May 1, 2012, 12:00 AM

Rich, Unique and Profitable

(Page 2 of 3)

"We're constantly trying new ways to do two things," John says. "First, to expose the user to various sales so they have a clear understanding of the breadth we offer. Second, to display products in a way that is visually appealing and not cluttered. We're constantly trying different templates and different variations to convey both of those messages at the same time. We take advantage of the crispness with which the iPad allows you to display images, while making it very easy to shop."

Gilt's extensive use of high-resolution images could come at a cost: slow speeds. But the merchant uses the caching functionality of an app and tweaks the resolution imagery to overcome this hurdle.

"You have to play with the resolution, you have to weigh how heavy the app is based on all the images that have to load," John says. "We have expertise in-house on the visual side and on the speed and optimization side, and they come together."

Wine.com faces the same speed hurdle and uses similar techniques to ensure rich visuals and speedy performance.

"The way we cache images is getting into the nuts and bolts of how the device handles graphics, and every millisecond counts," Monroe says. "The first thing was the images don't exist in the app when you first get it. There's a physical limit to how big an app can be. When you start, it loads the app with the initial images and then caches images a user views on the device. So the app gets faster every time you use it."

The app team

A variety of people must come together to get the right design, features and speed into an iPad app. It's a team effort that goes beyond the app developers.

Gilt Groupe created a mobile commerce department that includes five engineers, a product lead, a front-end user experience lead, a creative executive and a mobile marketing executive.

"Everyone has a different view, but all are very excited about doing something new and unique," John says. "The team does ongoing usability studies to understand user needs and analyze data to see where customers are going and what categories they're buying from, to help with app navigation and to design the look and feel to match customer needs."

The team requires little help on the back end as the iPad app uses all of the same systems as the e-commerce site, John adds.

At Wine.com, the software team integrated the app with the site's underlying e-commerce systems. On the front end, marketing and merchandising teams were heavily involved.

"The merchandising team works with wineries; the content on the iPad app comes from our merchandisers," Bergsund explains. "Marketing helps when we run a sale on the iPad. We run iPad-exclusive sales on weekends when iPad users can be 20% of our sales. People are pulling out the iPad and sitting on the couch, and marketing tries to match our promotions up with their behavior."

Who builds it?

As is the case with any technology, building an iPad app can be done in-house or with an outside developer. Gilt Groupe chose to keep the iPad app project in-house.

"We definitely prefer building everything internally at Gilt to keep control and consistency of the brand and maintain the knowledge portion because we do understand that mobile—smartphones and tablets—is a big part of our business moving forward," John says. "We wanted to invest internally, betting on that being a big part of the business."

Wine.com employed developer Marshall Monroe Magic, which brought extra resources and capabilities.

"Marshall has a background in Disney theme park design, and we wanted some of that magic combined with the expertise we have in wine and commerce," Bergsund says.

Innovators in the space

Ultimately the magic of a rich iPad app has to pay for itself. It cost Wine.com more than $100,000 to create its iPad app. Bergsund says the merchant is past the break-even point on the app.

"Before the revenue is there you have to consider the traffic and engagement you are doing with your customers and the impact on your brand," he adds. "Even if there is no revenue there is still a lot of value as long as people are using it; it positions us and our wineries and our brands in a great spot as innovators in the space."

Bergsund says the iPad app generated a pleasant surprise: Customers started shopping in new ways.

"Because the iPad is a mobile device, it has extended the days of the week and the hours of the day people are buying wine through us," he says. "The weekend matters a lot more right now, the commuting hours are important. It's nice."

Gilt Groupe spent more than $10,000 to build its app. It says the app has paid for itself, as today 7% of the merchant's total revenue comes from the app.

"The app is driving in new members and is doing very well," John says. "From a revenue standpoint, we are seeing significant increases year over year, and it's accelerating."

Enthusiasm required

John says the iPad app was a great investment for Gilt Groupe. But it's one that requires special care combined with enthusiasm.

"It's relatively easy to build an iPad app, but it takes a lot of work and dedication to optimize it for usability and functionality, and make it fit your brand," John says. "It has to also provide added value to the user. It has to be something that is above and beyond what you are offering in other channels."

Bergsund of Wine.com agrees that an iPad app must offer something new. "You have to use an app to do something that your web site can't do," he says. "To get your app into a customer's hands they have to go through a couple more steps than just typing in your URL. They have to go to the App Store, find it, download it. It better be good, different, have a unique reason to exist above and beyond your regular web site."

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