Oral Training for Sophomores (Fall, 2002)

M-commerce advocates should heed e-commerce failures. (Economics).("mobile commerce" - shopping over Internet using wireless devices)

The shine may be off e-commerce in the American economy, but that hasn't stopped some business people from getting excited about the "next big thing"--m-commerce. Mobile commerce will supposedly transform the economy by allowing customers to shop over the Internet using wireless devices such as cell phones.

As enticing as that might seem, you can count Roger Blackwell among the early skeptics. A professor of marketing at Ohio State University, Columbus, he is coauthor (with Kristina Stephan) of Customers Rule! Why the E-Commerce Honeymoon is Over. The economic wounds of e-commerce are still fresh in American business, but he already sees signs that some people haven't learned the painful lessons. "These glowing predictions of m-commerce are becoming very popular, but they are as absurd as the predictions that we're all going to be buying our groceries over our home computers." (The online grocer Webvan went out of business in July, 2001.)

"M-commerce has some very specific applications that will be successful, just as we saw with e-commerce. But many of the proposed uses of m-commerce just won't work." To understand why, Blackwell says you have to consider why e-commerce didn't have the impact that a number of people thought it would. The primary reason is simple: Many entrepreneurs and investors didn't consider principles of consumer behavior when they were developing their Internet-based businesses.

People don't care whether they buy products and services from a computer screen or from a storefront, he maintains. They will choose whatever best meets their needs. Yet, many entrepreneurs assumed they could sell anything and everything over the Internet and do it better than traditional retail stores. The truth is that it is good at selling only a limited number of products and services, Blackwell argues. The Internet is effective for selling digital products--such as electronic airline tickets--as well as hard-to-find or hard-to-stock items like rare CDs or clothing items that people are familiar with, but can't find in a particular color or size.

For many products, though, consumers want to be able to touch and see before they buy. In some cases--such as banking--people won't trust a system in which they can't talk to real people. "These are all fundamentals of marketing that business students are taught. Anyone could have predicted which products could be sold profitably over the Internet, but many entrepreneurs and investors were caught up in that irrational exuberance," Blackwell explains.

"When people were thinking of the Internet as a way to sell, they should have been seeing it as a way for consumers to learn more about a company and its products. You can't download a donut from your computer, but you can find the location of the nearest donut shop. That's the way most consumers use the Internet."

One of the most important lessons for businesses is that they shouldn't adopt technology just for the sake of technology, Blackwell indicates. If the latest breakthrough doesn't make life easier for consumers, it won't succeed. That's why he is skeptical about the new infatuation with m-commerce. "I've heard people say that one promising application of m-commerce would be that when customers walk by a grocery store, their cell phone will ring with a message that ketchup is on sale. People are actually saying things like that. That's not how consumers make choices."

However, one promising application for m-commerce could be allowing people to return a rental car and get their bill over a cell phone without waiting in a line. "If people evaluate how consumers really behave, they should be able to see which m-commerce applications are fads and which will have longevity in the marketplace," Blackwell points out.