white paper - m-commerce_ackshatt&sachan

8/14/2019 White Paper - M-Commerce_Ackshatt&Sachan

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M CommerceSuggesting the Way Forward in India

12/13/2009

Aradhye Ackshatt; Padmendu Sachan


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Introduction

Need, Purpose & Potential of our Paper

The current mobile-based commercial market (at least inIndia) is focused on making communication possible anytime,anywhere, and through any device. Service providers aresimply network operators, but are trying to evolve intoproviders of rich, interactive media, productivity services, andretail experiences. Consumer expectations in India have

remained where they were, with even the most upmarketmobile consumer expecting no more than the availability of Internet on their phone.

Our white paper was conceived as a means to bring intosharp relief the direct correlation between the vast proliferationof mobile phones (488.4 million subscribers, meaning 42 of every 100 Indians 1) and the commercial space that liesunexploited in India today, despite there being virtually notechnological, infrastructural, or economic barriers toexpansion. We attempt to discuss m-commerce as it exists inwhat is generally accepted as the most advanced economy inthe world in such matters (Japan), and to explore if they havesomething India doesnt. (PADDY Note (new, do read):after we have written the whole thing, we will need toround this part off nicely. Either beyond the scope of our paper, or beyond our limited capability to research,so we are only taking the lesser, more obvious factorslike tech, per capita expenditure and income, state of the economy etc.)

In a nutshell, our paper aims to transform the widely-ingrained concept of the mobile as a communication device,and reveal its enormous potential in a nation as supremelyinformation-starved as ours. We will, in the course of this paper,try to identify the incentives of m-commerce, and how a

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balance can be achieved in the trade-off between informationand its price.

M-Commerce in Japan

Japan and South Korea have long been considered

the most technologically advanced economies of the world. This section focuses on how m-commerce exists in Japan, why itwas successful (and why it wasnt as successful as it wasenvisioned to be, as is the case with most ambitious schemes).

One of the major hindrances to m-commerce is theinconvenience of entering information into a small screen withsmaller keys. The Japanese, however, do not face this problembecause of two reasons, one due to their history, and the othera brilliant move by NTT DoCoMo, the almost monopolisticcorporation providing m-commerce in Japan. The first is thatthey read column-wise, and thus read entire screens in oneglance; the second is that DoCoMo tied up with, and in somecases, prevailed upon mobile phone manufacturers to delugethe market with phones compatible with iMode, DoCoMosproprietary wireless commerce technology, thus shutting outthe only competitor it had WAP technology. This ensured lowrates for users, since iMode uses the number of packetssent/received (amount of information exchanged) to billconsumers, while WAP technology based its billing on the timespent on the Net by the user. Additionally, iMode has tightersecurity, fast networks, substantial websites and user-friendlydisplays as compared to WAP 2.

Also, Japan did not have as much a proliferation of

home computers as did the West, so that their society movedfrom telephony to cellphone technology much faster than PCs;

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thus, when DoCoMo launched its m-commerce initiatives, it hadover 90% of Japans 108 million subscribers as its samplingframe 3.

Mobile technology is not about duplicating Internetexperience as it is on computers; m-commerce, while using theInternet as its medium, is substantially different from e-commerce. The service penetrated the Japanese marketbecause of two things

(i) People were comfortable with the devices andtechnology

(ii) DoCoMo was delivering value for money on mostservices & transactions

These two factors are to be considered when wedeal with the Indian scenario.

The few problems blocking m-commerce spreadingeverywhere are that mobiles are prone to theft, loss anddamage; any connection to the Web is a potential path forviruses, worms and phishing attacks; and eavesdropping onwireless transmissions is easier than might be thought.However, these problems are only existential, and can beeffectively eliminated with IMEI tracking, regular mobilesoftware up gradation and secure networks from the serviceproviders. These technologies exist , and, in fact, are easilyapplicable if enough incentive is given to the serviceproviders, since they are the ones who will need to apply thesetechnologies.

With this background of Japanese m-commerce in mind,let us proceed to compare the Indian m-commerce scenario, inits present, almost non-existent state, with Japans $10 billionm-commerce industry.

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Test Marketing Research in India

Based on the overview of Japan provided in theprevious section, we can define the factors to take intoconsideration while testing the feasibility of m-commerce inIndia. These are:

(i) Technological infrastructure and ability

(ii) Comfort levels of users with mobile phones

(iii) Inclination of service providers

(iv) Support from banking system for validatingtransactions

(v) Demand for m-commerce services available

Role of government: It is vital for the government totake a proactive interest in conducting the preliminary researchfor the feasibility of m-commerce in India, if not activelypromote its adoption. The reason for this is that without properregulation and accountability, m-commerce can open up many

commercial activities that may get difficult to control if allowedto grow unchecked. Also, without a substantial incentive to look

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forward to, wireless service providers will only be moderatelyinclined, at most, to pursue new avenues of revenuegeneration.

Research methodology : We suggest animplementation-based research, to be conducted as per thefollowing parameters:

- Extent : concentrated retail commercial areas of metropolitans (e.g., Connaught Place in New Delhi)

- Infrastructure deployed : compatible readingmachines to ALL merchants and businesses in the test

area- Guidelines issued : to accept ALL transactional

attempts; guaranteed by the RBI for the test period, tocheck fraud incidents and their nature and frequency of occurrence, apart from collecting the obviouseconometric data about volume of transactions&revenues

Selection of test and control groups: Furthering theConnaught Place example, subscribers across serviceproviders to be selected with good probability of conductingtheir economic activities in the test area (i.e., CP), say 10,000people.

Out of these people, those with monthly phone billsfalling in the same slot to be sifted, say with bills (both pre- and

post-paid) between Rs. 2,000 and Rs. 2,500 per month, say1,000 people fit this criteria. This figure may be arrived atthrough more thorough means. For this target population, weseek their consent, and link their mobile numbers (through themore than adequate technology at our disposal) to theirrespective bank accounts, whether credit or debit. The ReserveBank of India and the Telecom Regulatory Authority of India willhave to be assertive in bringing this about.

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From the target population, we make two groups control and test. The control group is randomly selected, whilethe test group should consist only of people who have paidtheir dues on time and in full, within acceptable limits of deviance. The comparative data for the two groups will help inestablishing whether m-commerce is as susceptible tofraudulent usage as it may be conceived to be in a corruption-manifest country like ours (unfortunately).

Over a reasonable period (one quarter of thefinancial year, for example), we track and record the usage of the facilities of payment through mobile. After a month of our

assumed test period, we may convince service providers(starting with the most numerously represented carriers in thetest group) and the banks to introduce and promote more m-commerce opportunities for test subjects, beyond those alreadyavailable to them (cashless transactions, reserving tickets formovies and travel, infotainment etc.), like those in Japan banking, stock trading and portfolio management, hotel andtravel arrangements, etc. Overall, we should try and emulate

what NTT DoCoMo offers to its subscribers and potential users:Lifestyle Infrastructure .

Based on the outcomes of our activity, we may beable to draw conclusive inferences about the feasibility of m-commerce in India. The process, of course, is primarily upper-end consumer based, but there is no reason for the exclusivitytag to erode when service providers and businesses reach a

mutually compensatory revenue model, as explained in thenext section.

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Revenue model for financial institutions, service

providers and consumersVoice based services are already declining sharply owing

to the cut-throat pricing strategies, and SMS might even goaway. This means that search and display advertisers will havea larger and more captive audiences. Its important to see whatkind of a user experience and value is provided so that theusers are enticed to adopt m-commerce.

Growth in digital commerce depended on three factors quality concerns, security concerns and reliable fulfillment. One

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needs to avoid copying blatant business models of the US andthe UK, and instead concentrate on the specific needs andwants of users in India.

Network providers can then make money in two ways: They can charge users for the volume of data transmitted overthe packet data network, or they make revenues from servicesthat use their billing systems. Charging users for data packetsmay attract severe completion and eventual lead to anotherdj vu of price wars, thus disrupting customer loyalty owing toever slashing prices. However, if the network providers ensurefree and uninterrupted service for the end-user and charge the

various service providers which use the formers network on thebasis of pay per use (similar to Googles online search enginerevenue model). Customers would pay less for service if theyinteract with a lot of advertising thus maximizing the profitsfrom promotional offering.

The initial push for mobile commerce is expected to comefrom banking/financial services and later, point-of-purchasesales would push the market. The statistical figures on thevolumes of Indian financial transactions reveal some startlingfacts: 8 per cent of transactions were cash transactions, 11 percent were through cheques, while a meagre 1 per cent wasthrough alternative payment modes like mobile or e-payments. This indicates a hugely untapped market as far asm-commerce is concerned.

A number of banks and financial institutions have alreadylaunched mobile friendly websites and transaction portal withmany more in line to follow. Payment solutions for common-dayuses such as paying auto or taxi fares through mobile phonescould also be designed to attract an all together new consumerbase which has been oblivious to the m-commerce services.

A mammoth chunk of Indias population still remainsunbanked due to infrastructure problems. This could be taken

care of by methods like mobile payments as penetration of

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mobile device is phenomenal in Indias rural and remotestsectors.

Consumers for years have been placing orders right from

their cell phones for such downloadable items as ringtones andgames sold directly from service providers. More recently,they've begun using mobile phones to purchase downloadableapplications developed by third-party programmers for use onsmartphones such as Apple's iPhone and Research in Motion'sBlackBerry. A growing popularity of smartphones would lead todevelopment of detailed Web browsers and easy-to-usekeyboards, consumers across the country may finally using

wireless devices to buy physical itemsnot just pizzas andsodas, but also books and clothes and the sorts of thingstypically associated with in-store browsing or online shoppingvia personal computer.

RBI guidelines could warrant gateways like Visa andMasterCard, to formulate mandatory verification of onlinetransactions making the system highly reliable and efficient.

This could result in a major boost in the m-commerce servicesas the Trustworthiness and Ease of Purchase are the twodominating factors influencing m-commerce user behaviour.

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Hence, we come to our conclusion: M-commerce IS theway forward itself!

References

1. http://www.pcworld.com/businesscenter/article/184069/virtual_sim_allows_multiple_connections_on_a_mobile_handset.html

2. http://www.brandcha nnel.com/features_effect.asp?pf_id=200

3. http://www.slideshare .net/cbillich/future-insight-mobile-commerce-in-japan

4. http://www.mediapos t.com/publications/?fa=Articles.showArtic le&art_aid=119038

5. http://www.exchange 4media.com/e4m/izone1/izone_fullstory.asp?

section_id=4&news_id=36588&tag=32689&pict=1

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Scheduling
http://www.pcworld.com/businesscenter/article/184069/virtual_sim_allows_multiple_connections_on_a_mobile_handset.htmlhttp://www.pcworld.com/businesscenter/article/184069/virtual_sim_allows_multiple_connections_on_a_mobile_handset.htmlhttp://www.pcworld.com/businesscenter/article/184069/virtual_sim_allows_multiple_connections_on_a_mobile_handset.htmlhttp://www.brandchannel.com/features_effect.asp?pf_id=200http://www.slideshare.net/cbillich/future-insight-mobile-commerce-in-japanhttp://www.mediapost.com/publications/?fa=Articles.showArticle&art_aid=119038http://www.mediapost.com/publications/?fa=Articles.showArticle&art_aid=119038http://www.exchange4media.com/e4m/izone1/izone_fullstory.asp?section_id=4&news_id=36588&tag=32689&pict=1http://www.exchange4media.com/e4m/izone1/izone_fullstory.asp?section_id=4&news_id=36588&tag=32689&pict=1http://www.exchange4media.com/e4m/izone1/izone_fullstory.asp?section_id=4&news_id=36588&tag=32689&pict=1http://www.pcworld.com/businesscenter/article/184069/virtual_sim_allows_multiple_connections_on_a_mobile_handset.htmlhttp://www.pcworld.com/businesscenter/article/184069/virtual_sim_allows_multiple_connections_on_a_mobile_handset.htmlhttp://www.pcworld.com/businesscenter/article/184069/virtual_sim_allows_multiple_connections_on_a_mobile_handset.htmlhttp://www.brandchannel.com/features_effect.asp?pf_id=200http://www.slideshare.net/cbillich/future-insight-mobile-commerce-in-japanhttp://www.mediapost.com/publications/?fa=Articles.showArticle&art_aid=119038http://www.mediapost.com/publications/?fa=Articles.showArticle&art_aid=119038http://www.exchange4media.com/e4m/izone1/izone_fullstory.asp?section_id=4&news_id=36588&tag=32689&pict=1http://www.exchange4media.com/e4m/izone1/izone_fullstory.asp?section_id=4&news_id=36588&tag=32689&pict=1http://www.exchange4media.com/e4m/izone1/izone_fullstory.asp?section_id=4&news_id=36588&tag=32689&pict=1http://www.exchange4media.com/e4m/izone1/izone_fullstory.asp?section_id=4&news_id=36588&tag=32689&pict=1


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6. http://www.exchange4media.com/e4m/izone1/izone_fullstory.asp?section_id=4&news_id=36591&tag=32692&pict=3

7. http://www.livemint.com/2008/02/13232657/Mobile-commerce-gets-ready-for.html?pg=1

8. http://www.businessweek.com/technology/content/oct2009/tc20091011_278825_page_2.htm

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Pre-loaded Information Recollection Translation
http://www.exchange4media.com/e4m/izone1/izone_fullstory.asp?section_id=4&news_id=36591&tag=32692&pict=3http://www.exchange4media.com/e4m/izone1/izone_fullstory.asp?section_id=4&news_id=36591&tag=32692&pict=3http://www.exchange4media.com/e4m/izone1/izone_fullstory.asp?section_id=4&news_id=36591&tag=32692&pict=3http://www.livemint.com/2008/02/13232657/Mobile-commerce-gets-ready-for.html?pg=1http://www.livemint.com/2008/02/13232657/Mobile-commerce-gets-ready-for.html?pg=1http://www.businessweek.com/technology/content/oct2009/tc20091011_278825_page_2.htmhttp://www.businessweek.com/technology/content/oct2009/tc20091011_278825_page_2.htmhttp://www.exchange4media.com/e4m/izone1/izone_fullstory.asp?section_id=4&news_id=36591&tag=32692&pict=3http://www.exchange4media.com/e4m/izone1/izone_fullstory.asp?section_id=4&news_id=36591&tag=32692&pict=3http://www.exchange4media.com/e4m/izone1/izone_fullstory.asp?section_id=4&news_id=36591&tag=32692&pict=3http://www.livemint.com/2008/02/13232657/Mobile-commerce-gets-ready-for.html?pg=1http://www.livemint.com/2008/02/13232657/Mobile-commerce-gets-ready-for.html?pg=1http://www.businessweek.com/technology/content/oct2009/tc20091011_278825_page_2.htmhttp://www.businessweek.com/technology/content/oct2009/tc20091011_278825_page_2.htm


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