Public Release: 

Author: E-commerce failures should caution m-commerce advocates

Ohio State University

COLUMBUS, Ohio - The shine may be off of 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 (or m-commerce) will supposedly transform the economy by allowing customers to shop over the internet using wireless devices such as cell phones.

But as enticing as that might seem, you can count marketing expert Roger Blackwell among the early skeptics. Blackwell, professor of marketing at Ohio State University's Fisher College of Business, is co-author of the new book Customers Rule! Why the E-Commerce Honeymoon is Over (Crown, 2001). As the title implies, Blackwell and co-author Kristina Stephan explain why e-commerce never took the economy by storm as many experts had predicted.

The economic wounds of e-commerce are still fresh in American business, but Blackwell already sees signs that some people still 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," Blackwell said. (The online grocer Webvan went out of business just this week.)

"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 many 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, Blackwell said. They will choose whatever best meets their needs. But many entrepreneurs assumed they could sell anything or everything over the internet, and do it better than traditional retail stores.

The truth is that the internet is good at selling only a limited number of products and services, he said. The internet is good for selling digital products - like electronic airline tickets. It is also good for selling 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.

But for many products, consumers want to be able to touch and see before they buy. In other 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," he said.

In fact, Blackwell first approached publishers with the idea for this book in 1999 - at the height of the internet craze. But publishers didn't want to touch a book that conflicted against the prevailing business currents. If the book had been published then, it probably would have been ignored, he said.

But Blackwell's message back in 1999 - and today - isn't that e-commerce has no value for business. However, he argues that instead of a revolution in the economy, the internet is more of an evolutionary force - much like a more humble product that we're all familiar with.

"We regard the introduction of the internet and the world wide web as very similar to the introduction of the telephone a hundred years ago," he said.

"The firms that were successful then were able to bring the telephone into their business and become even more successful. The firms that will be successful today have integrated the internet into their business."

While most firms don't sell products or services that can be sold successfully over the internet, the best companies have found that the internet is an excellent marketing tool.

"When people were thinking of the internet as a way to sell, they should have instead been seeing it as a way for consumers to learn more about a company and its products," he said.

"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 business is that they shouldn't adopt technology just for the sake of technology, according to Blackwell. If the latest breakthrough doesn't make life easier for consumers, it won't succeed.

That's why Blackwell 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 or some other product is on sale inside. 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 said.

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Written by Jeff Grabmeier, 614-292-8457;
Grabmeier.1@osu.edu

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