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E-Channel: Web Wireless Sales Predicted to Mature

Channel Partners

January 1, 2001

6 Min Read
E-Channel: Web Wireless Sales Predicted to Mature

Posted: 01/2001

Web Wireless Sales Predicted to Mature
By Josh Long

The men and women who cram into the subways in Boston and New York scan the
headlines and stock quotes printed in The Boston Globe (www.boston.com/globe)
or The New York Times (www.nytimes.com).
It’s a scenario not likely to vanish, even as next-generation wireless
technology revolutionizes how consumers and businesses gather their information.

Chart: Forecast for Evolution of Wireless Distribution

Nor is it likely that the ultimate paradigm of the new economy–the
Internet–will abolish agents and retail stores as more Americans purchase
high-tech gadgets, including wireless products and services, online.

Still, industry analysts and professionals say the web will play a stronger
role in mobile transactions as service providers continue the push for mixed
distribution channels.

Last year, in the retail market, the Internet represented approximately 1
percent of wireless sales, according to a Yankee Group (www.yankeegroup.com)
report on wireless sales via the web. However, the Boston-based consulting firm
predicts that Internet sales could represent up to one-third of the distribution
market by 2005.

Mobile carriers are paying attention.

"All Tier 1 and most Tier 2 carriers have developed online stores with
back-end ordering, processing, fulfillment and provisioning capabilities through
their site, and are in the process of developing marketing and advertising
rollout plans to support these stores," writes Yankee Group wireless
analyst Knox Bricken in the report.

AT&T Wireless (www.attws.com)
executives say its online business is experiencing "dramatic growth in our
online sales and expect this trend to continue as customers become increasingly
comfortable with the convenience and safety of buying online."

In August, for instance, the number of customers that signed up for the
company’s online customer service reached 1 million, up from 100,000 last

Comparing Sites

Those numbers sound captivating for the growing number of Internet comparison
sites, which are changing and expanding their focus of business-to-consumer
models to business-to-business and ASP models.

The business-to-consumer strategies have not proven to be a slam-dunk in
cyberspace, as the dot coms braved a storm on Wall Street in 2000. Many
enterprises learned the hard way that e-commerce is not the cash cow some
thought it would be.

For example, Washington-based Point. com Inc. (www.point.com)
restructured its business last fall, in part due to the discovery that consumers
using its comparison site on wireless plans frequently were not buying online.
Company executives explained the firm would eliminate its online purchasing and
private label offerings but retain its comparison features.

"Our goal was to sell phones online," says Point.com spokeswoman
Silvia Ammerman. "[We] found people were not doing that. People were
purchasing phones directly from the dealer."

Although consumers used Point.com as a resource to educate themselves on
viable carrier plans, they purchased equipment and services directly from the
dealers, who did not compensate the dot com for the leads.

"The dealer did not know why they came to the store," Ammerman

While Point.com still offers consumers price-plan information, the company
has shifted its focus from direct sales toward a business-to-business and ASP
model. When it made the shift, the company laid out a plan to use its editorial
and research department to send industry data to partners.

Other comparison sites are offering turnkey solutions in private label
agreements to national retailers to enable mobile sales online. In the
business-to-business model, many comparison sites are offering retailers the
technology and solutions to provide their customers with a wireless product or

Cellmania.com Inc.’s (www.cellmania.com)
Mstore features in-memory database, extensible markup language (XML) technology,
and business logic that enable businesses to sell wireless products and services
to customers who can access the technology through a desktop and a mobile phone.
Sundial.com (www.sundial.com), meanwhile,
has forged partnerships in private branding agreements with the likes of Yahoo!
Mobile (http://mobile.yahoo.com) and
LowerMyBills.com Inc. (www.lowermybills.com)–a
site that helps consumers lower bills on utilities.

Making Friends

The dot coms recognize the advantages of befriending the giants of the old
and new economies.

"It is hard in the Internet world to build a brand and compete against
the Best Buys [ www.bestbuy.com ] and
Staples [ www.staples.com ] of the
world," says Sundial.com director of marketing Leora Schachter. "It is
better to work with them than against them."

Adds Cellmania’s co-founder and vice president of marketing Neerav Berry,
"These are people who have established consumers and established traffic
flows … who get far more hits than we will get."

The players are evolving their strategies, says Mitch McCoy, Decide.com
Inc.’s (www.decide.com) vice president of

In its report, the Yankee Group calls Decide.com a latecomer to the market,
and says it plans to launch a new strategy this year that incorporates online
and offline assets.

McCoy declined to elaborate.

The dot coms also are selling certain applications to other companies that
provide wireless products and services. For instance, Point.com provides
wireless agents and retailers an interface to manage customer activation
information and settle carrier commission statements. Cellmania features the
Mfinder, a directory of wireless applications that offers expert reviews,
customer ratings, international coverage and personalized book finders among
other services.

Touch and Feel

Industry professionals recognize the limits of the web–a buyer’s need for
human interaction and what experts call the "touch and feel" factor in
wireless sales.

"It is not like you are buying a book from Amazon.com Inc. (www.amazon.com),"
Ammerman says of purchasing mobile devices. "You know pretty much what a
book looks like."

However, carrier sites are compensating by making the web experience more
real and customer-friendly, the Yankee Group’s Bricken notes. For example, some
carriers are using three-dimensional technology to make the "phones seem
more real."

More importantly, carriers are improving customer service, Bricken says.

For instance, some have implemented instant messaging, which permits
consumers to speak with a representative while shopping on the web. Other
carriers will call consumers who provide phone numbers via the web.

"We do find that many people who purchase through our [online] store …
visit somewhere where they can actually see the phone product," says Jim
Gerace, a Verizon Wireless (www.verizonwireless.com)
spokesman, who notes the web is the company’s smallest distribution channel, but
is becoming a "larger and larger percentage of sales."

"People want the phone right now," says an industry executive
explaining the glitches in business-to-consumer models. "If you do it
online, you’ve got to wait."

While Internet users are typically more technology proficient, AT&T
Wireless reports that its customers who purchase online are typically
professionals between 18 and 49 years old with incomes exceeding $50,000 a year.
The demographic mix participating in e-commerce likely will broaden.

The introduction of third-generation mobile technology–high-speed data
solutions that might someday help wireless devices replace a portion of the
newspapers on the subway–will complement the demand for mobile services online.

Meanwhile, Bricken says that as e-commerce evolves as a more "day-to-day
life function for the average consumer, those carrier sites that don’t adopt to
those mediums will fall behind."

"As long as carriers maintain an aggressive stance in the Internet
medium, they will be fine," she continues.

However, during a period where investors have been reluctant to fund the
lagging dot coms, Bricken says the future of the Internet comparison sites is
more uncertain: "It is yet to be seen how successful they will be."

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