In its second-largest acquisition, Amazon buys the company for $970 million.
Retailers that create mobile apps that balance cool and practical are raking in the cash.
Buy.com Inc. wanted to make its smartphone app stand out in the crowd, so it took what it describes as the most important feature in mobile commerce, search, and made it cool. Super cool. And practical, too.
Shoppers can still search in the app the old-fashioned way, by typing terms into a search box. But that's a slow process on a mobile phone, and one that produces frequent fat-fingered errors. That's why Buy.com integrated voice recognition, bar code scanning and image recognition technologies. They allow a consumer to search by speaking her query into the phone, scanning a bar code, or using the phone's camera to snap a photo of a product that, if the app can recognize it, displays links to that product and similar products.
"Our multiple search capabilities greatly differentiate us from our competitors," says Bernard Luthi, chief marketing officer at Buy.com, a unit of Rakuten Inc. "A lot of it had to do with the initial research and talking to customers, and realizing that people were looking for that convenience." Siri, the dulcet-toned assistant that answers questions from users of Apple Inc.'s iPhone 4S, spurred consumer interest in voice recognition, Luthi says. "We got a jump on the competition by including voice in the app and that sets our app apart."
Super cool and practical doesn't always come cheap. Buy.com declines to reveal the exact figure but says it spent less than $100,000 to create its app, built by in-house staff and mobile technology provider Cybage Software Private Ltd. But Luthi says it's more than made back its investment because 5% of the company's total revenue now comes through the app. Buy.com reached $805 million in sales in 2011, according to Internet Retailer estimates.
For retailers looking to ensure their apps are downloaded and routinely used, one word will keep popping up: cool. Smartphone owners represent the vanguard of mobile commerce and are drawn to apps that offer unique features and functions, mobile experts say. But cool tools also must be useful—technology for technology's sake can lead nowhere.
Retailers at the forefront of smartphone app development study their customers, understand what these shoppers want, and respond to those desires by fashioning apps with intriguing features—everything from image recognition to ring sizing to web cams—that drive purchases and keep shoppers coming back for more.
"The apps that stand out the most are ones where the developers have clearly thought about the consumer, consumer behavior on a mobile device, and what features and functions make sense for those consumers," says Naushad Huda, founder and CEO of mobile app developer Xtopoly. "Identify the things shoppers do the most on your mobile web site if you have one. If not, look at your analytics to see what consumers on mobile devices are trying to accomplish on your desktop site. Your business goals need to be clear-cut from the beginning before you start thinking about what cool features you can put in an app."
Brian Jewell, vice president of marketing at University Co-op, set out a goal early last year of creating an app that University of Texas students and alumni would use on a daily basis. University Co-op operates the campus bookstore at the University of Texas at Austin, four similar stores around the state and an e-commerce site. Jewell and his team dreamed up features designed to entice U.T. partisans to come back, while appealing to their university pride and, in the process, make them want to buy a T-shirt or other Longhorn-related product.
What's going on
The app—iPhone and Android versions have been downloaded nearly 15,000 times—offers two live webcams that show what's happening on the University of Texas campus. "App users love the cams," Jewell says. "The cams keep people coming back to the app."
University Co-op also includes news feeds from university and Austin newspapers and the school's sports blog. The aim is to create one place where consumers come for their U.T. fix. "The feeds are a link to home," Jewell says. "They can read about Austin, U.T. and U.T. sports and hopefully somewhere along the line that little tug on their emotions while reading will drive them to buy a T-shirt."
Driving them into University Co-op stores is another goal, and the retailer has started testing a technology from Digby, its m-commerce platform provider, designed to pinpoint app users and pull them into stores. Dubbed Digby Localpoint, the system uses geofencing technology to send app users near a store a special in-store offer just for them. The consumer must first agree to allow the app to use the smartphone's GPS location information; if she does, she receives a message and alert tone when she is near a store.
Jewell's first offer was for 40% off one regular-priced item purchased in a store. The offer was sent in July and results have yet to be finalized. App users also can check their Offer Wallet within the app to access all mobile-exclusive deals. Jewell may also send notifications with news and information.
"Location-based offers and the app in general acknowledge the consumer's lifestyle," Jewell says. "Their lives revolve around their smartphones. They are doing practically everything on a smartphone. What we are saying through our app is we get your lifestyle, and we will reward you to continue the Co-op's small portion of your smartphone lifestyle."
Jewell says the app cost in the low five figures. 20% of all web traffic comes through the app. While he declines to give exact figures, he describes the return on investment as "frighteningly positive. The future is coming faster, not slower."
Indeed, the future seems to have arrived at Jewelry Television, which sells through its TV channel and online. Its smartphone app has been downloaded 200,000 times and 18% of total web traffic goes through the app.