Even if you don’t know the terminology, chances are you know what m-Commerce is. If you’ve ever researched a product or even purchased something from your phone, you’ve participated in m-Commerce. At its simplest, m-Commerce just means “mobile commerce”. More accurately, it’s “any transaction, involving the transfer of ownership or rights to use goods and services, which is initiated and/or completed by using mobile access to computer-mediated networks with the help of an electronic device.”
In practice, this means customers carry the online shops they love in their pockets. From looking at what the latest products are and comparing prices to finding coupons and pressing ‘confirm purchase’ right on a mobile phone, m-Commerce covers the range of purchasing activities people engage in on their mobile devices. It might seem like an obvious thing today, but the concept of m-Commerce took a lot of collaboration and plenty of imagination to become a reality.
The Late 1990s: the beginning
It all began back in 1997, the same year Tony Blair beat John Major in a landslide victory, scientists in Scotland made Dolly the sheep famous and the film Titanic assured us that our hearts would go on.
While the rest of us worried about the futuristic year of 2001, telecoms companies were thinking about the future. Logica and Cellnet, which later became O2, came together to launch the Global Mobile Conference Forum. During the launch, Kevin Duffey, the Group Telecoms Director at Logica and the forum’s first executive chairman, coined the term m-Commerce, and though the terms weren’t set in stone, the aims of the forum were clear. The goal of the forum was to figure out a way to get customers to use their increasingly advanced mobile phones to make purchasing things easier.
Collaboration was an important part of the forum’s strategy, and many others soon saw the benefit of working together. Within the first year, more than 100 companies joined the forum to collaborate and try out different ideas.
In fact, it didn’t take long before the first practical application of m-Commerce occurred. The same year the forum launched, two Coca-Cola vending machines were installed in Helsinki, Finland, that allowed customers to purchase a beverage using SMS. Shortly after, Merita Bank of Finland also utilised SMS to develop the first mobile banking system.
1997 ended with the advent of the m-Commerce server. We might not have heard of it, but the server, created by Duffey and Logica’s Andrew Tobin, was key to an m-Commerce solution developed by Logica, De La Rue and Motorola. The innovative solution was recognised in 1998 when it won the Financial Times 1998 Global Telecommunications Award for “most innovative mobile product“.
Finland continued to pave the way in mobile innovations in 1998. Radiolinja (now owned by Elisa Oyj) began to make the first downloadable ringtones available through purchase, but that doesn’t mean all developments happened in Europe. In Asia, national commercial platforms for m-commerce were launched in both the Philippines and Japan in 1999. In the Philippines, it was called Smart Money, and in Japan, the i-Mode Internet service was provided by NTT DoCoMo. It was an mobile internet service that allowed customers to purchase items through their phones.
Turn of the Century: wider acceptance
The turn of the millennium brought with it an international proliferation of m-Commerce. Back in Europe, Norway introduced the ability to pay for parking from a mobile phone. Customers in Austria could buy train tickets. And in Japan, airline tickets were available to purchase through mobiles.
In 2001, the adoption of m-Commerce began in earnest, since the rollout of 3G mobile networks made online browsing easier and safer than ever. Finnair, the Finnish airline, began to allow mobile check-ins. By 2009, half of all passengers were using it on their busiest routes.
The next year, the European Telecommunications Standards Institute began to push for standardisation in m-Commerce technology. The organisation appointed Motorola’s Joachim Hoffmann and charged him with the development of standards. Then, in 2003, the US got 3G and Apple launched the iTunes store, bringing the US market into the world of m-Commerce.
The next big development didn’t have anything to do with the Global Mobile Conference Forum, servers or speedy mobile connections. On 29 June 2007, the iPhone was launched. The popularity of the iPhone meant smartphones become mainstream consumer electrics. As a result, the technological focus of m-Commerce companies shifted from SMS and internet access to the development of applications, or apps.
Once the iPhone made apps – and by extension m-Commerce – mainstream, the developments came quick and fast. Amazon launched TextBuyIt in 2008, a now-defunct service that allowed users to check prices and purchase items using SMS. In the Philippines, Globe launched GCASH, one of the world’s first mobile wallets. This service didn’t allow users to pay for items using their phones, but it did allow money to be sent electronically from one bank account to another, beginning the mobile banking revolution.
2009-2014: 4G and common use
As the decade came to a close, 4G networks began to be rolled out to selected US cities and in Stockholm and Oslo. It became clear that m-Commerce would only get bigger and bigger. In fact, a 2010 report by the International Telecommunication Union predicted that “web access by people on the go – via laptops and smart mobile devices” would exceed access from desktop computers by 2015. In fact, mobile access overtook desktop access in the US in 2014. In the UK, mobile access overtook desktop access in 2016.
Were all of these mobile users actually buying things? By 2013, they were. Nearly one-third of smartphone users and more than two-thirds of tablet users had purchased items on their devices. And that summer, “omnichannel retailers”, those with significant online and physical stores sales, found that 25-30% of their online traffic came from mobile devices. Many online-only retailers, meanwhile, reported that 40-50% of their traffic came from mobile devices.
In 2014, Apple Pay was launched in the US. It used near field communication (NFC) to allow users to tap their iPhones on a compatible reader to make purchases. The next year, Android Pay was launched in 2015, which like Apple Pay, used NFC to purchase products. Since the late 1990s, companies like eBay and PayPal were trying to get customers to use digital wallets. Even Google tried to get in on the game with Google Wallet in 2011. But customers just didn’t quite trust these purely digital wallets. Once Apple, and later Android, inextricably linked the digital wallet to the phones’ security features, people began to feel more comfortable using their mobile phones to tap a reader by a till to make small purchases.
In the past, the focus was on getting customers to use their mobiles to make purchases wherever they were. Since that has caught on, retailers now are adopting new strategies. Physical shops are trying to create a “bricks and clicks” environment. That means they are using location-based tracking, barcode scanning and push notifications to urge in-store shoppers to complete their purchases in the shop. They do this by making things like coupons, user reviews and other information readily available on customers’ mobile phones. Mobile phones can also be used to hold vouchers, coupons and loyalty cards that customers can use in-store. These are often sent to customers that are near a location to entice them to shop.
In developing countries, many people are avoiding corruption and underdeveloped systems with mobile money transfers. In Kenya, almost all money transfers on done through mobile companies – M-PESA and Airtel Money. It’s taken off in parts of Europe, too. Germany has a similar system, called MobilePay, and the Norwegian system is called Vipps.
Mobile technology has also meant we can get cash in more places. Mobile ATMs, which can be installed anywhere an ATM might be needed temporarily, use the wireless technology that mobile phones use to transmit transaction information to banks. In short, m-Commerce technology helps people get cash out at temporary fairs, conferences and more.
Finally, the way we buy things on our phones has changed, too. If we buy physical products, we increasingly turn to our favourite stores’ apps. Back in 2015, a full 40% of mobile sales were expected to come from apps, rather than from mobile browsing. And the content we buy to keep on our phones has changed, too. We mostly buy games, ringtones and wallpapers for our mobiles, but as our devices have become all-in-one entertainment devices, sales of full length music tracks and even movies have become more common.
It seems hard to believe that in two short decades, the m-Commerce environment has gone from an idea to a gigantic part of the e-Commerce landscape. In the US, m-Commerce made up 11.6% of e-Commerce sales, which hit $303 billion that year. BI Intelligence predicts that by 2020, m-Commerce will make up 45% of e-Commerce sales. That means m-Commerce will be worth $284 billion on its own, just $19 billion less than the whole industry was worth in 2015. That’s not too bad a development for a sector that didn’t have a name just 21 years ago.