M-Commerce

Muhammad Amir Malik
Director (ICT)  Pakistan Telecom Authority
The advancements in wireless technologies and mobile communication networks have set a new paradigm as far as business opportunities and research attention are concerned; nevertheless market potentials and impacts of web-based e-commerce are also growing at a rapid pace. Commonly, mobile commerce is considered to be another new addition to existing web-based e-commerce. However as an independent business area, mobile commerce has its own advantages and challenges as opposed to traditional e-commerce applications. This report focuses on exploring the unique features of mobile commerce and its impact in Pakistan.
While the advancements in wireless technologies and mobile communication networks have set a new paradigm as far as business opportunities and research attention are concerned, nevertheless market potentials and impacts of web-based e-commerce are also growing at a rapid pace. Commonly, mobile commerce is considered to be another new addition to existing web-based e-commerce. However as an independent business area, mobile commerce has its own advantages and challenges as opposed to traditional e-commerce applications. This report focuses on exploring the unique features of mobile commerce and its impact in Pakistan.

Recently, mushroom growth in m-commerce has been witnessed. According to Juniper research, expectedly, the transactions will cross the mark of $200 billion in 2012 under the umbrella of m-commerce, which is 100{e1f18614b95d3cd6e4b3128e1cd15d99b042a60a5a19c19b7a8e07e7495efa10} growth as compared to current year. Similarly, aforementioned research also forecasts that worldwide market for remote mobile payment of digital goods will reach $1.65 billion by the end of this year. Furthermore, the mobile subscriber base that performs mobile banking will double from 200 million this year to 400 million in 2013. Moreover, the subscriber base that use mobile coupons is expected to reach 300 million consumers globally by 2014, generating revenue of $6 billion per annum. Another research study by ABI Research deduced that around 170 million mobile subscribers globally will make local person-to-person payments by end 2011.While aforementioned firm also predicts that global expenditure on mobile marketing and advertisements in 2010 was $11.5 billion and is expected to rise to $16.3 billion in 2011 and $21.2 billion in 2012.In the similar fashion, Berg Insight predicts that by 2015 most of the international money transfer will be done by mobile phone, producing a solid revenue of $6.2 billion for the cellular industry. Moreover, Portio Research forecasted that the m-payment users will accelerate from 81.3 million to 490 million by the end of 2014 and expected transactions of $ 633.4 billion will happened globally.

The preceding facts and figures show that m-commerce has exponentially increased in recent years and it also anticipated a huge growth in approaching years. These predictions are based on substantial reasons. Firstly, the potential benefits of forenamed technology such as easy accessibility to consumers independent of time and location, secure and private transactions, robustness, reduced transaction cost, competitive pricing and efficiency, streamlined business process and reduce order processing time. Financial institutions like banks are taking keen interest in the m-commerce technology due to their realization of the fact that it is one of the best and cost effective ways to reach the unbanked people. Furthermore, the mobile consumers around the world are also embracing smart-phones and availing high-speed internet connectivity in their life style. Above mentioned two postulates are acting as impetus for m-commerce because in past years the mobile computational capabilities and slow data rate were major hurdles in the proliferation of forenamed facility.
A research report on global consumer perception conducted by Springboard Research to identify the potential factors probable to success M-Commerce usage illustrates that majority of consumers have highly advocated that consumer awareness and quality of contents will boost the m-commerce usage. However, they also have shown their serious apprehension over increased cost of operation which might not help in boosting up the usage of m-commerce.

Similarly, aforementioned study has also highlighted some potential risks probable that will hamper M-Commerce usage. Security risk and poor network coverage were also the serious concerns of the Majority of customers. Furthermore most of them also highlighted that complexity in mobile service usage and risk of exploiting privacy are also noticeable hurdle in the usage of m-commerce.
So far in Pakistan, the sector of m-commerce has been left unattended for several years. But nowadays numerous business associations are trying to affiliate with m-commerce facility in their establishments in order to uplift their revenues but most of them are confused about the consumer’s perception regarding m-commerce facility. Therefore, in order to project the current perception of consumers about m-commerce in Pakistan, a survey has been conducted to analyze their opinions about the prominent sectors of m-commerce like downloading mobile contents, m-ticketing, Location Based Services, m-banking and mobile based online shopping etc.
Downloading Mobile Contents
In 2010, an augmented growth in the mobile application market has been observed. A leading mobile research organization deduced that around 10 billion accumulated mobile downloads have been recorded in the last quarter of 2010 and expectedly to touch 76.9 billion in 2014 thus mustering a revenue $35 billion. Furthermore, a report on mobile consumer behavior conducted by the Nielsen Company elaborates that items like games, news, maps, social networking and music as the most popular categories for mobile downloads.
Likewise the global mobile subscribers, similar trends have been observed in Pakistan. Around 72{e1f18614b95d3cd6e4b3128e1cd15d99b042a60a5a19c19b7a8e07e7495efa10} of the survey participants have shown their positive response towards downloading contents on their mobile devices. Approximately, 16{e1f18614b95d3cd6e4b3128e1cd15d99b042a60a5a19c19b7a8e07e7495efa10} of survey participants don’t show their interest in purposed activity, majority of them indicated that indolent data rate is the foremost hurdle towards their interest because the mobile applications addressing their needs are bandwidth hungry. So far around 12{e1f18614b95d3cd6e4b3128e1cd15d99b042a60a5a19c19b7a8e07e7495efa10} of survey participants don’t know about such services, the main reasons are lack of awareness about mobile applications, lack of trainings and advertisements about interacting with new software technologies.
M-Ticketing
According to Junipers research study, last year around 2 million mobile tickets have been purchased over the mobile devices worldwide, in which China and Far East regions are dominant. The study also anticipated that the forenamed amount of m-tickets will rise up to 15 billion in 2014 because most of the consumer sectors around the world have realized the cost savings and up-sell revenue potential in mobile ticketing.
In order to analyze the consumer attitude about m-ticketing, the survey participants in Pakistan were inquired to express their interest about m-ticketing; more than 53{e1f18614b95d3cd6e4b3128e1cd15d99b042a60a5a19c19b7a8e07e7495efa10} of them have shown their keen interest in m-ticketing facility due to its convenience and easy online acquisition. So far it has also been observed that the local commercial transport system in the country is not technological intimate, due to this fact most of the people think m-ticketing facility couldn’t be possible in the current region, around 27{e1f18614b95d3cd6e4b3128e1cd15d99b042a60a5a19c19b7a8e07e7495efa10} of participant not shown their positive response due this cumbersome hurdle.
Location Based Services (LBS)
The charm of location based services has attracted most of the business and corporations globally because of rise in revenues and convenience in acquiring location specific information about the business, places, people and services etc. A research study by Gartner research has predicted that LBS user base globally will raise more than 526 million subscribers in 2012, which is six times of the current subscriber base. The research also rates LBS among top 3 consumer mobile services for 2012. Another research approach from ABI Research has spotlighted the fact that LBS revenue will reach to a global total of $13.3 billion per annum by 2013, twenty six times more as compared to $515 million during 2007.
So far in Pakistan, LBS facility isn’t available to the public yet. The local consumer perception about LBS depicts that around 87{e1f18614b95d3cd6e4b3128e1cd15d99b042a60a5a19c19b7a8e07e7495efa10} of survey participants have keen interest in forenamed facility because in Pakistan options like maps, business location, places or events etc are not organized in informative or proper manner, many people face massive hurdles in finding services and business on a particular location. But it also be noticed that the privacy matter in the LBS facility is of great concern for the people, around 8{e1f18614b95d3cd6e4b3128e1cd15d99b042a60a5a19c19b7a8e07e7495efa10} of them haven’t shown their interest due to security and privacy issue.
Mobile based Online Shopping
Globally, a colossal breakthrough in mobile based online shopping has been observed. The main reason behind that boost is enormous adoption of smart-phones and the eagerness for mobile Internet. Many consumers around the world have realized the time and cost saving gain with the help of this facility. Consumers can compare their products on different stores by using their phones and definitely save lots of money on their shopping. According to a research study by ABI research, it has been expected that in 2015 around $119 billion will be spend on the procurements of goods and services via mobile phone, which is approximately 8{e1f18614b95d3cd6e4b3128e1cd15d99b042a60a5a19c19b7a8e07e7495efa10} of the total e-commerce market.
Consumer perception in Pakistan regarding shopping on mobile phone has exhibit that around 61 {e1f18614b95d3cd6e4b3128e1cd15d99b042a60a5a19c19b7a8e07e7495efa10} of survey participants have shown their interest in online shopping due to ease and cost effectiveness of Mobile based online shopping facility, but they have also shown their moderate concern over the security issues in the aforementioned LBS facilities. Source: Paradigm Technologies 2010-11
While about 28{e1f18614b95d3cd6e4b3128e1cd15d99b042a60a5a19c19b7a8e07e7495efa10} of survey participants have serious concerns on the security issues and don’t show their interest in shopping over mobile. Furthermore, one third of uninterested participants also find it difficult to interact with mobile phone based online shopping software due to technological unawareness and unavailability of contents in regional languages.
Mobile Banking
Mobile banking has become a key electronic channel for the global banking and financial services industry due to its aptitude to reduce overall operational costs, streamlining the operations and the potential to boost up the customer base. Every bank in the world is considering this option in order to reach the unbanked. According to Global industry Analyst study the global mobile banking, customer base will reach from 1.1 billion by 2015, which is seven times of the current customer base.
The consumer perception about m-banking in Pakistan is seems to be quite different as compared to global community. Around 44{e1f18614b95d3cd6e4b3128e1cd15d99b042a60a5a19c19b7a8e07e7495efa10} of consumers are interested in m-banking, most of them are young people and want to get benefitted from m-commerce facilities due to its convenience and fast transaction.
Regardless of these advantages, around 40{e1f18614b95d3cd6e4b3128e1cd15d99b042a60a5a19c19b7a8e07e7495efa10} of survey participants don’t show there positive interests toward m-banking, most of them have shown great objections over security issues. Furthermore, they also highlighted that mobile device compatibility, SMS and data service cost, software operation convenience and unavailability of contents in regional languages are major hurdles in its adoption.
Key Findings
The consumer perception in Pakistan regarding M-commerce is quite optimistic. Many consumers have shown their keen interest towards m-banking, m-ticketing, LBS and mobile based online shopping because they all have realized this salient facility will provide convenience, cost reduction, more comprehensive and quick transaction opportunities in their daily life.
However, there is also a fair percentage of consumers who haven’t shown any interest in the said facility because most of them not have adequate knowledge to handle this facility. Furthermore, few of them have demanded good QoS with high data rate and availability of contents in local languages while they also have serious concern regarding security and privacy issues.
It must be noted that there are also a percentage of consumers who don’t know about such facility due to lack of awareness and literacy because most of them are belong to rural areas of Pakistan or else are elderly and have almost no knowledge of the subject.
Conclusion
In order to foster the proliferation of m-commerce in the country, business firms, financial institutions and service providers must realize the opportunities of discussed facility and start to invest in the this sector. Moreover, to address the issue of lack of awareness and motivation; stakeholders must conduct awareness campaigns for promoting m-commerce services in the society. Financial institutions and service provider must develop partnership in order to meet the consumer demands.
It has been also observed that most of the consumers demands for more user friendly, secure and local contents based applications therefore local content developer must be encouraged by the stakeholders to address the said issues in order to boost-up the subscriber base of m-commerce in the country. Moreover, government must encourage mobile device manufacturers to float low cost smart-phones in the country to address the issue of affordability of local consumers and also compel cellular operators to ensure full QoS during financial transaction process.