Private equity firm Apollo Global Management will take Rackspace private in the all-cash deal.
Retailers with standout tablet apps and sites catch consumers with clever features and smooth designs.
Sephora USA Inc. decided in early 2011 to offer women coming to the beauty products retailer on an iPad tablet computer a shopping platform befitting the device. The strategy behind the resulting iPad app, the retailer says, was to wow iPad shoppers so they would regularly use it.
One of the many features in Sephora's app, the Virtual Mirror (see picture), enables a consumer to load a how-to makeup video into the tablet screen's bottom half. She gathers her cosmetics in front of the tablet and follows the video instructions. How can she tell if she's doing it right? The iPad camera streams a live video of her face on the screen's top half.
"The iPads we have in stores at our Beauty Studios showcase looks you can achieve in 10 minutes—the iPad app is the play-at-home version," says Bridget Dolan, vice president of digital marketing at Sephora.
Today, 40% of Sephora web traffic comes from smartphones and tablets; it declines to report figures for each device. 90% of its tablet traffic stems from iPads. Consumers accessing Sephora with a tablet spend more time with Sephora than customers on desktops or smartphones, and tablet shoppers register the highest average order value among all devices, Sephora says. The e-retailer declines to reveal the number of app downloads but says revenue from the app has been significantly higher than it expected.
Retailers like Sephora are responding to the growing number of consumers who own tablets and use them to shop. U.S. consumers bought 37.9 million tablets in 2012, will buy another 46.6 million this year and 53.2 million next year, Forrester Research Inc. says. By 2015, 105.1 million U.S. consumers will own a tablet, Forrester predicts. That's roughly one in three Americans.
And those consumers shop with tablets, far more than they do from mobile phones. Of the $38.40 billion in mobile sales predicted for 2013, $24.00 billion, or 62.5%, will come from tablets, research firm eMarketer Inc. forecasts.
What's more, tablet users love apps. Apple Inc.'s App Store offers more than 850,000 apps—350,000 for the iPad—and its apps have been downloaded 45 billion times. Google Play, the official store for Android apps, has more than 750,000 apps that have been downloaded more than 25 billion times. Google Inc. doesn't break out the total number of apps for tablets.
To tap into this demand retailers need to create tablet experiences that meet consumers' high expectations, fueled by the entertainment and information sites and apps they visit on their tablets. They seek sleek, cool and efficient designs that make full use of the tablet's functionality. That includes the touchscreen, camera, GPS and accelerometer, the technology that senses when a mobile device is moving.
Retailers that understand mobile consumers are experimenting in their tablet apps and sites, creating things like makeup mirrors, swipe-friendly sections featuring 3-D stores and drag-and-drop shopping carts. But at the same time, a retailer must make sure its tablet presence is easy to use. Sharp tablet sites and apps don't necessarily require an enormous investment. But they may require help from a creative vendor with mobile smarts and a different point of view.
"A well-designed user experience is about the shortest line between two points—where the user is and where the user wants to be," says Andrew Borg, research director, enterprise mobility and collaboration, at technology research firm Aberdeen Group Inc., a Harte-Hanks company. "It needs to provide an efficient workflow, offer a clear presentation of options and be touch-centric. Apps need to be simple, delightful and fun."
While smartphone apps should be bite-sized and task-oriented, tablet sites and apps should be graphically rich and engaging experiences that can draw in a user for 30 minutes, says David Eads, CEO of mobile commerce consulting firm Mobile Strategy Partners LLC.
"The key ingredients for a tablet site or app include making full use of tablets' larger form factor and high-resolution screen," Eads says. "Design should enable quick, task-oriented workflows, but also include longer-form experiences that let users lean back and explore what you have to offer."
Sephora had all these things in mind when creating its tablet app. But when it started work on the app, it didn't realize how important the tablet would become. "The tablet app started out as, 'Wouldn't it be fun if we did this?'" Dolan says. "And somewhere along the line it turned into a real business."
CVS Caremark Corp. already had more than 1 million customers visiting CVS.com via tablets each month when it decided last year to create a dazzling 3-D recreation of a bricks-and-mortar CVS store as an iPad app.
CVS came up with the concept of a 3-D store iPad app based on research it conducted centering on how customers like to shop across channels. Research showed that CVS customers are used to being in a store and increasingly looking to mobile devices to supplement store shopping.
"We asked through research what would be the most intuitive way to shop in a digital realm for a customer used to a physical realm, and the concept of a store tested very well and proved very intuitive to them," says Brian Tilzer, senior vice president and chief digital officer for CVS. "To be able to enter the store on their device and have that as the path to get things done made a lot of sense."
App users browse the 3-D store, touching icons that mark departments and products by category.
"Our mission is to provide incredible customer utility through our mobile programs," Tilzer says. "The objective was to have something really useful while taking advantage of the capabilities of the tablet device, and it evolved in a way that was really cool."