MobileLime Looks to Pending Major Deals for National Expansion

Boston-based Vayusa Inc., which markets its m-commerce service under the name MobileLime, has had discussions with a national retailer and restaurant chain about offering its m-commerce network nationally. If successful, the deals could pave the way for MobileLime to reach the 172 million or so mobile users in the U.S. At the same time, the company plans to begin testing an application that will allow quick-service restaurants with drive-through windows to accept PIN-based debit cards from m-commerce users, says Andy Fruit, vice president of marketing for MobileLime, without being more specific To support the business case for expansion of m-commerce, a $16-billion industry now composed mostly of sales of ring tones, online games, and screen savers, Fruit cites increases in the average ticket size in point-of-sale applications. Three Boston-area MobileLime merchants posted gains ranging from 14% to as much as 32%, and one merchant reported that MobileLime users spend an average of $77.29, compared to $32 for other customers. Another reports the MobileLime users spend an average of $62.77 compared to $45.36, and the third says MobileLime users spend $49.71 compared to $37 for its other customers. The company has signed about 80 merchants and has nearly 10,000 users. The user count has almost doubled since last summer (Digital Transactions News, July 28, 2004). “We know the percentage increase will shrink as more merchants are added to the program, but we feel a 20% increase in average ticket is still realistic,” says Fruit. “Consumers tend to spend more if they feel they are receiving some value in return for doing so, and that is where rewards and incentives come into play.” MobileLime accounts give cell-phone users the ability to pay retailers and service companies as well as receive and manage rewards and other loyalty incentives offered by participating merchants (the “Lime” part of the name stands for loyalty, information, money, and entertainment). The service, which is backed by venture capital and was introduced in March 2003, does not rely on billing by mobile telecom carriers. Rather, consumers call a MobileLime number on their cell phones when they are ready to pay. MobileLime identifies the user and authorizes the transaction, which is billed to card or prepaid accounts set up by the user upon enrollment. The company won't reveal specifics about transaction fees to merchants, other than to say MobileLime levies a flat fee as well as a per-transaction charge. These fees pay for campaign management and loyalty programs as well as transaction services. Since MobileLime doesn't stand in as the merchant, participating retailers also pay the discount fees they would ordinarily pay for card transactions. MobileLime's strategy is to leverage its network as a content-delivery tool users opt in to. Merchants can then send timely marketing messages to users' cell phones capable of generating large sales increases in short periods. Two restaurants in the MobileLime network recently messaged users an offer for 50% off dinner Sunday through Thursday. The campaign netted a combined 13% response rate in the first two hours after the message went out. “When you consider that a good response to a direct-mail campaign is 4% to 5% and coupons usually get a 1% redemption rate, a 10% or more response rate is pretty successful,” says Fruit. M-commerce experts predict sales through mobile devices will double by 2007, thanks largely to more widespread deployment of broadband-access services, which can transmit images faster than current GSM-based phones. High-speed digital content makes it possible to download games faster and in bundles for which providers can charge more. High-speed access also provides better access to the Internet, making it easier for consumers to surf the Web using their phones and to buy higher-priced items, such as concert tickets, while standing in line or riding public transportation.