create free, dedicated shopping channels on their wireless Web portals, and merchants must offer discounts or promotions to consumers making their first purchases over the wireless Web.

"Mobile commerce is about influencing purchases, not transactions," Brooks said. "The greatest area of promise for mobile commerce is to bridge the gap between the touch-and-feel physical world and the convenient and cost-competitive online world. Merchants that understand and act on the 'mobile bridge' concept will come out ahead in what is fast becoming an era of cross-platform retailing."

Jupiter Advice for Merchants and Carriers
Jupiter analysts believe that commerce sites can attract a broader customer base to their wireless shopping initiatives only by encouraging use of and familiarity with their services. In order to build this established base of consumers, merchants and carriers must implement the activities listed below:

- Work to drive familiarity, not transactions, among early adopters by encouraging browsing for price comparison, product reviews, store locator and item availability.

- Take common sense precautions when it comes to security, including protecting credit card databases and communicating to consumers about the safety of their personal information. The recent Jupiter Consumer Survey shows that 33 percent of portable device owners will not engage in mobile commerce because they feel that their credit card or payment information is not secure.

- Focus on voice capabilities of wireless phones in the short term in order to process the expected low volume of transactions. Jupiter analysts say that providing users with an "order now" option that connects them with a representative to process orders will be an effective strategy for easing consumers into using the wireless Web without forcing them to confront their concerns over credit card security.

Jupiter Mobile Transactions Report Methodology
Jupiter utilizes a wide set of data-gathering tools to conduct research, including systematic polling of leading industry executives, extensive consumer surveys, extensive executive surveys, Media Metrix audience measurement data, AdRelevance online advertising metrics and a rigorous approach to building market forecasting models. Jupiter forecasts, such as in this study, are based on a number of methodologies, including close examination of analogous markets (either previous growth of new technologies or relevant off-line market case studies), consumer self-stated intentions culled from proprietary Jupiter surveying, complex market segmentation analysis, and analysis of historical trends. Additionally, all forecast assumptions are rigorously debated in a process designed to capture the collective judgment of analysts with relevant experience and perspectives on each given market.