Unique Features of Mobile Commerce

DING Xiaojun IIJIMA Junichi HO Sho

(Graduate School of Decision Science and Technology, TITECH, Tokyo, 152-8552, Japan)

Abstract While the market potentials and impacts of web-based e-commerce are still in the ascendant, the
advances in wireless technologies and mobile networks have brought about a new business opportunity and
research attention, what is termed mobile commerce. Commonly, mobile commerce is considered to be another
new application of existing web-based e-commerce onto wireless networks, but as an independent business area,
mobile commerce has its own advantages and challenges as opposed to traditional e-commerce applications. This
paper focuses on exploring the unique features of mobile commerce as compared with traditional e-commerce.
Also, there are still some limitations arisen in m-commerce in contrast to web-based e-commerce. Finally, current
state of mobile commerce in Japan is presented in brief, with an introduction of several cases involving mobile
commerce applications in today’s marketplace.
Key words m-commerce; e-commerce; wireless technology; applications and services

1 Introduction In the sections that follow, definitions and market

drivers of m-commerce will be outlined in the
According to the market research firm Strategy
beginning, and then the characteristics and existing
Analytics, the global market for m-commerce is
limitations in m-commerce will be presented as
expected to reach $200 billion by 2004 [8]. Wireless
opposed to web-based e-commerce applications.
technology has recently received much attention from
Finally, some cases of m-commerce applications and
entrepreneurs, investors, business experts and scholars.
services in Japan will be offered to illustrate the unique
It opens new avenues for businesses. Similar to the
attributes of m-commerce.
Internet several years ago, wireless technology
At present, there are a variety of definitions for m-
represents an important new technology that is
commerce used in different kinds of sources and
generating a general fervor. The wireless Internet and
literatures [1, 7, 10, 11]. From computerworld.com, “Mobile
its commercial usage, m-commerce, represent
commerce is the use of radio-based wireless devices
opportunities as well as challenges for entrepreneurs.
such as cell phones and personal digital assistants to
Many researchers assume wireless technology and m-
conduct B2B or B2C transactions over wired, web-
commerce will change the global economic
based e-commerce systems.” The definition given by
environment to a large extent.
Searchingmobilecomputing.com shows that “M-
Frequently m-commerce is represented as a subset
commerce (mobile commerce) is the buying and
of e-commerce. Although there are similarities
selling of goods and services through wireless
between e-commerce and m-commerce from being
handheld devices such as cellular telephones and
able to purchase a product or service in a virtual
PDAs.” Furthermore, according to the definition given
environment, in this paper, m-commerce is recognized
by Tarasewich, P., Nickerson, R.C. and Warkentin, M.
as a unique business opportunity with its own unique
in their paper “Issues in mobile commerce”[10], “Mobile
characteristics and functions, not just an extension of
e-commerce (mobile commerce or m-commerce) is
Internet-based e-commerce. One of the objectives of
defined as all activities related to a commercial
the paper is to explore the unique features of mobile
transaction conducted through communications
commerce as compared with traditional e-commerce.
networks that interface with wireless (or mobile)
 2
devices. These definitions provide us with an overall All of these market drivers enable m-commerce to
image of m-commerce, which describes m-commerce be an inevitable trend on which businesses should
as a commercial activity involved in electronic focus their attention. Therefore, it is important for the
financial transactions by using wireless devices. numerous participants to understand the unique
features, framework and possible issues of m-
commerce so as to grasp the new business chance and
Technological Market enhance their competitiveness in the future m-
Possibilities Environment
M-commerce commerce market.
Market

Social
Tendencies

Fig.1 Market drivers for m-commerce

2 Unique Features of M-Commerce

There are different driving factors that encourage
Applications and Services
businesses to make advances towards the m-commerce
market [1, 4, 8] (as shown in Fig.1). Firstly, m-commerce Mobile commerce is not just another application
holds a promising future due to the penetration of the of e-commerce but combines the advantages of mobile
mobile phone market. Widespread availability of communications with existing e-commerce services.
devices can be utilized by suppliers to directly There are some specific attributes of mobile
communicate to existing and potential customers. technology, such as mobility, reachability etc., which
Further, the push from vendors, attractive content, low give m-commerce an advantage over e-commerce [4].
costs and reasonable prices of the mobile services, Mobile technology is a broad category that
substitution possibilities are also promoting includes all devices, protocols and infrastructures that
substantially the market growth. Secondly, some allow one to communicate, interact and exchange data
technology-related factors, such as improvement of with an individual or system anywhere and anytime.
bandwidth, development of wireless Internet and Examples include mobile phones, PDAs (Personal
software, emergence of new technologies and so on, Digital Assistants). For mobile technology, the major
contribute a great deal to the development of m- characteristics are mobility and reachability [6].
commerce market. In addition, some social tendencies, Mobility implies that users can carry cell phones or
including so-called handset culture and increasing other mobile devices to transact from anywhere in
propensity to transact online, can be regarded as mobile network area [3]. Reachability of the wireless
another driving force for prosperity of m-commerce. devices makes it possible for people to be contacted
anytime and anywhere and provides users with the
choice to limit their reachability to particular persons
or times.
The empirical researches and experiences in the
environment of e-commerce show that the winners in a
new business area are those that can offer added value
through the new medium [9].
Tab.1 Summary of m-commerce characteristics

[4] [8] [9]

Efraim, T., David, K. Michael, S., David, S. Stanoevska-Slabeva, K. Zeng, E.Y., Yen, D.

Ubiquity Ubiquity Ubiquity Currentness

Convenience Convenience ――― Convenience
Instant connectivity Accessibility Immediacy Accessibility
Personalization Personalization Identification Personalization
Localization Localization Localization Localization

The unique
m-commerce
features of mobile
application areas
technology generate
resulted from
value added attributes
existing mobile
of m-commerce
technology. The
applications and disadvantages can
services. Tab.1 sums be identified as
up the basic
Unique features of m-commerce
characteristics of m- follows [2, 4, 5, 10]:
commerce
Personalization Preparation of information
Localization attributed
CreatingKnowing
serviceswhere Usability:
that the
customize
user is the
located Small
end-user
at any particular moment
experience Match services to
to theirthe

location specific
 screen
features of the s and
underlying
 keypad
technology according s of
to several related  mobile
[4, 8, 9, 12]
researches . device
s,
limited
messa
Major dimensions to m-commerce applications and services
ges
Time-dependent Location-sensitive Personalized and
 3
br g of Technical: overcome. With the
o infor Limi developments in
ws mati ted wireless
in on. me technologies and
mor the findings of
y practical solutions,
Ubiquity Convenience Accessibility
and there will be more
Easier Devices that store Contacted com widespread
information data are always at anywhere anytime
puti acceptance and
access in hand The choice to limit
ng deployment of m-
real-time Getting easier and their accessibility
pow commerce
Communication easier to use to particular er, applications and
independent of persons or times.
insu services.
the user’s location
ffici
ent 3 Mobile Commerce
band in Japan
widt
Japan is one
h
of the countries in
and
which mobile
Limi
Fig.2 Unique features and major application dimensions of m- phones have
commerce ted
become very
data
Based upon primary situation closely integrated
trans
the literature determinants that are in the lifestyles of
fer
review, there are presently the people. The
capa
some different transmittable in Japanese mobile
city.
naming and mobile networks. The market is one of
Basically,
classification specific features can the world's largest
these
methods for the make more suitable with almost 80
disadvantages
characteristics of services available for million subscribers
are balanced by
m-commerce. But users who have and approximately
the unique
taken together, different preferences 70 million of those
advantages of m-
they can be and changing have data
commerce at the
summarized as contexts in time. connections
moment.
Fig.2. These On the other (source Ovum).
However, as
characteristics hand, as opposed to With the
with the growth
bring about a range Internet technology, introduction of
in the use of
of distinctions there are still some advanced mobile
mobile
between m- limitations in Internet services,
technologies,
commerce and such as i-mode,
these limitations
conventional e- mobile phones
will have to be
commerce, and have become an
also can provide
indispensable tool for the market. In the last
added value daily life. several years, the
compared to Japan’s mobile communication style
traditional usage of operators are of sending and
the Internet expanding the receiving e-mail by
channel. Several functions of their mobile phone, or
identified value- mobile phones so gathering information
added attributes of that handsets can be and enjoying shopping
m-commerce are used not just for via mobile phone
ubiquity, ordinary voice calls websites, have become
convenience, but also to widespread. And with
localization, incorporate such the development of
personalization and additional functions mobile Internet, there
accessibility. as sending and have been significant
These five receiving e-mails, changes in the way
attributes address accessing the Web, people think and live.
three major utilizing Java The following several
dimensions: applications and so cases in Japan
location-sensitive, on. Actually, voice illustrate some unique
time-dependent service is accounting features of mobile
and personalized, for less and less commerce applications
which make up a share in all the and services from
three-dimensional mobile services. various application
space to describe Meanwhile, areas, which concern
the set of possible these are also mobile transaction,
customized motivating location based service
services. These innovation and and mobile payment.
dimensions diversification of 3.1 Tsutaya Online
correlate with the mobile services in (http://www.tsut
 4
aya.co.jp/) advantage of takes advantage of
business plan to
Tsutaya, mobile the highly accurate
drum up the bulk
which is Japan's technology is location measuring
of customer via
largest video and localization. capabilities to
the wired web.
CD entertainment Technologies like provide customers
But the firm
chain, can be TOA (Time of with a way to
quickly realized
regarded as one of Arrival), GPS improve transport
that a large
the successful (Global management, sales
potential market
examples of what's Positioning and marketing
would be created
possible with System), will activities and the
in step with the
mobile commerce. enable marketers dispatch of
growth E-mail of
It uses the specific
TOL and consumers to maintenance
wireless market.
features of m- access personnel.
Since then, their
commerce, such as information, Based on
business plan
ubiquity, services and many features
was shifted from
personalization and
Database conduct incorporated in
a web-centered
accessibility, to transactions GPS mobile phones
one toPurchase
a mobile-
show others how
Tsutaya shop specific to their ranged widely from
centered one.
mobile technology location. map guidance,
As shown in
and a good Knowing where information
Fig.3, the
database can help the user is located regarding
strength of TOL
companies take the at a particular restaurants and
is its rich
pulse of their moment will be traffic to urgent
customer
customers anytime, significant to notifications, etc.,
database on the
anywhere. offering relevant the new service
basis of the
services. allows users to see
customer’s
By using the in real time the
purchase records.
specific attributes location of all
Tying the
in mobile personnel or
sizeable database
technology, vehicles with
to mobile phones
KDDI launched a compatible
has put customer
new location handsets. It has also
relationship
information many potential
management into
management applications in
drive. By
service, GPS map areas as diverse as
combining data
Fig.3 in 2002, which goods delivery and
Business with mobility,
model of Tsutaya is able to collection, sales, applications such as
Tsutaya
Online maintain a maintenance, mobile banking,
dynamic nursing, healthcare, mobile money transfer
TOL (Tsutaya individual security and event and mobile payments,
Online) is entertainment management. etc.
initially a tastes and Various surveys
web-focused T
Mobile preferences,
Mobile and have shown that
Suica Phones Suica ic
then personalize location information k
product or capability is likely et
service offerings. one of decisive ca
rd
Nowadays, influences on success
TOL has been in the business field.
one of Japan's A
Therefore, in order to
d
most popular increase market m
online share, one of is
entertainment important things for si
sites. On average, future work will be o
n
Tsutaya's online how to stimulate new
ca
customers spend demand by rd
9 percent more developing unique Shopping
per month than content that makes
Fig.4
those who shop full use of GPS Image of
offline. Mobile
functions.
Suica
Meanwhile, 3.3 Mobile Suica
TOL's online (http://www.jrea
st.co.jp/) Japanese railway
services also
As one of the operator East Japan
have helped to
most important Railway Co., Ltd. (JR
increase brick-
components of m- East) will introduce a
and-mortar
commerce new ticket payment
parent Tsutaya
applications and system using mobile
revenues.
services, mobile phones with inbuilt
3.2 KDDI’s GPS map
(http://www.kddi.com/) financial applications Integrated Circuit (IC)
Another could involve a Suica cards, called
variety of Mobile Suica (see
 5
Fig.4). Suica the three basic tend to be
Owners of
(Super Urban benefits are not successful, such as
mobile phones
Intelligent Card) is enough to ensure a LBS (location based
with inbuilt IC
an IC card system general user services),
Suica cards will
for automatic ticket acceptance and the personalized
be able to use
gates of JR East. It success of a internet services,
their phones for
can be used not mobile application etc.
paying train travel
only as a prepaid or service. As the So far, by
by passing the
ticket card, and also experiences in m- connecting its rich
phone near the
for both a building commerce market customer database
checking
entry/exit control are showing those with mobility, TOL
machines at the
system and mobile is capable of
automatic ticket
shopping as well. applications and personalizing
gates. JR East
The number of services that take product or service
plans the new
Suica cardholders the specific offerings to some
system to come
has increased features of the extent, while KDDI
into effect in 2005
steadily since the users’ context into enables their users
at the latest. The
introduction of the account and apply to push, receive and
trial period for
system in this information to access information
operating Mobile
November 2001. generate an added and services
Suica has started
By early June 2003 value for the specific to their
since February
the number of mobile customers location with
2004. In addition
cardholders already
to the Tab.2 Correlation between m-commerce features and applications in the cases
exceeded 6.5
convenience of of Japan
million. The fast
Suica, Mobile Features Tsutaya Online KDDI’s GPS map Mob
pace of growth
Suica attempts to Ubiquity + +
reflects great Convenience + +
utilize the feature
enthusiasm of the Accessibility + +
of cellular
public to the Personalization + －
phones, such as
convenience of Localization － +
communication
Suica. “+” denotes significant correlation; “－” denotes
function and
insignificant correlation.
representational
function, to offer technologies like commerce so that new
new and more GPS. For the potential applications
convenient meanwhile, there is and services could
service. still not significant become possible in m-
Tab.2 embodiment of commerce adoption. In
outlines personalization or the meantime, several
correlation localization in the cases involving mobile
between m- case of Mobile Suica commerce applications
commerce at the present start-up in today’s Japan were
features and their stage. But a series of presented to show
applications in the new and more successful penetration
three cases. In tailored services will and positive perspective
essence, the be offered with the of mobile business
characteristics of advancement and thanks to the unique
ubiquity, maturity in features of mobile
convenience and technology and technology. In such a
accessibility in m- practice. rapidly changing
commerce environment, it is
environment are 4 Conclusion important to make
utilized overall in-depth
The
effectively and analysis for future
development of
widely in these research to take full
wireless technology
cases above advantage of the
and mobile network
mentioned and strengths of m-
has created a
some other areas commerce to increase
challenging research
of m-commerce competitiveness in this
and application area,
applications and global mobile
mobile commerce.
services. They marketplace.
As an independent
can be regarded business area, it has
as the basic and References
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Houston, from Tokyo
Texas, Institute of
Mar. 5-8, 2003 Technology
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University (NPU) in
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engineering. She is
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candidate in
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R.C.,
Warkentin, M., Industrial

Issues in Engineering and

mobile Management at
Systems Theory. He is the author and coauthor of many papers,
articles and books in Japanese and international journals as well.
He organized the third e-Biz workshop in 2003 in Tokyo.

HO Sho (包捷) is a research associate in Tokyo Institute of

Technology (TITECH). She received her MS degree from the
Graduate School of Decision Science and Technology, TITECH.
Her research interests include Component Technology, Web
Engineering, and Web Governance.