CHAPTER 1

What Is Digital Commerce?

Electronic commerce and mobile commerce are a part of digital commerce overall. Digital commerce refers to transactions that occur through the Internet. Digital commerce transactions usually begin with the consumer connected online through electronic means. Electronic devices include desktop computers, laptops, mobile phones, and tablets. Digital commerce forms include electronic commerce, mobile commerce, and social commerce. The division of forms is either by device or by platform.

Electronic commerce is any form of economic activity conducted via electronic connections (Wigand 1997). Although this definition is very broad, it has narrowed as digital commerce has advanced. Electronic commerce concerns transactions take place on a desktop computer or laptop, mobile commerce transactions take place on a mobile phone or tablet, and social commerce is on social platform—with some overlap as electronic or mobile devices can conduct social commerce.

What Is Mobile Commerce?

When developed first, electronic commerce on a mobile device defined mobile commerce. Those who were heavily involved with e-commerce were the first adopters of transactions on their mobile devices (Einav et al. 2014) and defined mobile commerce activities in this vein. However, as digital commerce evolved, so did mobile commerce. Mobile commerce came into its own as a viable means of shopping. Mobile commerce is not a form of electronic commerce but a different marketing channel based on changes in consumer behavior and needs.

Mobile commerce, specifically, refers to the ability to offer value through virtual transactions that allow for location-specificity and time-sensitivity, as well as the ability to build personalized relationships with the customer (Swilley and Hofacker 2006). Whereas electronic commerce only offers, the ability to transact at any time, mobile commerce offers consumers the ability to transact at any place and at any time.

Why Mobile Commerce Matters?

Projections of mobile commerce for shopping will increase year over year according to many sources. Although consumers still shop in stores and on their computers, there are reasons for continuance of mobile commerce by consumers. First, anytime, anywhere shopping matters to consumers. Consumers expect to be able to connect to their mobile devices at any location. With their device in hand, use of mobile devices for searching and shopping, anywhere at any time is a marketing function that consumers expect from retailers. Mobile commerce has benefits not found in other forms of shopping, whether online or offline, which include

• Ubiquity
• Location
• High level of ownership
• Individual devices

Ubiquity. Mobile commerce is ubiquitous, meaning consumers shop anywhere at any time. In electronic commerce, using a desktop computer does not allow shopping anyway. Desktop computers are stationary. Consumers must shop at the location of the computer, when online at that computer. Laptops allow for better location advantages but can be cumbersome in trying to shop in many settings. Although the location is not fixed, laptops are usually limited in where usage can take place as many use a laptop instead of a desktop. Hence, the base of the purchase is the whereabouts of the computer.

With electronic commerce, the time it takes to get back to the location of the computer delays the time between when the consumer makes the decision to purchase and the time of purchase. Many factors change that decision within that time. In addition, consumers can shop at locations outside the retail store, including while at a sporting event, on public transportation, whenever or wherever it is convenient for the shopper. Location-based shopping offers the expediency of connecting to the Internet wherever for shopping at any place convenient for the shopper.

Retail store restraints of time are also nonexistent with mobile shopping. Most stores are not open 24 hours, seven days a week. Electronic commerce offers this advantage. However, mobile commerce takes round-the-clock shopping to another level. Time is based on convenience of the shopper. No longer is time a shopping constraint. Mobile commerce allows for more time convenience for shopping.

Location. A benefit of mobile commerce is the location of the customer. Everyone is busy—on the go. Shopping on the go refers to immediate purchasing opportunities for consumers so they can make purchasing decisions instantly. Shopping on the go offers retailers the ability to close the sales gap relatively quickly in the consumer decision-making process. When consumers understand their need, search for information, and compare alternatives, a purchase decision is made. Mobile shopping closes the time gap within this process. Immediate purchasing opportunities allow the customer to interact with the retailer without going to an alternate outlet. Immediate purchasing also allows consumers to make a decision without browsing alternative sources. For example, Sarah is shopping for decorative pillows at Local Décor. The Local Décor salesclerk, understanding exactly what Sarah wants, tells her of a shipment coming in a week. The salesclerk shows her pictures of the pillows, allowing Sarah to look at the pictures on her mobile phone, and purchase them from the store, while in the store. By the time the shipment comes to the store, Sarah will have her pillows.

High Level of Ownership. More consumers own mobile phones than any other device. Reaching a target audience is easier and more reliable because most consumers own, have, and are using their mobile devices. Expectations of mobile phone and tablet ownership see continuous rise, however, at a slowing pace.

Individualized Devices. Many consumers either share a desktop computer at home with other family members or use a personal computer at work. In either case, consumers may be reluctant to share information over shared devices. However, mobile phones and most tablets are individually owned and used. Even if a company supplies mobile devices to employees, the devices are not shared. This gives mobile devices personal uniqueness. The consumer, as an individual, is the only user of a mobile device. Messages, communications, and other forms of data can be personalized and exclusive to the individual. For example, Sarah can now receive information from Local Décor, specifically using the colors and items that satisfy Sarah’s needs.

Communication between a business and a customer individualized through mobile devices gives each anywhere, anytime convenience. Tablet computers and mobile phone use is frequently specific to one person, even if owned by an employer. Hence, retailers can personalize mobile marketing efforts.

Retailers can reach consumers when convenient for both retailer and for the consumer. When merchandise is first in stock, retailers can reach out to their clientele for quick and easy mobile transactions. In turn, consumers can buy within minutes of a mobile communication from a retailer, whether done while watching television on their tablets, or in another store with their mobile phones.

Profiling customer wants and needs gives retailers the opportunity to sell to whom it makes sense—their target market. Retailers can segment their target to a finite sample and personalize messages, coupons, promotions, and other marketing communications. User-specific information can be gathered allowing for interactivity between the individual and the retailer. Retailers can now focus on distinct customer relationships and offer personal interactions.

Transactions in mobile commerce involve at least one mobile device. For example, a consumer can make a purchase using their tablet computer on an online website. Alternatively, while in a store, a consumer makes a purchase through their mobile phone. This is mobile commerce.

Mobile Devices and Their Roles in Mobile Commerce

A mobile device refers to a handheld device with a computing system that allows for the transfer of voice and/or data transmissions for communication purposes. Wi-Fi, GPS, and Bluetooth allow these devices to connect to the Internet. These devices also run on software called a mobile application, or app. Like software for computers, mobile apps allow users to use their mobile devices as a computer for communication, information, productivity, gaming, and shopping. The two most popular types of mobile devices are mobile (or cell) phones and tablet computers. Mobile consumers use each of these devices. Both mobile phones and tablets run on either an Apple or Android operating system, also referred to as a platform.

Mobile Phones

Although the technology for mobile phones was developed in the early 20th century, the 1973 Motorola portable handset developed by Dr. Martin Cooper was the first commercial cell phone. A large, clunky device, this mobile phone was the first to be used outside of the automobile. It was not until 10 years later that it became commercially produced. In 1992, IBM developed the first smartphone, named Simon, which had not only cell phone capabilities but also a calendar, address book, world clock, calculator, and e-mail capabilities. It was the first cell phone enabled with a touch screen instead of buttons. Several versions of smart phones were developed, including the Windows CE, Palm OS Treo, and Blackberry. Not until the advent of the iPhone in 2007 did consumers began to buy smartphones.

Starting as analog, most mobile phones are now digital, with the advent of wireless networks. There are different types of mobile phones: basic, conventional, and smartphones.

Basic phones allow users to communicate with voice and text. Some offer limited media and the use of keyboards. Prepaid phones and buying minutes prior to use are usually basic. Conventional mobile phones, like basic phones, allow for communication, and also offer Internet access, gaming, and productivity features. However, conventional phones do not allow for the multimedia features of smartphones. Smartphones are to be used as a substitute for a home computer. Smartphones allow users to access the Internet, either through a network or Wi-Fi. The features are advanced with access to a multitude of apps.

Wireless networks allow for computer communications, through radio waves, without a physical connection. Wireless networks now support voice communication, texting, video, and other multimedia at high transmission speeds that rival wired networks.

Mobile Phones and Mobile Commerce. Because of the faster speeds, as well as ubiquitous locations, many consumers prefer to use their mobile phones to desktop computers and laptops for shopping. Mobile phones allow for impulse purchasing as consumers can search pricing while shopping. Mobile phones also give consumers the ability to show others while shopping. For example, when purchasing an expensive item, consumers can send a picture to others for approval before purchase. As a retailer, picture sending is an advantage in being able to close a sale, knowing the consumer sense of the product.

Tablets

Tablet computers are portable devices with touch screen technology. Like mobile phones, tablets allow users portability. Apps are available for productivity, gaming and shopping, as well as multimedia. Unlike mobile phones, tablets are larger and usually take the place of desktop computers and laptops for consumer use. Most have peripherals such as docking stations, keyboards, and a stylus. Tablets offer the best of both desktop computers and mobile phones. Tablets offer larger, touchable screens, and ability to be used anywhere and anytime, and these are personal. Most tablet users spend their evening time shopping online. Tablets make it easier to browse while watching television (Han, Ghose, and Xu 2013).

Tablets and Mobile Commerce. Tablets are most commonly used for shopping by consumers in evenings while watching television. With screen sizes larger than mobile phones, tablets allow consumers the ability to see merchandise as on desktop computers. Many consumers use tablets as substitutes for their desktop computers. Ease of access, convenience, and the ability to browse while lounging gives rise to high levels of shopping on tablet devices. Tablets, like mobile phones, are individual devices, allowing for personalization of products and services by retailers. Consumers are also more likely to spend more when tablet use is coupled with usage of another device (Han, Ghose, and Xu 2013). Tablets are more likely to complement a mobile phone, specifically a smartphone. This is important when retailers develop websites. All sites, regardless of digital device, should be seamless, meaning a unified look and feel, to allow for continuity of service for consumers.

Not only are tablets a channel for consumers, but they are also used by retailers as the point of sale. Tablets are the new cash registers. In order to make the sale anywhere, anytime, retailers are supplying their associates with tablets to ring up sales. Reports state that tablets as payment terminals will increase from 80,000 in 2013 to over two million in 2016 (Evans 2013). Retailers find that using a tablet for sales is less expensive than conventional registers. Sales associates can assist customers with product information, product availability, and check out within minutes. This assistance can reduce checkout line and the possibility of consumer regret before the sale. Smaller retailers have found success with using mobile phones for selling, and now the larger retailers are finding mobile devices can aid in closing sales.

Consumer Considerations for Using Mobile Phones and Tablets

Are desktop computers and laptops going away? Not any time soon. Most consumers will start a shopping task on one device and finish on another. Most will start on a desktop computer or laptop and finishing on a mobile phone or tablet (Han, Ghose, and Xu 2013). Retailers can use this information for a sustainable competitive advantage.

Consumers use technology devices for different tasks. The conundrum of the marketer is understanding these uses and the marketing channels where consumers shop. As shown in Figure 1.1, consumers relate to computer devices in rational and emotional situations. According to Hritzuk and Jones (2014), consumers see the desktop computer as a sage—an intellectual guide for information. Desktop computers are used to make rational shopping decisions. Consumers will look up product information, read reviews, compare prices, and use social media for an understanding before buying. For many consumers, laptops have become substitutes for desktop computers, with portability allowing for ease of use. However, laptops are generally used in the same manner as desktop computers in information search.

Figure 1.1 Buying decisions based on device

One of the reasons for the increase in mobile shopping is many times consumers use the device at hand when making purchases (Han, Ghose, and Xu 2013). Tablet computers allow consumers to explore on a whim (Hritzuk and Jones 2014). Consumers, while watching television, can buy on impulse, but can also use the tablet to look up product information. For example, a new product commercial may have consumers searching for more information on their tablets, resulting in purchases.

However, when using specifically mobile phones, consumers are more likely to use the device for immediate purchase—a more emotional buy. No product in the store, finding a product that has been researched, using a mobile coupon, or finding a great sale are more emotional buys that are more likely to be done on the mobile phone.

Consumers are more responsive to purchasing when using mobile devices after having researched information online prior to purchase. Mobile devices allow for what seems like impulse purchases, but are actually informed, buy-it-now purchases.