SMS WHOLESALE SPECIAL REPORT 2014: Top five SMS verticals to watch
19 September 2014 | Gareth Willmer
The ubiquitous nature of SMS makes it an obvious add-on service across a wide range of industry verticals. Capacity explores the verticals that are ripe for growth.
Transport is another area that has manifold A2P opportunities, with significant demand for using SMS for booking and obtaining confirmation for services such as aeroplane flights and taxisin a sector that often requires rapid and reliable delivery of messages. Possibilities have further grown as customers have adopted mobile location-based services, creating an array of options for combining location information and messaging in new business models.
A mere glance at the credentials of some businesses in this area is enough to confirm the benefits of investing in simplifying transport-related communications. For example, taxi-app company Uber was recently valued at US$18 billion after starting operations just four brief years ago in San Francisco. It now provides services in 42 countries and more than 150 cities worldwide, from Frankfurt to Lagos and from Bogota to Albuquerque.
Uber's service is centred on a GPS-based app, but SMS can be used to receive alerts when cars are approaching and for drivers to see when a client is waiting. Although the company's service is not centred on SMS and also uses push notifications, this example shows the potential for communications services in this sector. "Uber is one of the hottest start-ups in this area," says Stephan Schirrecker, VP of marketing at cloud communication company Nexmo. "It revolutionises the way people use taxis."
Another player that Schirrecker cites in this area is Zipcar, which allows customers to reserve cars by the hour or day and is currently available in various municipalities in the US, Canada, Austria, Spain and the UK. Zipcar provides SMS confirmation and reminder messages when customers who opt in make bookings. Users can also send SMS messages to extend their reservations, or to honk the horn of the car they have hired to locate it.
Lyndsey Donald, senior brand marketing manager at Zipcar UK, says that the SMS service is not seeing particular growth and is not the company's central focus, but provides a useful source of information for customers and can help increase Zipcar's revenues by giving customers a simple way to extend their bookings. But she says that people can still be suspicious of receiving spam via SMS: "One of the challenges is that in the sign-up, lots of users opt out of it. I guess they worry about spam."
Many enterprises believe that this is something that will change as A2P SMS grows and consumers become increasingly at ease with trusting messages that they receive, viewing them as something useful rather than a nuisance. Growing use and reliability in the transport sector would certainly help with this.
Banking and finance
The vertical most commonly cited as having the greatest potential for A2P SMS is the banking and finance arena, with this sector's interest in mobile services underlined by the large number of banking-related MVNO models that have arisen in recent years. One trend is that a burgeoning number of enterprises are seeking SMS options for authentication services.
A wide variety of over-the-top (OTT) players have entered the mobile market in recent years, such as WhatsApp, Facebook Messenger, SnapChat and Viber. Indeed, these providers have had a major part in the erosion of operators' P2P SMS revenues, with users of WhatsApp alone reported at the start of the year to be sending and receiving more than 50 billion messages per day.
Other socialnetworking services such as Twitter and LinkedIn are also seeking to use A2P SMS for authentication services. "Now we're seeing OTT players and next-generation service providers really starting to communicate with their clients," says Jeff Bak, vice president of mobility solutions at carrier Tata Communications.
The proliferation of such disruptive businesses shows no sign of stopping, so operators may do well to seek optimum methods for linking up to capitalise on the A2P SMS opportunity in this segment rather than giving OTT players a wide berth. And some are doing just that.
Last year, multimedia and cloud communications company Genband acquired Fring's OTT mobile IP service and then struck a deal for French mobile operator Bouygues Telecom to use Fring to offer customers free phone calls and SMS over WiFi while abroad.
According to Genband, adoption of the service exceeded the operator's expectations and customers used it as their preferred communication tool when on holiday abroad. Gabriel Racah, VP of marketing and products at Genband Fring points out that although Bouygues subscribers do not have to pay extra to send SMS through the application, the operator gains revenues from subscription to a premium package.
He says that the service can now be accessed in France as well. Genband Fring is also in the pre-launch phase of a service with India's Airtel, but did not confirm what this would entail. Racah says that the company is working on several deals that will soon be
announced, while more are being negotiated with both service providers and enterprises. He adds that Genband Fring will soon launch a service that intelligently select the optimum channel for communication according to network and application availability.
"The massive adoption of IP messaging is not only having an impact on the volume of SMS sent, but on their perceived value, as users are no longer willing to pay per-message charges," says Racah. But he points out at the same time that the company is helping operators re-exert control over the market and significantly enhance their offerings. "Bear in mind that what we are doing is
bringing IP applications back into the carrier capability," he says.
The health sector is another vertical that lends itself to a broad array of SMS applications, in areas such as appointment confirmations and alerts, prescription reminders and follow-up services with patients.
Retail and hospitality
Retailers and providers of hospitality services are also seeking to make the most of the SMS opportunity, with some companies springing up that even centre a significant part of their model on the text service.
Qudini is a UK company that operates a queue- and appointment-management system aimed at reducing waiting times and queue sizes for businesses such as general retailers, restaurants and healthcare establishments, allowing them to communicate with customers via SMS to inform them when they are next to be seen in a virtual queue or when their table is ready.
The service runs on a cloud-based web app, but Fraser Hardy, co-founder and CTO at Qudini, says that all communication with the customer is via SMS. He points out that such a service that used other channels would not gain such traction with customers, but they have the option of accessing a more active web page through links on text messages.
Qudini says that the service helps businesses to improve staff efficiency, as well as boosting customer retention, spend and loyalty. Hardy says that the "service is growing as we grow", with the company looking into integrating other services via text message such as special offers. Holiday-villa booking company Vilondo has a very different model. Stefan Russel, co-founder of the company, says that "when using the SMS in combination with email we have registered a higher percentage of our customers responding to our email, which leads to a higher number of bookings".
Vilondo saw a 10% increase in bookings after introducing an SMS notification service, a figure that Russel says has remained more or less constant since then. Major retailers that offer delivery services such as Amazon also stand to gain significant benefits from A2P SMS. By using text messaging, says Thorsten Trapp, co-founder and CTO at Tyntec, "Amazon saves on the logistical costs of repeated delivery".
But these examples only skim the surface of what is possible with A2P SMS, with an inexhaustible list of potential verticals that present business cases, including machine-to-machine (M2M), insurance, energy industries and logistics services. As Alex Duncan, CEO of messaging platform Openmind Networks, says, "the opportunities are almost endless".
Three others to watch...