ITEC0722: Mobile Business and Implementation: Mobile Commerce

Suronapee Phoomvuthisarn, Ph.D.suronape@mut.ac.th

Mobile Commerce

http://www.forbes.com/sites/chuckjones/2013/10/02/ecommerce-is-growing-nicely-while-mcommerce-is-on-a-tear/

Outline

• Introduction to Mobile Commerce– Characteristics of M-commerce– M-Commerce vs E-Commerce– M-Commerce Services

• M-Commerce Business Models (BMs)– Definition– Business Models’ Key Elements– Revenue Model s for M-Commerce’s BMs

• Challenge

Introduction to Mobile Commerce

• Definition– “The use of wireless handheld devices such as

cellular phones and laptops to conduct commercial transactions online.”

• M-commerce is e-commerce preformed via a mobile phone or other mobile device.– Also known as m-commerce or mCommerce

Purchased goods through m-commerce channels

• "The history of m-commerce began in the early 2000s, when retailers started offering mobile device add-ons such as ringtones, games, wallpapers and screensavers. By 2009, the offers over mobile phones had evolved significantly. Specifically, out of all consumers that purchased goods through m-commerce channels in the United States: 58% purchased digital content (such as music or apps), 51% consumer electronics, 37% computers/laptops/related equipment, 36% books, 31% apparel and 20% jewelry.”

Characteristics of M-Commerce

E-commerce vs M-commerce

Factor E-Commerce M-Commerce

Product or service focus Product focus Service focus

Product or service provision

Wired Global access Wireless Global access

Product or service assets Static information and data

Dynamic location-based data

Product or service attraction

Fixed non-time-constrained access

Mobility and Portability of access

E-commerce vs M-commerce (2)

Factor E-Commerce M-Commerce

Personal Devices PC: Medium Mobile phone : High

Network Operators can determine the services

No Yes, like a gatekeeper

User’s Location Hard to find Network Operator know who you are, where you are, can direct you to the portal of choice, and can charge you money

Display Screen Size and Memory

Medium Small

Click through rates for banner AD and e-Mail (i-mode)

PC Less than 0.5% 3.6%; 24%

Powerpoint of M-commerce Strategy

M-Commerce Services• Financial

– Secure banking services• Entertainment

– Mobile Gambling• Shopping

– Purchase of goods• Information services

– News• In-application mobile phone payments

– Games• Mobile Advertisement• Mobile ticketing

Business Models

• Definitions of business model• “the blueprint of how a company does business.

Osterwalder et al. (2005) • ‘‘the totality of how a company selects its customers,

defines and differentiates it offerings, defines the tasks it will perform itself and those it will outsource, configures its resources, goes to market, creates utility for customers and captures profits.’’ Slywotzky (1996)

Business Models’ Key Elements

E-Commerce Business Models

Phillips, B., Business Driven Information System, 2008

M-Commerce Business Models

• Type of M-Commerce Business Models (General)– Businesses – involving a Wireless Business-to-Consumer

(WB2C) interaction mode. It is important to note that most such interactions would naturally involve a Wireless Consumer-to-Business (WC2B) interaction mode as well.

– Consumers – Involving a Wireless Consumer-to-Consumer (WC2C) mode of interaction.

– Businesses – Involving a Wireless Consumer-to-Business (WB2B) mode of interaction.

–

Business Models (Revenue in Mobile context)

• User Fee Business Models • Shopping Business Models • Marketing Business Models • Improved Efficiency Business Models • Advertising Business Models • Revenue-Sharing Business Models

User Fee Business Models

• Type of fees– Subscription fees – usage fees

• Charge for actual usage of a service

• Often involves relying on 3rd party billing providers or network operators to collect fees

Powerpoint of Mobile Commerce Business Models ,Business intelligence, Sadat Academy for management sciences

Shopping Business Models

• Like wired e-tailers, another distribution channel • Examples : eBay, Amazon etc.

Powerpoint of Mobile Commerce Business Models ,Business intelligence, Sadat Academy for management sciences

Marketing Business Models

• Mobile presence is subsidized company’s core business– using the mobile Internet as a marketing channel

rather than as an actual sales channel

Powerpoint of Mobile Commerce Business Models ,Business intelligence, Sadat Academy for management sciences

Improved Efficiency Business Models

• cut costs and improve customer satisfaction– mobile banking– mobile ticketing

• This model help reducing operating costs such as expenses on personnel at branch offices, call centers, ticketing booths, and counters. .

Powerpoint of Mobile Commerce Business Models ,Business intelligence, Sadat Academy for management sciences

Advertising Business Models

• Flat Fees– Charge flat fee for displaying advertisement over a

period of time• Traffic-based Fees

– Paying based on the number of times an advertisement is placed -> cost per thousand ads impression (CPM)

• Performance-based Fees– Fees based on the number of click-throughs or call-

throughs -> cost per click and cost per acquisition, respectively

Advertising Business Models (2)

Powerpoint of Mobile Commerce Business Models ,Business intelligence, Sadat Academy for management sciences

Revenue-Sharing Business Models

• Companies’ partnership arrangements– collecting payment from users and redistributing

it across the different parties involved in delivering the service

– Examples:• local weather updates, traffic conditions, news

updates, and games and other entertainment services.

Powerpoint of Mobile Commerce Business Models ,Business intelligence, Sadat Academy for management sciences

Other Business Models

• Razor and blades model. – The seller sells one product for free or very low cost

hoping to sell a complementary product at high margins.

• Brokerage/Marketplace model. – matches buyers and sellers in usually auction like model

and take a commission on the sales.

• Freemium model– a company sells out two services – one for free but with

limited features, and one for premium with full features.

Other Business Models (2)

• Network effect model.– business tries to focus mainly on building more users and

making money eventually through selling users data or advertisements.

• In-app commerce. – For example, in a game, the game is given for free or low

cost, but additional enhancements in the game can be bought for a price.

• Certification & verification. – Usually a role of non-profit organizations like ISO and

universities, this is also getting commercial.

Mobile apps: which Business Model is best?

• According to Gartner, – within 2017, 94,5% of downloaded apps will be

free for users. Us, the users, will pay only five apps on a hundred.

– 90% of paid apps do not reach 500 daily download and generates less than 1.250 Dollars per day.

• Revenue or users?

Examples• B2C Models: Content Provider

– Digital content on the Web• News, music, video

– Revenue models: • Subscription (pay per download (micropayment)); advertising

• B2C Models: Market Creator

– Create digital environment where buyers and sellers can meet and transact (Examples: eBay)

– Revenue model:

• Brokerage Model (Transaction fees)

Examples

• B2C Models: Service Provider– Online services

• e.g., Google—Google Maps, Gmail, etc.

– Value proposition • Valuable, convenient, time-saving, low-cost

alternatives to traditional service providers

– Revenue models:• Sales of services, subscription fees, advertising,

marketing business model

Examples

• B2C Models: Community Provider– Provide online environment (social network)

where people with similar interests can transact, share content, and communicate

• e.g., Facebook, LinkedIn, Twitter

– Revenue models:• Advertising, subscriptions, shopping business model

Challenges

• Efficient and fast wireless telecommunications services are often focused within specific area

• Wireless Mobile Internet access more costly than wired Internet access

• Concerns over privacy and security still pervade the wireless data transmission world

Task

• Work on a group of 3 people or less– Pick a mobile commerce application and describe

its key elements of the business model– Give a presentation at the end of the class

Reference• http://www.investopedia.com/terms/m/mobile-commerce.asp• http://itlaw.wikia.com/wiki/Mobile_commerce• http://en.wikibooks.org/wiki/The_Computer_Revolution/E_commerce/M-commerce• http://en.wikipedia.org/wiki/Mobile_commerce• http://en.wikipedia.org/wiki/Subscription_business_model• http://theagni.com/2011/12/02/how-to-build-revenue-24-types-of-major-business-models-with-

examples/• http://articles.bplans.co.uk/starting-a-business/examples-of-well-known-business-models/1040• http://en.wikipedia.org/wiki/Business_model• Laudon, K.C., E-commerce business technology society, 8th edition • http://en.wikibooks.org/wiki/The_Computer_Revolution/E_commerce/M-commerce• Elliott, G.; Phillips, N., Mobile Commerce and Wireless Computing Systems, Pearson Educations

Limited, England. 2004

• Barnes, Stuart J. And Huff, Sid L., “Rising Sun: iMode and the Wireless Internet”, Communications of The ACM, Nov.2003, Vol. 46, No. 11, pp. 79-84.