In its second-largest acquisition, Amazon buys the company for $970 million.
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A consumer looking at TVs in a Target store, for instance, can quickly access ratings and reviews, and see what other models are available online, Eastman says. “That is incredibly powerful, and not something we’re having to force upon our guests, because when you walk stores today you see guests doing this already. This is very compelling for us as we create our evolving cross-channel experience.”
Many shoppers are using mobile phones this way. 25% of U.S. consumers with mobile phones are likely or very likely to use their devices to compare prices among retailers while in a store, according to a 2009 Gartner Inc. study. But this can represent a threat to bricks-and-mortar retailers, because that shopper looking at TVs in Target can just as easily browse the selection at Walmart.com or Buy.com as at Target.com.
In fact, web-only retailers see a big opportunity in the mobile channel.
“The Buy.com mobile site gives us an opportunity to reach shoppers in the offline world,” says Jeff Wisot, vice president of marketing at Buy.com, an e-retailer of consumer electronics and general merchandise. “For example, a shopper is in the aisle of a bricks-and-mortar store and can’t decide between brand X and brand Y and customer service is nowhere to be found. He can simply use his phone to go onto our mobile site for some quick product research, price comparisons, and intelligence on whether or not the store offer is competitive.”
Amazon.com, which operates an m-commerce site and app and text message marketing and selling program, also points to mobile as the way Amazon can reach shoppers wherever they are, not just when they’re at their PCs.
“Having mobile apps and web sites that enable our users to quickly and easily find and buy what they are looking for, or check prices while on the go, is just another example of how we’re offering customers a convenient way to shop,” says Sam Hall, director of Amazon Mobile.
Patrick Byrne, CEO of Overstock.com, says web-only merchants have lower costs and can offer lower prices than retail chains—and the mobile Internet extends that advantage. “If our purpose is to help consumers save money, having Overstock.com available on mobile allows them to compare prices while standing in the aisles of bricks-and-mortar stores,” he says.
The competition for the business of in-store shoppers is a big part of what’s driving mobile commerce this holiday season.
The Finish Line USA Inc., for example, has designed its m-commerce site to prominently present product reviews, as it deems reviews a critical mobile tool for in-store shopping, says Roger Underwood, senior vice president of e-commerce at Finish Line, which built its site with Unbound Commerce. The ability to check in-store product availability is coming next, he says.
The retail chain has seen mobile catch on quickly among consumers: the percentage of traffic to its web site from mobile devices grew from 2.5% in September 2009 to 4.5% in January 2010, a month before it launched its m-commerce site. Today mobile traffic is at 12%—a whopping 380% growth year over year.
Research and consulting firm Deloitte says in a new study that this holiday season mobile phones will increasingly influence in-store shopping behavior, particularly as consumers’ use of phones to research and comparison shop continues to grow significantly, from single digits last winter to 29% in July.
“The uptake of mobile phones has been across the demographic spectrum,” says Alison Paul, Deloitte’s retail practice head. “That says to us that smartphones are the new PC and retailers need to do a lot more electronically to break through the clutter and deliver a message to a consumer.”
That growth underscores the potential for mobile to shift market share this holiday season. Merchants are keeping their m-commerce holiday strategies close to the vest, but they say m-commerce will be key to retailing online and in-store.
“People will see some innovative new things in our holiday marketing strategy, where we will leverage mobile with other aspects of our marketing to create a more immersive experience,” says Eastman of Target.com. “It will be very unusual. Innovation on the mobile platform is exciting to our marketing teams.”
Mobile commerce is a vital part of the strategic plan for this holiday season, adds Dupuis of youth-oriented American Eagle Outfitters.
“We’ve recently launched new functionality that enables our customers to manage their account profiles and loyalty program information. And we will continue to roll out functionality that allows our customers to conduct everything from information transactions to finding out the latest about our products going into the holidays,” he says. “We believe mobile is critical, and that our kids are looking for instant access to everything we offer, and we need to make sure our mobile site is there how and when they need it.”
Android begins to challenge iPhone’s dominance
The mobile revolution was born with Apple Inc.’s iPhone in 2007, prompting a wave of smartphone imitators. But Apple’s dominance is eroding, which is important for retailers deciding which phones to prioritize as they develop mobile apps.
Sales of smartphones using the Android operating system skyrocketed in the second quarter of 2010, grabbing 34.1% of market share, up from 3.9% in Q2 2009, according to technology research and advisory firm Gartner Inc. Android’s two main competitors, BlackBerry and Apple, lost share. BlackBerry went from 52.5% in Q2 2009 to 33.3% in Q2 2010, and Apple decreased from 25.4% to 22.2%. (However, Apple sold millions of its new iPhone 4 when it debuted early in the third quarter, so its third quarter share may increase.)
Gartner’s numbers reflect sales by manufacturers, for instance to mobile phone carriers or retailers, not sales to consumers. But The Nielsen Co. does ask 75,000 consumers each quarter which smartphone they use, and again there are signs of gains for the Android software developed by Google Inc.
Nielsen says BlackBerry’s share dropped to 35% in Q2 2010 from 37% in Q2 2009, Apple’s jumped to 28% from 21%, and Android’s shot up to 13% from 2%.
Android has quickly emerged as a serious contender. And the flooding of Android phones to the market that Gartner documents means Android will be an increasingly important platform for retailers.