Chapter 12: Moving from wired e-commerce to mobile e-commerce

1. Chapter 12: Moving from wired e-commerce to mobile e-commerce After this session you should be able to: • Define mobile e-commerce and outline the key components of the mobile value network • Recognise mobile e-commerce applications and be able to categorise them • Depict the advantages of mobile e-commerce over wired e-commerce • Understand how wireless technologies affect the value chain and influence the industry’s five forces.

2. Exhibit 12.1 The mobile e-commerce value network outlines the key players Provider of enabling technologies Infrastructure equipment vendor Mobile network operator Portal provider Application developer/provider End Consumers Mobile device manufacturer Content provider Service area Application area Technology area Source: Adapted from F. Müller-Veerse et al. (2001), p. 23.

3. Exhibit 12.2 m-Commerce consumer services and applications Information • News • Weather • Catalogues • ... Communication • m-Advertising • m-Health • SMS/MMS • … Transaction • m-Banking • m-Tailing • m-Payment • ... Entertainment • m-Games • m-Gambling • m-Music • ... Source: Adapted from F. Müller-Veerse et al. (2001), p. 80.

4. Exhibit 12.3 m-Commerce business services and applications M-SCM • m-Inventory • m-Tracking • ... M-CRM • m-Services • m-Sales • ... External m-Workforce • m-Office • m-Fleet tracking • ... Internal Source: Adapted from F. Müller-Veerse et al. (2001), p. 80.

5. Characteristics of mobile e-commerce Ubiquity This characteristic means that users are able to use their device at any time and in any location. Ubiquity increases the immediacy of communication and is equally valued in consumer and business markets. Convenience Mobile content is inferior to other media in terms of screen size and downloading speed. However, it is superior to other media in terms of convenience and ease of use. Localisation Localisation of devices and their users is based on the portability of wireless devices and the knowledge about a person’s location. It enables location-based services. Personalisation Personalisation in mobile is higher than in wired e-commerce. When calling a mobile phone, users call the number of a person and not the number of a location as in the case of a fixed-line phone. Privacy and security Privacy and security are decisive prerequisites for all wireless transactions. Users need to be in control of their data, especially if it comprises information about their geographical location. Device and network limitations Due to slow transfer rates, limited connectivity, small screens and tiny keyboards of the handset,a user’s wireless Internet experience can be very restricted. Source: See also D. Steinbock (2005).

6. Exhibit 12.4 Impact of wireless technologies on the value chain Firm Infrastructure • Mobile financial and ERP systems, incl. legal and government information • Mobile investor relations (e.g. information dissemination, broadcast conference calls, alerts)‏ • Voice-to-data conversions: mobile forms-based applications, multimedia cellular and wireless broadcast • Mobile services: rich voice (image, video), Internet (intra/extranet), messaging (SMS, MMS, LBS) and content • Mobile access to e-mails, personal information management Human resource management • Mobile activities in recruiting, hiring, training, development and compensation • Mobile self-service personnel and benefits administration, incl. mobile time and expense reporting • Mobile sharing and dissemination of company information • Mobile services via HRM: voice guidance, messaging (SMS, MMS, LBS push or pull), internet and infotainment Technology development • Mobile teams, distributed collaborative product design across locations and among multiple value-system participants • Knowledge directories accessible from any location • Real-time access by R&D to mobile sales and service information Procurement • Mobile demand planning and fulfilment • Other mobile linkage of purchase, inventory, and forecasting systems with suppliers and/or buyers • Mobile direct and indirect procurement via marketplaces, exchanges, auctions, and buyer/seller matching Mobile supply chain management Mobile customer relationship management Source: Adapted from Dan Steinbock (2005), p. 260.

7. Exhibit 12.4 Impact of wireless technologies on the value chain (Continued) Inbound Logistics Mobile activities in receiving, storing and disseminating inputs to products/services • Mobile scheduling, shipping, warehouse/demand management and planning and scheduling across the company and its suppliers • Mobile distribution across the company of real-time inbound and in-progress inventory data Operations Mobile activities associated with transforming inputs into final products/services • Mobile information exchange, scheduling and decision making in in-house plants, contract assemblers, and components suppliers • Mobile available-to-promise information to sales force and channels Outbound Logistics Mobile activities associated with collecting, storing and distributing products/services to buyers • Mobile order processing and scheduling • Mobile delivery vehicle operation • Mobile customer/channel access to product development and distribution status • Mobile channel management, incl. information exchange, warranty claims, contract management (versioning, process control) After-sales service Mobile activities associated with providing service to enhance or maintain the value of product/services • Mobile support of customer service reps (incl. voice guidance, SMS, MMS, LBS, e-mail, billing, co-browse, chat, VoIP, video streaming) • Mobile customer self-service via portals and mobile service request processing, billing, shipping etc. • Mobile field service access to customer account review Marketing and sales Mobile activities with means for buyers to purchase products/ services and inducing them to do so, incl. advertising, promotion, sales force, channels, pricing • Mobile sales channels, e.g. websites, marketplaces • Mobile access to customer information, product catalogues, order entry • Mobile product/service configurators • Mobile push/pull advertising • Mobile surveys, opt-in/opt-out marketing, and promotion response tracking Mobile supply chain management Mobile customer relationship management Source: Adapted from Dan Steinbock (2005), p. 260.

8. Impact of wireless technologies on the industry’s five forces (+) Increases barriers to entry by eliminating waste and contributing to efficiencies (+/–) Mobile applications are difficult to keep proprietary from new entrants, but consolidation favours incumbents (–) A flood of new entrants has come into many new industries Barriers to entry Bargaining power of suppliers Bargaining power of channels and end users Rivalry among existing competitors (+) Complements (–) Shifts powerful bargaining channels and power to can improve end consumers bargaining (+/–) Increases/decreases power over switching traditional costs channels (–/+) Reduces differences among competitors as offerings are difficult to keep proprietary, but increases the potential for efficiencies (–/+) Migrates competition to price, but can increase potential for differentiation (–) Widens the geographic market, increasing the number of competitors (–) Lowers variable cost relative to fixed cost, increasing pressure for price discounting (+/–) Procurement using mobility tends to raise bargaining power over suppliers (e.g. Wal-mart and RFID), though it can also give suppliers access to more customers (+/–) Mobility provides a channel for suppliers to reach end users, reducing the leverage of intervening companies, but it may also provide a direct channel to industry rivals and thus dis- intermediate channels (+/–) Mobile procurement and mobile markets tend to give all companies equal access to suppliers, but they can also be used to create privileged access to some firms (+/–) Mobility can gravitate procurement to standardised products that reduce differentiation, but it can also be deployed to diversify products/services, which increases differentiation Threat of substitute products or services (+) By making the overall industry more efficient, Mobility can expand the size of the market (+) The proliferation of mobility approaches creates complementary opportunities, rather than substitution threats Source: Adapted from Dan Steinbock (2005), p. 266.