Amazon has moved out of the Internet and into consumers’ mobile phones to grab more retail sales.
With TextBuyIt from Amazon, registered users can now send a text message to Amazon.com and receive a product price and offer-to-buy message back within seconds. With a click consumers can confirm the purchase and the item will be shipped to their stored address.
Why should brick-and-mortar retailers feel threatened by this new mobile commerce (m-commerce) technology? “This adds another layer of pricing pressure to physical retailers,” says Jonathan Yarmis and Robert Bois of AMR Research in a recent report. “Imagine you are standing in an electronics store, shopping for a new digital camera. You find one that’s got the features and functions you’re looking for… Then you wonder, might there be a better price for it on Amazon? Text, send, receive. And there, from the aisle of the competitor, you can buy that camera from Amazon.”
Priced out of the competition
Amazon’s entrance into the mobile commerce arena drives home the point that most retailers will fail if they try to compete on price alone. “Clearly this isn’t a service for consumers who demand instant gratification, but it does give them a clearer picture of exactly what they’re paying for,” report the AMR analysts. “Retailers will need to work extra hard to keep that consumer if that price difference is too attractive.”
According to AMR, consumers have long been able to do price comparisons, even on premises, but this takes things a step further. Consider the following three benefits of mobile commerce:
The simplicity of the system — Amazon will accept structured and unstructured item descriptors and has a fairly simple system for going from comparison through to delivery.
The breadth of the product portfolio — As one of the Internet’s largest retailers, Amazon has access to a broad range of products so that user frustration with unavailable products, a major reason why users wouldn’t return, should be small.
The ubiquity of the technology platform — By using text messaging rather than Internet browsing, Amazon reaches most cell phone customers, largely without regard to speed and capability of the network or device.
The technology is here today and retailers can’t ignore it. So as they embrace it, brick-and-mortar retailers will find better ways to compete using the mobile technology. “Retailers will join the fray and use it, not just for increasing transactions but for relationship building,” says Andy Nulman, President and CMO, Airborne Mobile. “A perfect example is a retailer like Barney’s that has a specific clientele that is not price sensitive, but is more style and exclusivity sensitive. They are not going to find Barney’s products elsewhere but they will use the mobile technology more to find out if a specific product is in stock.”
The next phase of mobile commerce technology will take the Amazon application and raise it to a higher customer experience, industry experts say. “The retail industry as a whole is keeping its eye on mobile applications ingrained with customer management solutions that can deliver contextualized information to the consumer in the field — which will likely be the next important milestone in retail,” notes Hervé Pluche, President and co-founder of StoreXperience. “Amazon’s new service is not offering that type of solution, but the service is interesting nonetheless.”
How near is the future of m-commerce?
Amazon has taken the lead in the U.S. with this m-commerce technology, and others are not far behind, including Google, Paypal, Yahoo and MSN, suggests Airborne’s Nulman. Then retailers will join in, probably starting with the likes of Wal-mart, he predicts. Right now, though, Amazon needs to work out some of the kinks, he says. “It is a bit clunky, cumbersome, and not intuitive. You must know product name and ISBN number. As the technology develops, maybe as soon as two years from now, our cell phones will be preloaded with software so we don’t have to key in so much information.”
“Like any new technology, you will have the early adopters who will migrate to mobile commerce, but the real story is when it reaches Main Street America,” adds Brad Beasley, CEO of Crosslink Media. “It is definitely an exciting time and with major players like Amazon entering the fray, it accelerates the acceptance for all of us.”