RealTime IT News

PCs Still Rule the E-Commerce Roost

Research that predicts Internet use and e-commerce will move away from the PC and onto mobile or television-based platforms is nothing new. But with all but a minute portion of this year's B2C e-commerce sales coming through PCs, it's interesting to speculate when this long-anticipated trend will come to fruition.

According to research from GartnerG2, as much as 10 percent of the B2C e-commerce transactions in the United States will be done through devices other than the PC by 2005. This is a fairly significant portion of sales when you consider 99.8 percent of B2C e-commerce dollars will be spent via PC in 2001.

"B2C e-commerce for products and services in the United States is projected to reach $61.8 billion in 2001 and grow to $227.7 billion in 2005," said Michael Cruz, senior analyst for GartnerG2. "In 2001, $61.7 billion of B2C e-commerce will be done through a PC, and online sales purchased through a TV will total a mere $107 million. In 2005, $204.8 billion will be done through a PC, $9.5 billion will be done through a mobile device and $13.4 billion will be done with a TV."

GartnerG2 predicts that by 2005, 42 percent of U.S. consumers will use multiple platforms on a regular basis. While the PC will remain the dominant platform, interactive TV and mobile devices will be used primarily from location- or situation-specific buying.

"Mobile devices will be used primarily for purchasing access, for such things as public transportation and entertainment tickets, as well as time-sensitive or alert-driven purchases or location-specific purchases," said Mike McGuire, research director for GartnerG2. "Interactive TV will be most often used in responsive mode, in reaction to an advertisement or other stimulus during normal television viewing. Although, delayed rollouts of advanced Internet-capable set-top boxes will limit the opportunities for multiplatform authentication applications until approximately 2005."

But getting U.S. consumers to turn to their television, cellular phone or PDA to make a purchase will not be easy. More than consumers in Europe and Asia, U.S. consumers clearly associate Internet use with PCs. That said, GartnerG2 analysts predict U.S. consumers will be willing to use any or all platforms, individually or in combination, as the occasion and opportunity allow. Since each e-commerce platform has different strengths and weaknesses, U.S. consumers will likely employ multiple devices, choosing and switching based on what works best, when and where in the increasingly interconnected telecommunications environment.

"Because of differences in capabilities and functionality, consumers will favor different platforms for different roles and at different times," said David Schehr, research director for GartnerG2. "Retailers, service companies (such as airlines) and the technology vendors supporting them must make strategic investments and development decisions that take full advantage of the range of existing opportunities. Most companies cannot afford to try every new e-commerce idea, so they must choose wisely to get the greatest payoff from their investments."

There will almost certainly be some hand-holding involved for retailers interested in switching consumers to different e-commerce platforms. The challenge will be finding a return on this investment, because with many consumers learning to shop on mobile devices or television, you're bound to hear "Why couldn't I just do that on my PC?"

"Retailers need to help consumers use the channels synergistically -- help them set up shopping lists on the PC then order via a mobile device. Real opportunities will exist for hybrid commerce, helping consumers use devices in combination," Schehr said. "Multinational vendors and retailers should use Europe as a proving ground for mobile and interactive TV initiatives. Europe is more mobile- and interactive TV-oriented, and less PC-focused, so it provides better near-term testing opportunities for these systems."

Some research has shown that e-commerce via the television (t-commerce) hasn't exactly had a smooth ride in Europe to this point. According to the report, "Resuscitating Interactive TV Retail," from Forrester Research, t-commerce in Britain is in trouble. It found that ROI is a distant possibility, because dozens of retailers are chasing tiny revenues. Platform operators have created an impossible scenario for t-commerce, according to Forrester Research Director Fraser Pearce, by attacking thin margins with large revenue shares and high fixed costs.

As for mobile users in the United States, the Yankee Group estimates 50 million wireless phone users in the United States will use their devices to authorize payment for premium content and physical goods by 2006. This represents 17 percent of the projected total population and 26 percent of all wireless users.

The 50 million mobile users will spend approximately $15 billion, purchasing premium content and authorizing the purchase of physical goods and services with their wireless devices. This will be possible because by 2006, the Yankee Group predicts micro-billing for small transactions will have started to make a dent in the payment mix (representing approximately 2 to 3 percent of all non-cash, electronic transactions).

While it still trails Europe by a healthy margin, there is little doubt about the potential audience for m-commerce via cellular phones in the United States. According to the "2001 U.S. Wireless Industry Services Study" by J.D. Power and Associates, 52 percent of the households surveyed in the 25 largest U.S. markets in 2001 use wireless phone service. Nearly twice as many subscribers in 2001 (23 percent) report accessing the Internet via a wireless phone compared to 2000 (12 percent).