Internet shopping meets wireless: Wireless players add to their range of distribution outlets

Electronic commerce is all the buzz these days as businesses big and small experiment with hawking their goods on the Internet. Wireless businesses are no exception. Although some companies, such as Nth Dimension, which recently launched an on-line shopping guide, believe the Web can add a new distribution outlet for carriers and help them save big on customer acquisition costs, others aren't quite so hopeful.

"Books and flowers, [the Internet] works for," said Nick Molina, CEO of Let's Talk Cellular and Wireless. "Wireless and cellular are more complex. There's a lot of confusion, and people have questions that may be better answered face to face in a store," he said. Let's Talk Cellular and Wireless operates retail stores and an on-line site where Internet users can purchase phones and other services.

Internet users, however, may already have the answers to questions regularly asked by retail shoppers. "People on-line tend to be more educated and comfortable with technology," said Joe Smyth, project manager for BellSouth Cellular Corp. "They tend to know more about cellular phones and usage than those who wander into retail outlets."

BellSouth Mobility's site offers one rate plan and one phone, although it is working on offering more. The site does not require any payment mechanisms-the phone is free, and customers pay when they receive their first bills.

Although Molina intends to upgrade the Let's Talk Cellular site, sales from the site have been disappointing. "Revenues coming in through the site are not that significant right now, and we don't know if they will be," he said.

Despite Molina's questioning outlook, 33.4 million people will shop on-line by 2000, resulting in $15.6 billion in shopping revenue, according to Jupiter Communications.

"The Web is not a channel to be neglected," said Matthew Delson, director of the technology information and communications practice at FIND/SVP.

Nth Dimension plans to take advantage of this Web shopping growth. Its on-line magazine, Wireless Dimension, lets Internet users anonymously shop for wireless service. The site lets users compare every service in the 25 markets it serves.

Eliminating confusion could be both good and bad for carriers that have benefited from consumer confusion, Delson said. Carriers may find it more difficult to maximize profits from better-educated Web users, but ultimately, the Web can help them reduce churn, expand their customer base and increase use, Delson said.

Nth Dimension also stands apart from other on-line wireless retailers because it will profit mainly from carriers participating in its targeted advertising plan, not from sales. While all carriers' services are listed on the site, a paying carrier can include a logo and marketing information for $2.50 per impression. Dimension Select, Nth Dimension's on-line advertising system, allows it to charge carriers per hit.

Paying carriers also receive information about the number of hits made on their pages.

Nth Dimension charges carriers a transaction fee for every customer that signs up for service. The site passes these customers onto the carrier's own on-line commerce site to sign them up.

Nth Dimension hopes carriers will consider Wireless Dimension as an additional low-cost, efficient distribution outlet. "When we pass a consumer through to a carrier, we have prequalified them already," said Derrick Chasan, vice president of marketing for Nth Dimension. He said that the average acquisition cost, before marketing and advertising, is $300 per customer, according to Bear, Stearns & Company research. "We make a commitment to bring customers to them at 30% below their CGA," Chasan said.

* Some 52% of wireless shoppers are not confident when shopping for a wireless phone, according to Peter D. Hart Research Associates

* About 73% of Web users search for information about a specific product or service

* 39% of Web users search for product information on-line before making a purchase, compared with 19% in 1995, according to CommerceNet and Nielsen Media Research

* On-line shopping revenues of $2.6 billion in 1997 will grow to $37.5 billion in 2002

* On-line ad spending will grow from $301 million in 1996 to $7.7 billion in 2002, according to Jupiter Communications

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