Dallas Business Journal - Retail Sales Meet Wireless Phones
FINA-Alliance Data-Cellenium joint venture pioneers technology for buying at U.S. retail stores
GREATER METROPLEX -- Two Dallas companies have quietly joined with an Israeli partner to be the first in the United States to offer mobile, wireless transactions using cellphones for retail purchases.
AlonUSA of Dallas, parent of the FINA gas-and-convenience stores, is partnering in the joint venture with Dallas-based Alliance Data Systems and Tel Aviv-based Cellenium.
Their new co-equal partnership, called Cellerate, will be run by a management committee consisting of individuals from each company. Its technology will be tested in FINA stores in Texas in the second half of 2002.
The venture's technology, which will enable consumers to use cellphones to buy gas and vending-machine goods or to order and rent products like videos, works with all existing cellphones and wireless carriers.
The technology has been popular for years in countries like Israel, Japan, Singapore and parts of Europe, but has never been available until now in the United States.
The companies declined to comment on the partnership's financial terms, or to say how much the new system is costing to develop and roll out.
AlonIsrael, the owner of AlonUSA, is a petroleum company that has offered cellphone transactions in Israel via Cellenium since 1999. That makes FINA -- which owns 1,600 gas-convenience outlets mainly in New Mexico and Texas, including 174 in West Texas and more than 200 in the Metroplex -- the natural retailer to implement the technology in the United States, said Jeff D. Morris, president and CEO of AlonUSA.
"The nice thing for us is that this is not research and development," Morris said. "It's already done; it already works; it's already proven."
Alliance Data has the financial platform to operate the transactions, while Cellenium offers the cellular technology and FINA will serve as the new platform's initial merchant.
"Today, there is a mobile kind of purchasing that you can do like Speed Pass or McDonald's Fast Pay or something," Morris said. "But those are `one-off' types of transactions; you have to have some type of device, like a key fob or something, to do the transaction. Through Cellerate, a customer will be able to do all mobile transactions through a cellphone, and the types of transactions are technically unlimited.
"You can buy pizza, fuel or theater tickets and, even more important, you'll be able to integrate those transactions," he said.
Morris is referring to a so-called loyalty program that will be integral to the Cellerate system. After buying gas at a FINA station, for example, a customer will immediately be able to redeem "loyalty points" inside the FINA store for free or reduced-price items.
"Loyalty programs have grown very popular in the United States, and people use them regularly," Morris said. "Through this system, we can integrate loyalty programs through all these transactions, so customers will be able to do all mobile purchases -- sitting in traffic on Interstate 635, say -- and can even buy in advance, which cannot be done with the current technologies."
Preparation of the joint venture has been so low-key, none of the equity analysts contacted by the Dallas Business Journal were aware of it.
Shaul Shalev, president and CEO of Cellenium, said the new system will be "technology agnostic."
That means customers will not need to install any software on their phones to use it and, because it's a wireless system, customers can charge the service to a debit card, a credit card or a telephone bill, having only to designate the method of payment at sign-up.
"The penetration of cellphones abroad has been much higher than the United States. But over here, there has been a very steep penetration over the last couple of years," Shalev said. "In the United States, cellular phones were used until recently only for voice messages. But in Japan, for example, people have used (cellphones for) data applications for years."
In order to develop the system domestically, the wireless transaction can also be voice-activated, Shalev added.
"On top of all the data communication for the U.S. market, we will also add voice-based applications, where you can activate your transaction through a regular voice channel," he said. "You'll order by speaking, rather than through a code."
Cellerate hopes to win consumer acceptance with its convenience, personalized options and immediacy, Shalev said. "It will be personalized so that at the end of the day, the subscriber will feel very comfortable with the new mode of purchase. It will also add a convenience to people's lives."
Michael Beltz, president of transaction services at Alliance Data, said the new system will attract participating merchants because the kinds of goods and services it will offer are the kinds of things that people have to purchase, regardless of the method.
But the technology will also give customers a reason to go to FINA versus another gas station, for instance, creating a new "loyalty opportunity" that some smaller retailers might not otherwise have, Beltz said.
Once the platform has been tested in the pilot program, FINA intends to offer it more widely next year.
"We'll be moving it out to our core market area, which is the Southwest, next year," Morris said. "In our test markets we will incorporate other merchants -- the pizza store, maybe the movie-rental store, the home-improvement store -- so we're hopeful from those merchants that we can extend it beyond our core markets.
"There's quite a few significant merchants, names that people would recognize, that have expressed a high level of interest in participating," he added. "I really believe after we've had this on the ground and customers utilizing it, we will be
able to attract many other large-scale merchants."
Retail sales meet wireless phones
Hala Habal Staff Writer