Retailers that create mobile apps that balance cool and practical are raking in the cash.
Bill Siwicki , Managing Editor, Mobile Commerce
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.
The JTV app, built in-house, showcases a live, high-definition feed of the TV channel. That was the top priority in building the app because shoppers are no longer tethered to their living room TVs, says Tim Engle, chief strategy officer at Jewelry Television.
"If you like a JTV show and you want to watch the show while you're waiting in the airport or in line somewhere, you can do that," Engle says. "We show the product, demonstrate the product, talk about it; we didn't want to lose that allure, and that's why live video is an important part of the app. It sets us apart."
JTV's app also includes an educational feature called the Gemopedia, which is divided into seven sections such as Color, Family, A to Z, and Month. This is designed to attract consumers interested in gemstones and give them the confidence to make a purchase.
"We have videos of our buyers around the world buying stones and jewelry," Engle says. "Customers watch videos of buyers in Bangkok purchasing the stones. A more educated customer is more comfortable with purchasing. Next to the high-quality video stream, education was the No. 2 thing we wanted to make sure we did a good job at in the app."
Just the right size
JTV also wanted something cool, and came up with a feature in the app that lets a shopper determine her ring size.
"You can take your ring off, put it on the smartphone screen and size it," Engle says. "That gives the customer a tool to be able to make an order. If they don't know the size they may be hesitant to make an order."
The app cost JTV about $250,000 in staff time. Engle says the company has more than recouped its investment because 15% of its web sales come through the app. JTV reached $101 million in web sales in 2011, according to Internet Retailer estimates.
JTV's commitment to promoting the mobile commerce app has been critical to its success, Engle says. "We took this cool thing and talked about it on-air, sent e-mails about it, put an ad on the web site—we are serious about it," Engle says. "It was not about one guy in I.T., it was a collaborative effort from senior executives down to web development guys. When you have that commitment, you can get our numbers."
Buy.com doesn't have a TV channel like JTV, but it does have a web show: BuyTV. It highlights within its smartphone app an episode library. The idea is to entertain customers while making it easier for those in the mobile realm to learn about products, Luthi says.
"We use BuyTV to differentiate ourselves by having weekly hosted shows as well as tutorials and video descriptions," Luthi says. While easy-to-use search was Buy.com's top priority in building its app, that's not the only thing that makes the app valuable, he says. "It's also about research and content and entertainment, and BuyTV really fits that model of providing a more personal touch to getting information on a product and certainly a more entertaining aspect to shopping. 10% of the people using our app are also watching a video."
While videos keep app users coming back for more, so, too, does a giant countdown clock on the app's home screen, Luthi says. This is an important feature of the app as it pulls consumers into the deals of the day.
"It differentiates us while creating a sense of urgency when you open the app and see the deal and see there is a time limit," Luthi says. "It also creates a desire in the customer to come back tomorrow and see what the new deal is."
Consumers have downloaded the Buy.com app 250,000 times and it accounts for 190,000 monthly unique visitors, the company reports.
The results show the cool and useful features of the Buy.com, Jewelry Television and University Co-op apps bring customers back to the apps for more information, entertainment and shopping. But all three warn other retailers that cool is not always the right choice.
"Don't try to create something that is different from what your customer expects to see," says Engle of JTV. "You need to create a friendliness across channels. If we had not done a live feed in the app that would have been a disconnect from our brand. If we didn't do education, that would have been a disconnect with what we're trying to accomplish."
Luthi of Buy.com agrees, saying it's critical for a retailer to understand its customers and how they behave.
"Whether you are a bricks-and-mortar retailer or a pure-play, you have to understand how that app is going to be used and what information your customer is looking for," Luthi says. "You can build a great app with a lot of bells and whistles that ultimately doesn't get used because it doesn't meet customers' needs."
In short, maintaining a balance between cool and practical is key. Retailers that achieve that balance are reaping handsome dividends from their smartphone apps.