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Will M-Commerce Convenience Sites Survive?

Sure they are handy and even fun, but will m-commerce consumer convenience sites be able to avoid the fate of their online counterparts.

March 30, 2001

When I first read about the now-defunct Espressonow.com, a company that takes coffee orders over the Internet and delivers them hot to your door, it occurred to me that either this business was misguided or people were extremely lazy.

As I walked into Uptown Espresso this morning to pick up the first of my 5 morning cups of that sweet dark nectar known as coffee, I was once again struck by that same sentiment.

The coffee store, using technology from Bellevue-based Ontain, is offering a new m-commerce initiative, whereby one can place orders and pay through their cell phone, then simply walk into the store to make the pick-up and be on their way.

At first I was somewhat offended that people were actually that lazy as to go use their phones to order their morning coffee, when it occurred to me that not standing in that line every morning would be great.

Whether or not this is a viable business for Uptown Espresso is not for me to speculate, but it does bring up the question of whether convenience sites may face similar consequences as their online counterparts.

Promises of convenience features from m-commerce are prevalent, but their success hinges on whether people will actually use these features and whether the companies can monetize that usage.

According to a report released this week by Jupiter Media Metrix, the immediate future for m-commerce does not look extremely positive.

The report speculates that any kind of significant revenues generated by mobile advertising and subscription in the U.S. are still two years off.

According to Dylan Brooks, the Lead Analyst for the report, the lack of opportunity for ad and subscription revenues in the near future paints somewhat of a grim picture, especially for the "convenience sites."

"The view on pure convenience mobile-commerce shopping sites is, if it's possible, even dimmer than those on the Internet," says Brooks.

The question then remains, how can businesses actually provide something useful to consumers, while at the same time making money?

"Some of the ways (to make money) are just trying to keep it simple, and relying, not exclusively, on any sort of online commerce angle," says Brooks.

For companies to achieve this, they are going to have to avoid looking strictly at m-commerce as its own stand alone e-tail outlet.

"The biggest opportunity for a lot of the retailers is in actually looking at the wireless devices right now more as a promotional tool, as a hook to pull people away from their computers, and perhaps into their brick-and-mortar stores," says the analyst.

He cites FTD.com as a strong example of how to use m-commerce initiatives to positively influence sales, allowing for mobile enhancement of the flower company's online service without having to deal with concerns and negative consequences.

With mobile-commerce security issues still prevalent, FTD.com has set out mobile initiatives, which will wirelessly alert you the day before a loved one's birthday, allowing you to instantly connect to their 800 number, without any of the concerns of having your credit card number entered into your phone.

"It's those modest and simple lengths that can help drive the incremental revenue without being a big risk or a large bet for any of these companies," notes Brooks.

The report also identifies an immediate potential for what they call "Niche Applications," noting the added value given to a Web-based service simply because it is mobile.

"While other services struggle to optimize a service for location, movie times (and ticket buying) are an immediate business, and one that will improve with location-based services," the report stated.

Despite the cautious outlook for the future of m-commerce, this factor sheds hope for our local caffeine provider.

In fact, according to Uptown Espresso's ASP, Ontain, who hired Market Trends to survey the users of the service, there is not only a high level of satisfaction among the users (an average score of 4.7 out of five on a satisfaction scale), but also a significant interest in having this service applied to video rentals (32%), fast food orders (30%) and restaurant take-out (10%).

"We have some wonderful traction with some of the key quick serve retailers, where time is really important for the consumer, and there's benefits built in for the merchant," said Jeri Goldberg, Director of Marketing for Ontain.

While the near future of m-commerce may still be hazy, at least for the time being I won't have to stand in line to grab my morning coffee.






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