Instant Messaging: Good for E-Commerce?

Instant messaging offers fast, convenient communication and expands the possibilities for customer service. Now, if only everyone could agree on a standard.

There's an unfortunate tendency to dismiss instant messaging (IM) as a simple conversational gimmick that's primarily useful for chatting with friends over the Internet. But IM can be a valuable business tool, especially in e-commerce. In fact, for a Web-based e-commerce environment, IM may be the best and most natural way for a company to provide direct, real-time service to a site visitor who has a question, is lost or has special needs. It adds a flexible, comforting human touch to an otherwise automated process.

IGo Corp. in Reno, Nev., relies on IM to help its customers buy wireless phone and mobile computing accessories such as batteries, adapters and rechargers. IGo President and CEO Ken Hawk says that typical Web site shoppers may very often be in hotel rooms with a single phone line or may have left their cell phones or computer manuals behind and need expert help to determine exactly which battery or recharger they need. IM helps accomplish that.

Customers can click on a Live Help button on iGo's Web page, which brings up a JavaScript applet that allows the user to type in his question to initiate the IM session. IGo's customer service representatives use the system to type responses and even to send customers the Web pages that show the specific devices they need, via a rudimentary push technology. Help arrives "in band," meaning customers don't have to disconnect from the Internet to make a separate phone call.

Wilmington, Del.-based, a division of First Bank USA NA, was founded last year to offer banking and investment services over the Web. Terrence Ransford, president and chief operating officer at Wingspan Investment Services Inc., says all but two pages of his firm's Web site offer IM links to investment specialists via Foster City, Calif.-based FaceTime Communications Inc.'s Instant Customer product.

Shifting Focus to the Customer

Ransford's research shows that 70% of Wingspan's customers don't have a second phone line within arm's reach of a home computer. He says he feels that IM makes it easier for customers to use the Web site to complete their transactions and that the result is much greater customer satisfaction. Like iGo, Wingspan Investment Services uses IM to not only send replies but also to push Web pages and addresses to its customers. Ransford has high praise for IM. "It's helped us migrate from a self-service Web site model to a people-oriented department store model," he says.

Wingspan's customer service staff also has a library of cataloged, templated answers to frequently asked questions that they can drag and drop into an IM window to answer a customer's query.

For security, Wingspan uses Secure Sockets Layer encryption to conceal IM data from prying network eyes. In contrast, most IM data flows unencrypted across the Internet in clear text form. Wingspan's IM software doesn't require a Java applet at each client, unlike some other implementations of IM. Rather, it's based on dynamic HTML. A user can click on a photo of an investment specialist to bring up a secure Common Gateway Interface-scripted window to begin the IM session.

Ransford notes that his company's IM system interoperates with Dulles, Va.-based America Online Inc.'s AOL Instant Messenger (AIM) service, and it can use buddy lists from either AOL or Yahoo Inc. One major difference, he notes, is that AOL's and Yahoo's IM services don't offer any security.

There are many competing IM products and services, some aimed at the general public and others at business users. What characterizes the entire field, however, is an overall lack of interoperability. Microsoft Corp., AOL, Yahoo and other vendors have sparred with one another for almost a year over how IM should work - although, in fact, they've mainly been trying to keep their own customers off their competitors' servers.

To use Microsoft's service, for example, you must have a free Hotmail e-mail account and use the MSN Messenger client application. AOL requires that you sign up for IM service but not for an AOL account. Both Microsoft's and AOL's systems let you maintain a list of people to chat with, but each service works only through its own servers and lets you access only other people who also subscribe to that particular service.

Yahoo has developed its own IM mechanism, Yahoo Messenger. Brian Park, a senior producer with the communications group at Santa Clara, Calif.-based Yahoo, says that although Yahoo Messenger is currently proprietary, the company is looking at the interoperability problem.

FaceTime has an agreement with AOL, so its IM products are fully compatible with AIM.

Yusuf Mehdi, director of marketing for Microsoft's consumer and commerce group, said late last year that Microsoft chooses not to provide Microsoft client software updates that will interoperate with AIM because AIM is insecure. Microsoft has been noticeably silent on the subject since that time, even though IM services are an important part of the company's Exchange 2000 Server.

There's no technical reason why one service couldn't access subscribers to another; in fact, Microsoft's initial IM product could indeed access AIM subscribers - until AOL pulled the plug by blocking Microsoft clients. AOL also recently shut out AT&T Corp.'s I M Here Service, which uses a version of PowWow IM software from Denver-based Tribal Voice and is otherwise interoperable with IM services from Microsoft and Yahoo. PowWow also powers AltaVista Co.'s IM services.

AOL, Microsoft, FaceTime and Yahoo have joined the Internet Engineering Task Force (IETF) working group that's trying to iron out the incompatibilities with the Instant Messaging and Presence Protocol. The group recently finished defining design goals and requirements, but in March, it canceled all future meetings until a complete protocol is submitted.

Although draft protocols are being worked on and one has been submitted, Park says he thinks any standard is still years away. The hurdles, he says, extend far beyond network protocol formats to encompass security and legal issues, among others.

Park says he suspects any initial interoperability between IM clients will take the form of extra software that creates bridges between the different IM network data protocols. He says he sees the IETF eventually proposing a standard that makes IM just another aspect of a Web browser.

The IM Time Line

From an e-commerce perspective, where do customers stand in the IM battle? The answer depends on how many different e-commerce sites they deal with and which IM approach each site has taken.

FaceTime's CEO, Kelly Trammell, looks at the far horizon when he talks about IM interoperability. "IM will follow the path of the early telephone networks, where there were lots of disparate telephone networks that did not interoperate," he says. "When telephone adoption reached critical mass, people demanded interoperability across networks, and telephony standards. The same will happen with IM. As the number of users reaches critical mass in the next one to two years, an IM standard will evolve and be adopted by the major networks."

With the competition between the various IM services, Yellow Freight System Inc. in Overland Park, Kan., chose FaceTime's software, primarily because it's AOL-compatible and AOL has the lion's share of the IM market. The company encourages customers to become AIM users, to add "YellowLive" to their buddy lists and to contact Yellow Freight via the Web.

Paul Marshall, senior director of customer support at Yellow Freight, says that although the company is essentially business-to-business today, he anticipates it will do some retail business in the future. Either way, he says, he believes IM is useful because Yellow Freight wants to be customer-oriented. "We're not sure right now exactly where IM fits in our freight business, but we're adopting it because IM offers yet another channel through which our customers can access Yellow Freight. That's a good thing," he says.

In the future, look not only for IM standards but also for new types of IM, involving voice and video. Microsoft has already made a provision for this in Exchange 2000 Server. Also, IM will expand beyond PCs. "Five years from now, the interface to most cell phones and wireless (personal digital assistants) will include a buddy list," predicts Jerry Michalski, president of Sociate, an industry analysis and consulting firm in San Francisco. "These buddy lists will transform the way people communicate and help them to avoid the necessity of making real-time two-way phone calls to handle simple communications."

Trammell says he's optimistic about IM's future. "For PCs, the IM client will become part of the browser, just like e-mail and news clients were embedded in early browsers," he says. "E-mail will become the off-line channel and secondary to IM, just the same way voice mail and answering machines are secondary to the telephone."

This view is supported by Mobile Insights, a Mountain View, Calif.-based consulting firm for the mobile computing and communications markets. It has predicted that the worldwide market for IM will grow to 175 million users by 2002. As of last summer, according to AOL, AIM and Mirabilis Ltd.'s ICQ (an IM platform acquired by AOL) had a combined base of 63 million users sending more than 750 million messages per day. Nance, a software developer and consultant for 29 years, is the author of Introduction to Networking, 4th Edition (Que, 1997) and Client/Server LAN Programming (Que, 1994). Contact him at

Copyright © 2000 IDG Communications, Inc.

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