Wireless on the Web

Sophisticated Internet store-fronts are becoming an important new sales channel for wireless carriers, not only as a standalone retail opportunity but also as an informational complement to traditional stores. More carriers such as Airadigm, Ameritech, AT&T Wireless and Bell Atlantic Mobile (BAM) are moving to the Internet, staking out complex domains that move the traditional retail outlet into the home PC.

Wireless sites generally are cut into two categories:

*Freestanding, end-to-end electronic storefronts that let consumers browse and buy without human interaction

* Information-only sites, where shoppers are encouraged to browse and educate themselves about their various wireless options before hitting the stores. Often these sites have locator maps directing buyers to actual stores in their neighborhoods.

Stake Your Claim

As e-commerce grows, the potential for electronic wireless retailing appears endless.

"Part of that is a general re-evaluation of a carrier's distribution channel, which is lower in cost and more direct," said Kent Olson, a Strategis Group senior consultant. "Prices and margins are under pressure, and carriers are looking aggressively at ferreting out costs and moving to channels that are less expensive."

For companies, the costs and prospects of addressing the market directly are appealing, considering the cost of web-site construction.

Much of carriers' Internet expenditure goes into paying a web designer for a site that's graphically rich and interactive but simple enough so that users with all types of web software can browse the site.

After the site is up, carriers face the less-considerable costs of site maintenance and updates.

"You don't have bricks and mortar," Olson said, "and once your fixed costs are up there, the maintenance costs are pretty small."

One of the most sophisticated wireless sites on the web belongs to BAM, the first carrier to offer end-to-end retailing through the Internet. Launched in September, the site allows users to browse the store, compare rate plans and phones, and make purchases. At the point of sale, the site conducts credit checks, processes credit-card numbers and arranges shipping.

BAM acted carefully in building the site, avoiding temptations to overburden it with slow-downloading graphics that could frustrate and turn off buyers. The strategy has paid off. According to BAM spokesperson Andrea Linskey, 50% of people who visited the web site in December went to the store. She added that sales from the web have increased 100% to 115% from November to December.

"Traffic is building on the site," said BAM spokesperson Nancy Stark. "We expected when we launched it that it would be a sort of niche distribution site, albeit a very important one, with the growing consumer popularity (of electronic commerce) and comfort with browsing and shopping. This will be a key distribution channel."

Airadigm opened its on-line store Dec. 7, and despite a slow first couple of weeks (many hits but no sales), Carl Artman, Airadigm executive vice president, wasn't surprised.

"These things take time," he said.

How long such sites stay in the niche-only category remains to be seen.

Internet experts estimate 90 million people worldwide use the Internet, with more than 400,000 companies using some type of Internet address.

"I think it's something that carriers are exploring, looking to see what kind of traffic they can get and sales they can generate," Olson said. "Right now it's too early to know, but I'm sure it will grow as e-commerce in general grows."

Complementary

Internet pricing is another issue carriers must face. Many lower the prices for products sold in their e-stores. Artman said Airadigm has not lowered the price of its products in its on-line store but is considering doing so. Carriers have to keep in mind that e-stores compete against their own retail stores as well as independent distributors and direct salespeople, he said.

But other carriers say their existing sales relationships with third-party agents are not under attack by the promise of direct Internet sales.

As people become more comfortable with e-commerce, there might be ways to pull the agents along with the e-store concept, either by linking to them in cases where a customer doesn't want to buy on-line or by Internet advertising, Artman said. And carriers such as Ameritech, BAM and BellSouth said their sites are not only direct-to-buyer outlets but sites where potential customers can browse.

"It's also for people who are more inclined to use the Internet before making their purchase in a store," said Robin Urbanski, Ameritech spokesperson.

"We have a very extensive chain of our own retail stores, but this is a strong complement to that," said BAM's Stark. "There are some people who will go into our stores, see, feel, touch our equipment and go back and order it on-line. It works both ways."

Carriers stand to gain by keeping customers that might otherwise tune out at a traditional store because of inexperienced or disaffected salespeople, said Bob Hutchinson of the Wireless Dealers Association, a trade organization representing roughly 5,000 outlets, dealers, agents, retailers and providers.

"You've heard the horror stories of someone going into a store and finding a well-appearing salesperson that doesn't know anything about the product," Hutchinson said. "The wise retailers are turning to the Internet.

It's not a substitute for a store, but it can be a substitute for a lot of expenses of distribution of documents and product information. It's so easy to point someone to your web site if the information they seek is there and presented to them efficiently."

Rough Road Ahead?

Until the Internet tops traditional retail sales as the preferred shopping method, carriers should tread carefully on-line, Hutchinson said.

First, Hutchinson is mildly skeptical about the wireless industry's Internet future. He said wireless phonesaren't a true consumer product because they fail to meet this litmus test: Is it a product that a consumer will hold on to "through a long period of economic panic?" Hutchinson said people don't yet view their wireless phones as a must-keep as they cut back to make ends meet.

"As a cellular telephone becomes more of a consumer product, I think we'll see more across the Internet," he said.

But Hutchinson is worried that large carriers may be trying to address the market directly -- a time-tested effort that usually fails, he said. Large carriers that deal direct often lack the proper customer care that local, third-party dealers can provide.

"It's very difficult for those large corporations to get down to true customer-service levels with the web system," he said.

To solve that problem while harnessing the Internet's potential, Hutchinson advised carriers to let their regional dealers develop their own, localized web sites that can advance Internet sales but also deliver customer care that can enhance profitable third-party relationships.