Service Scenarios and Business Models for Mobile Commerce

Transcription

1 Service Scenarios and Business Models for Mobile Commerce Stathis Panis, Neophytos Morphis, Elisabeth Felt, Britta Reufenheuser, Andreas Böhm, Janka Nitz, Petri Saarlo Cyprus Telecommunications Authority, Nikosia, Cyprus T-Systems Nova, Am Kavalleriesand 3, Darmstadt, Germany Tel Elisa Communications Corporation, Helsinki, Finland ABSTRACT As customers increasingly accept communication as a matter of course, operators are looking for new promising markets within m-commerce. Customers want and expect to do commerce on virtually every communication device. New technologies are enabling a large variety of s and m-commerce but solutions are inadequately analysed yet. This contribution summarises first results from a European-wide project which investigates current and future m-commerce service scenarios, serving as a base for promising business models. Starting from a categorisation of service scenarios for m-commerce a couple of exemplary scenarios are analysed and for one of them a business model is outlined. A set of recommendations which can help operators to model their own m- commerce concludes the contribution. I. INTRODUCTION Mobile voice is quickly becoming a commodity and operators are increasingly looking for ways to reduce the loss of subscribers to cheaper competitors and at the same time open up new revenue streams. Offering electronic commerce is a way of achieving both of these goals. The enabling technology is rapidly advancing and operators must act now to become central player in this lucrative market. EURESCOM (European Institute for Research and Strategic Studies in Telecommunications) [1], an organisation established to carry out co-ordinated research among European public network operators (PNOs) started a project called emporio in Its objectives were to look at the m-commerce market and to produce promising business models and service scenarios. As a second aspect the current and emerging technologies behind m-commerce were investigated and the elements needed in an advanced m-commerce service platform were looked at. This contribution gives an overview of some of the experiences gained in this project and presents some results achieved so far. M-commerce is difficult to define. Many people hearing the term for the first time assume it is merely a transfer of e-commerce to a device. However while some of the existing e-commerce could be used on, many of them are simply not suitable due to screen size, lack of keyboard or low bandwidth. Trying to sell m-commerce to consumers as "E-commerce On Your Mobile" could very well lead to the same consumer disillusionment that occurred when WAP was sold as "The Internet On Your Mobile". To allow the creation of a set of commerce which users will adopt and from which extra revenue can be generated, the unique attributes of s (portability, secure interaction capability, personalisation, access to accounts, etc.) must be leveraged against the disadvantages mentioned. II. M-COMMERCE SERVICES The emporio project investigated more than 25 potential service scenarios falling into 7 categories of. These have been analysed and categorised and possible obstacles to their deployment have been identified. With these scenarios an insight was gained of what functionality and technologies are needed for the underlying platform and the considerations that have to be made for the business case. (Further service scenarios can be taken from various studies and reports, e.g. [2,3,4,5] ) Certain key factors were identified that influence the evolution of the and have to be considered for their assessment: Stages of the purchase process that are addressed (i.e. information, selection, payment / commitment to a payment, fulfilment, after sales service) Security Advantage of operator towards competitors

2 Regulatory Issues User acceptance/market maturity issues Network Technology availability Building blocks available for m- Suitability of service for in terms of design and functionality (selection interface, bandwidth and memory issues) The identified within the scope of emporio were classified according to the user type, market segment and technical aspects. The classification of the service scenarios according to the user types (private and business users) and according to the market segment (B2C, C2C or B2B) is presented below. A. Private users This includes B2C where a transaction takes place between customers and a professional offerer (service provider, information provider or a shop), and C2C where the user transacts with other users. B2C: The majority of service scenarios deals with the exchange of products, or information between businesses and consumers. B2C service scenarios can be further divided into categories corresponding to different m-commerce areas. In the following three of these categories are described: Financial Services. The user experiences financial and payment related via device. Examples like Mobile Banking provide public information (e.g. exchange rates, interest rates), as well as private information (checking account and credit card balances, transferring funds, and paying invoices). Additionally Mobile Brokerage offer buying and selling stock, managing portfolio etc. Mobile Information Provisioning. This includes like Mobile Alert, Maps and Routing Direction, and Location Based Information. The information comes mainly either from users private data like calendar or address book, or is made available by a shop or a Content Service Provider. Mobile Advertising. The possibilities for marketing are extended and a variety of new advertising methods can be envisaged, replacing gradually advertising messages sent via SMS. Marketing campaigns like a digital coupons service can certainly be successful towards consumers, as the gathering and storage of digital coupons is easier than traditional paper based coupons. Mobile Entertainment, Mobile Shopping, and Local Services are other important categories of B2C. C2C: This category deals with that provide the necessary infrastructure to enable transactions and exchange of information between two or more private users. Examples of such are auction like real-time m-auctions and that allow users to share. B. Business Among the business service scenarios, a distinction has been made between scenarios that allow B2C scenarios to be adapted to a business context, and pure business scenarios that need integration into the internal system of the company. B2C for business purposes permit business users to use a B2C service for business purposes. B2B - The business considered here provide a channel to a business infrastructure and mainly target a process integration and optimisation by allowing employees or business partners to access data or processes of the business infrastructure. Such often need a strong integration with the Supply Chain Management systems, CRM systems or other systems of the company s internal infrastructure. C. Technical Aspects The technical aspects categorisation of m-commerce deal with the following: Terminal constraints that concern small screen size, limited storage capacity, low processing power and lack of keypad reduce usability, security, navigation as well as functionality. Improvement to all these features will boost m-commerce. Connection type can be a deciding factor for commerce because it determines the bandwidth and important security issues, and makes the distinction between local and global centralised Secure infrastructure: technologies like Public Key Infrastructure and SET protocol are important for the development of special security infrastructure. Value added infrastructure: e.g. Location Identifier and Voice Recognition servers III. EXAMPLES FOR M-COMMERCE SERVICES The four m-commerce mentioned in the following paragraphs and pictures were chosen for the deduction of business models. These particular four were picked from the multitude of developed in the project because their prospects to succeed on the market and to create revenue for operators were considered particularly high. They both met the user s expectations and gave the operator the opportunity to take a leading role in the service. A. Location based Location based are an excellent example of how service providers can make use of the inherent properties of. The user is always carrying his device with him and the device can be localised

3 by the operator. He does not even have to know where he is but will get information about his environment by connecting to his service provider. The provider localises him with the help of the operator and sends him information that is not only based on the user s location but also on his personal preferences. The possibility of user localisation is also used in intelligent advertising to allow merchants to address customers near to their shops or restaurants without the customer having explicitly asked for offers. The following figure gives an example of how a location based service could work. 2. upload and credentials 1. provide user s keys and certificate 2. sign purchase order gateway repository 3. return signed purchase order 1. send purchase order 1. registration process 4. check signature billing micropayment advertising Merchant: POS a) send collected purchase orders regularly b) check purchase orders c) clearing User registration Application and credential upload and clearing Financial institution 2b. localise user handset Merchant: POS Application upload Localisation and provision location based 3. create key pair and certificate 2. certification request 1. request information upload guidebook gateway localisation platform 2c. pass on user location Figure 2 - Example of a micropayment service 5. provide billing Financial transactions 2a. request location information repository location based micropayment 3. check customer preferences advertising customer database / profiles 4. Choose according to preferences and localisation of customer Figure 1- Example of a location based service B. Micropayment As we will later discuss in detail, payment is an important issue when it comes to adoption and acceptance of by the customers. With the micropayment service specified in the figure the customer can turn his phone into a payment device and use it to pay for items and at a real or virtual point of sale subsequently. For payment of a chosen item he gets a purchase order by the merchant, signs it with his private key and sends it back. The payment is safe, easy and quick. As the payment is offline and the service provider is only involved in the clearing process the transaction costs can be kept low. The user can even stay anonymous if he wants to. Thus the micropayment is the perfect enabling service for many other m-commerce that involve the transfer of small amounts of money (e.g. downloading of ring tones and music files or access to ). Figure 2 shows how a payment service could be implemented. C. Gambling The gambling and betting, such as lotto, instant games and sports betting, are very popular in the real world. Offering corresponding in a environment shows potential to become a quick and convenient way for a operator to get revenue out of the B2C markets. Mobile users can place their bets using text-based technologies like SMS or WAP or play games. Gambling is an excellent example of how an entertainment service could attract customers by offering rich, though often mainly text based contest with a degree of user interactivity and a real-time user experience. Mobile gambling appeals to people s natural desire to win and offers them a pleasant activity they can access anytime and anywhere. The operator should realise the market pull for betting and gambling and seize the chance to develop those promising into business models. An example how he could do this will be given in section V. security Application service provider Gambling / betting Initiation of gambling activity Application usage Access to channel regulatory issues gateway repository technical restrictions Minor winnings credited to user s online account User pays for his game billing ISP micropayment advertising Interaction of gambling betting process Major winnings credited to user s bank account e.g. Lotto Financial institution Location based Figure 3 - Example of a gambling service

4 D. Intelligent Advertising The basic idea of an intelligent advertising service is that customers receive advertisements (e.g. via SMS or MMS) from merchants on his phone that are adapted to their personal preferences and location based. The service requires a close collaboration between service providers: The Mobile Advertisement Service Provider takes care of the preparation of the ad, while the owner of the customer database has to define the target group it will be sent to. The operator s task is selecting those of his customers that fit to the target group and providing location information. The customer has to give the permission in advance to receive ads from the operator. If he is interested in an offer, he purchase the product or service directly by connecting to the Mobile Advertisement Service Provider via the operator. The main advantage of the service is that merchants can be sure to reach the right person by knowing the user profile so they are likely to be willing to pay for it. Of course the service will only be accepted by users if they can be sure that they will not be spammed by unwanted ads. a collection of existing realisations of payment with explanations of the basic schemas and the information flow of the main types of payments as well as a table summarising the payment solutions of today that enables the reader to get ideas about and estimate the future evolution of the payment area. A model for classifying payments was also developed and included in the document. The following figure is a modification of it with reduced details. Example items Mobile Service/Product Provider Product / Service Customer Personalized Target Group Handset capabilities Constraints Selection if Methods Usability of Funds Monthly Bill Revenue Billing Basis Trans-action User claims interest in the / Security Send the ad via SMS/MMS/etc. Mobile Gateway Regulatory Issues Permission for ads Check user location to find target customers Intelligent Advertisement Definition of target users Advertisement interaction process Collect usage data from MO s systems None Product Bundling Dynamic Type of Content Postpaid Time of Micro Size of Revenue Model of a Player Commision Owner of the Customer Database / Content provider Define target customer group User transaction confirmed Content Application Repository User Preference Storage Micropayment Financial Transactions Type of Connection GPRS Mobile Advertisement Service Provider Advertisement Agency Pay for network usage Location based Billing Advertising MO identifies actual target customers Certification Authority Constraints Constraints Initiate sending ads by sending target criteria with the layout of the ad External players Partners Figure 4 - Example of an intelligent advertising service Government Mobile Network Operator IV. MOBILE PAYMENT Legislation and Regulations Contracts Network capabilities Obviously payment are playing an extremely interesting part in commerce as a whole. On the one hand payment is interesting as a stand-alone service. On the other hand it could also be an enabling service for other m-commerce. Thus it could improve user acceptance by making the more secure and user-friendly. Based on the payment scenarios developed in the project, further research was done on payment. Its aim was to provide a round-up of m-commerce payment possibilities. The resulting document points out the main trends and drivers affecting the development of payment Figure 5 - Characteristics of payment This model can be used to identify a set of suitable payment methods for given situation and given m- commerce service. This framework aims at explaining the underlying complexity and interdependencies of decisions for m-payment solutions.

5 V. BUSINESS MODELS FOR M-COMMERCE A. Generic framework for business models The business modelling phase corresponds to a particular stage inside a more general development process for new products and. The figure below provides an overview of all phases of a development process, from the concept definition to the business plan. Market Pull Technology Push Concept definition of the product/ service Service development and investment analysis No Marketing plan Business plan sustainable ok? Business modelling Yes Yes Business analysis sustainable ok? Market analysis (interest, sustainability, competition, competitive advantage) Figure 6 - Development of a business model Stop No Definition and use of market anlysis Given this framework, the business modelling phase gets as input the concept for the service, the positioning decisions of the company, a rough definition of the business associated to the service and the value of the corresponding market. The approach followed in the project consisted of considering a business model in terms of actors, roles and business relations such as information, product, service and revenue flows (cf. [2]). The core issues identified and defined for each business model are: the concept for a new commerce service the positioning of the operator taking into account its strategic advantages the target market, in terms of market segment and corresponding potential the relationship with other strategic business partners The key features to be considered in a business model will be shown in the following example. Users could send their bets using text-based technologies like SMS or WAP and check their standing in much the same way they do it when they access the game using a normal browser. Players could also interact using s that simulate casino games like black jack or roulette using 2.5G or 3G terminals. These s allow the players to participate in the game by betting. The could be downloaded from the provider s server to the user s or run from where it is hosted. Method The timing of payment is important because for a bet to be valid the player should make a commitment to pay that he cannot repudiate afterwards, maybe by micropayment. Players could also subscribe and open a gambler s account that could be loaded with money when desired. Mobile Operator and Value Chain The operator should to position himself in a key role in the value chain by owning the portal and participating in the revenues accrued by gambling over its network. Those revenues will be significantly higher than the sheer increase in airtime charges. In order to achieve this a operator should exploit its strengths (brand name, customer base, infrastructure, price control, etc.) effectively. Alliances The most feasible scenario rests on appropriate partnerships and business alliances, which are based on revenue sharing, with a key role for the operator as shown in the following figure. USER Direct Subscription Content Airtime Subscription Premium charges Access to For Distribution For Access to the channel ISP Portal Pays for Access to Users Operator Application Service Provider Yearly / Monthly Fee (Subscription) for service One - off payment or for Usage or Revenue Share Service Provider / Clearing House B. A business model for gambling Introduction The online gambling and betting industry offers an attractive prospect for new profitable and s. Games like lotto, horse betting, football betting, black jack and other casino games are suitable for such business which represent an impulse purchase area with huge potential. Usage Scenario Betting is always time sensitive, people always want to bet just before the match or race begins. Operator Domain (may act as a portal) Figure 7 - Business model for gambling Players The main players that could participate in the gambling value chain are the user, who decides about the bets, the ASP providing the offers, the ISP providing access to the Internet, the PSP supporting the financial transactions and the operator that provides the network as well as the portal.

6 VI. CONCLUSIONS This paper and the corresponding project emporio analysed service scenarios and promising business models for m-commerce. From this analysis some conclusions can be drawn. The main findings and recommendations for operators who are planning to offer new m- commerce are: It is necessary to understand the difference between m-commerce and e-commerce. Those m- commerce service creators will succeed that offer that adapt to the unique attributes of as well as to the user's expectations. For the formation of long-term m-commerce strategies it is important to know what the state of the art solutions and emerging enabling technologies are. Operators must have a good knowledge of regulatory, technological, security or market related issues. Operators have to know their own competence and choose the roles in the business model that suit them best. They have to examine the market for potential competition and decide which players are experienced and trustworthy enough to be their partners in building a profitable m-commerce solution. There is no such thing as a killer. Successful m-commerce initiatives will be part of an overall range of service offerings by operators who concentrate on giving consumers the they find the most useful. ACKNOWLEDGEMENTS The information presented in this paper is based on the work done in the EURESCOM project P1102 emporio. This however does not imply that the paper necessarily reflects a common position of all involved EURESCOM Shareholders/Parties. The authors would like to thank their colleagues working on EURESCOM P1102 for their insightful comments. REFERENCES [1] EURESCOM: [2] UMTS Report, Durlacher Research Ltd., 2001 [3] Mobile E-Commerce: Market Strategies, Ovum Ltd., 2000 [4] Winning in Mobile emarkets, Diebold Deutschland, 2000 [5] Mobile Commerce Report, Durlacher Research Ltd., 2000 [6] Timmers, P., "Business Models for Electronic Markets", in: Gadient, Yves; Schmid, Beat F.; Selz, Dorian (Eds.): EM - Electronic Commerce in Europe. EM - Electronic Markets, April 1998 (