Wireless Takes Its First Steps On The Internet: Working the web

Everyone has been talking about electronic commerce as the next big communications revolution. Even President Clinton has been promoting it. Industry leaders have high hopes for big growth-John Chambers, CEO of Cisco, predicted recently that Internet-based commerce may grow to $1.5 trillion in 2003 from about $10 billion last year.

We've seen that books and computers can sell on-line. But how about wireless service? Not many wireless players have attempted to find out. Today, years after e-commerce first became available, few wireless operators allow potential customers to buy on-line.

The idea has spawned some Internet pioneers, though. GTE customers have been able to buy wireless on the Web for more than a year. AT&T Wireless recently launched a new on-line store where customers can purchase phones and service. BellSouth and Bell Atlantic Mobile's cellular arms offer on-line sales. AirTouch allows customers to buy handsets on-line, but it requires them to contact the company to choose a calling plan. Ameritech and some others offer prepaid phones and accessories on their Web sites.

Carriers have some good reasons for not jumping on the e-commerce bandwagon. "It's not like selling a book," says Jane Shanklin, director of marketing communications at AT&T Wireless.

Rather, wireless is what Larry Shafer, president of Shafer Consulting, calls a solution sell "because they're selling hardware and service."

Selling a wireless solution on the Web does not appear much more complicated than selling books, however. "Ultimately, for anyone to be successful, they have to make the complex simple," says Brian W. Sholly, assistant vice president of marketing communications for GTE. "For us to capture a lot of e-commerce, we're going to have to make wireless simple."

Companies like Amazon.com and Dell-two of the first companies to successfully sell products on the Web-have mastered the art of making it simple for customers to buy on-line, Sholly says. Those carriers that do allow customers to buy on-line are meeting the many challenges involved and finding, through trial and error, some success on the Web.

The hurdles Selling on-line presents a number of unique challenges to the wireless world. The solution sell requires more complex tools than are available in plug-and-play e-commerce offerings, Shafer says. For example, few of the well-known e-commerce servers offer intricate options to allow on-line shoppers to delve for information. "Most aren't equipped to provide shopping and searching for solutions," he says.

Rather, they are designed mainly for companies to present a set of products. As a result, wireless operators tend to present available service plans in a chart, listing prices and phones. Potential customers should be able to browse through wireless services by cost per minute or handset features, and match a service and product that meets their needs, says Shafer. Carriers would have to contract with a company to design a custom service for them.

Some carriers have approached this type of model. For example, AT&T offers on-line shoppers a list of statements regarding their usage plans and asks them to respond yes or no. The statements include: "I need to keep track of my phone numbers," "I wish I could be more productive during my commuting time" and "I currently track my investments daily through the Internet." The site then displays details of some service plans that would best fit the users' needs.

But simplifying e-commerce tools isn't the only challenge that wireless carriers face. Typical e-commerce sites are linked to a single warehouse, Shafer says. When a customer submits an order, it is sent to that warehouse to be fulfilled. In the wireless world, however, operators must run credit checks, activate phones and integrate customer information with billing systems.

For many wireless companies, these back-end processes may be set up mostly in the form of existing 800 number fulfillment centers. AT&T Wireless' on-line ordering process is linked to its existing 800 number fulfillment system, Shanklin says.

Other challenges in setting up the AT&T on-line store were more complicated than developing a fulfillment process, such as the ZIP code database, she says. One of the first steps that visitors to the AT&T Wireless site take is entering their home ZIP codes. The site searches its database to ensure that each shopper is eligible for AT&T service. AT&T also displays coverage maps on the site, which must be updated as the operator builds its network.

Canadian PCS operator Clearnet, which claims to be the first North American carrier to offer on-line sales, believes that the most difficult part of e-commerce is building the relationship with credit card companies and banks. Clearnet has outsourced the credit card validation process to a company called Internet Secure. Shoppers are transferred to a secure site run by Internet Secure to enter credit card information and complete a purchase.

"It's transparent to the user," says Valerie Jones, senior program manager for Clearnet. They are on a secure site operated by an established credit card validator, which makes them more comfortable with buying on-line, she says.

After shoppers submit their orders and their credit cards are approved, the secure site generates an e-mail to Clearnet's fulfillment center. "Clearnet's retail strategy is a little different from others," Jones says. "That's probably why it was so easy [to set up the site]."

From initial launch, Clearnet's PCS service was designed as an off-the-shelf offering. The company's processes were already designed around a simple product purchase. "The simplicity was easy to replicate on the Web," Jones says.

The incentives The few operators selling on the Web have different reasons for implementing e-commerce capabilities. They also have different hopes, strategies and investments in their sites. As a multiservice corporation, GTE was charged with cultivating an active and integrated presence on the Web, and wireless plays a critical role in that, Sholly says. The company created a site to meet customers on their own terms. "It's how the customer wants to interact with us," he says.

Compared with other retail channels, leveraging the Web is extremely cost-effective. GTE hopes to extend usage of its Web site to customer support, adding the ability to interact with customers on-line and allowing customers to view bills.

"The cost efficiencies from our standpoint can be significant," Sholly says. Clearnet agrees. "The cost of entry is small-we had nothing to lose," Jones says.

Clearnet's site has exceeded company goals, partially because the Web department initially wanted to set low expectations. In Canada, only about 35% of people have access to the Web, and when Clearnet's site was launched, only about 14% of those actually used the Web to buy products, Jones said. Nonetheless, Clearnet's on-line site generates about as much in sales as a small store.

These companies-the first to venture into on-line sales-are doing a lot of experimenting. "What works on the Web? No one knows," Jones says.

She has learned a lot so far through trial and error. For example, to drive traffic to the site, Clearnet first ran banner ads saying customers who bought phones on the site could win a free Volkswagen. When the company changed the offering to directly appeal to Internet users, the results increased dramatically.

Clearnet began running banner ads that focused on advanced phone features-with words comparing a PCS handset with a computer. "The click-through rate doubled," Jones said. Clearnet learned that focusing promotions on the typical Internet user increased its success in luring browsers to the site.

GTE has tightly integrated its site into its entire marketing program. "We have a Web component to every marketing plan," says Linda Janssen, manager of interactive marketing for GTE. "In a lot of companies, it's a stepchild in a way."

Dedicating resources to the Web is a shortcoming in many companies today. "The problem is that there is no champion in any carrier," says Ed Legum, president of The Edmond-Howard Network. Rather than haphazardly setting up a Web site, carriers need to dedicate people to integrating the site into the company's overall strategies and developing the latest capabilities.

A Web strategy then should be formed high up in a company. "It needs to happen from the executive level down," says Mitchell Levy, president of ECNow.com.

In addition to extending the function of a Web site to integrate with marketing and customer care strategies, a carrier could use a site to leverage the power of its channel partners. For example, Fruit of the Loom spent millions to help its retail partners create their own sites that link to a main Fruit of the Loom site. The investment brings customers to the Fruit of the Loom site and increases the number of ways customers can find what they are looking for. "You might have 1000 Web sites pointing to yours," says Mitchell Levy, president of ECNow.com.

However, translating such a plan to a more complicated service such as wireless raises some issues, Levy says. He cites an example of a software company that launched an on-line sales site and made only one sale in its first month. The company's sales people typically worked on commission but earned no commission for referring customers to the site. Levy suggested that such a company could create a policy where sales from the Web site would go toward a party for the sales staff. Or the company could offer sales people double commission for six months on referred customers that buy something on-line. Or the sales people could earn frequent flier miles for on-line sales.

Levy calls such a total Web strategy "holistic." The strategy must be tightly linked to all company functions. It shouldn't be just a site with e-commerce capabilities. It must satisfy customers as well as channel partners. Companies can be sure they are satisfying users by posting surveys on the site or encouraging channel partners to distribute surveys to customers in their stores.

Clearnet has dedicated part of its site to its dealers. They use a password to access the dealer portion of the site where they can find information such as rate plan changes and product availability. To date, Clearnet dealers have been slow to use the site, mostly because many of them don't have Internet access, says Valerie Jones, senior program manager for Clearnet. But by February, those dealers will have to begin using the site because it will be their primary source of information from Clearnet.

Beyond their own Web sites, companies can look to sites that sell a variety of products to bolster their Web presence. For example, books can be sold on a variety of different sites-Amazon.com, Barnes and Noble and the publisher's site. The same concept could be applied to wireless, in which retailers such as Best Buy or Radio Shack could sell their wireless products, along with everything else they sell, on a Web site.

A company called Wireless Dimension offers a site, nthdimension.com, that aims to offer an objective source of information on all available wireless services. Shoppers can research options in a variety of ways. If they choose to browse by service plan, they can view a list of all services available in their cities. They answer questions regarding usage, spending and feature preferences, which whittles the list down to the plans that would best suit them. Shoppers can then view those plans in a comparison chart. "It's difficult to do that in the off-line world because carriers often have exclusive deals with retailers," says Derrick Chasan, vice president of marketing for Wireless Dimension.

Customers can buy service only from the companies that have special agreements with Wireless Dimension, although all wireless services are listed on the site. These carriers, including AT&T Wireless, Airtouch and SBC, pay Wireless Dimension a lead generation fee for customers that actually buy on-line. Wireless Dimension collects all the user information and passes it on to the carrier, which fulfills the service directly-so carriers must have their own on-line fulfillment processes in place. AT&T and Airtouch say they are involved with Wireless Dimension because it offers another outlet where they can sell products. "This is a traditional affiliate relationship that is common in on-line buying," says Larry Shafer, president of Shafer Consulting.

A carrier might not want to rely solely on a site like Wireless Dimension's for their total on-line presence. "I would argue that it is in their interest to set up their own capability," says Shafer. Some shoppers might know that they want a specific carrier's service and might prefer to go directly to that company's site. In addition, some carriers might not want their services to be directly measured against their competitors. That isn't likely, though, because most carriers today are focused on growing the overall wireless pie, says Matt Ellenthal, vice president of sales for Wireless Dimension.