Meet the new mobile shopper: Smarter phones, savvier spenders

Mobile shopping is growing fast. Will it change the way you shop?

By , Correspondent

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    Todd Horton, founder of Kangogift, demonstrates a cellphone instant gift at Berryline, a yogurt shop in Cambridge, Mass. The service lets consumers buy gifts for friends online and then 'deliver' them by vouchers in cellphone messages. Kangogift is one of a host of mobile shopping and mobile commerce firms that are rewriting expectations for growth in the industry.
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Adam Forrest had no intention of buying anything on Black Friday, the traditional big shopping day that follows Thanksgiving. But when his smart phone buzzed as he lounged around the Long Island, N.Y., home of his future in-laws, he saw an offer he couldn’t refuse: free monogramming and shipping on glasses he had wanted as gifts for the groomsmen in his upcoming wedding.

Tapping on his iPhone, Mr. Forrest bought the glasses. A week later, they were on his doorstep. Forrest is one of the rapidly growing number of mobile shopping fans.

“I’m able to do it while I’m sitting in the front seat of a car and talking to my fiancée about what we want from Pottery Barn,” he says. “I can look online at prices and compare.”

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The on-the-go technology bridges a crucial gap in the shopping experience. Until now, consumers had to choose whether to go to bricks-and-mortar stores or shop online. With mobile shopping, they can do both. In stores, they can compare the price on the store shelf with prices online. Online with a mobile phone, they can find which nearby store has the product available immediately.

“I think the real-time blend of online and stores nearby is inevitable,” writes Scott Dunlap, founder of mobile shopping NearbyNow, in an e-mail. “Online will always compete better on price, nearby stores on service and immediacy. The always-connected consumer gets the best of both worlds.”

David Panarelli, a Web-information architect in Arlington, Va., needed the book “Our Iceberg Is Melting” for a graduate course at Georgetown University earlier this fall. But he didn’t have time to comb through several stores and he couldn’t wait for mail delivery. So he jumped onto Barnes & Noble’s iPhone application, found a store nearby with the title in stock, and bought it online.

Then he went to the gym. In an hour, his phone buzzed. The book was on hold at the local store. Mr. Panarelli could pick it up at his leisure.

While still small, mobile shopping is growing at breakneck speed. This year’s totals have “stunned” Mark Beccue, a senior analyst at market-intelligence firm ABI Research in New York. He originally projected 2009 sales at $550 million; now, he estimates they will hit $1.2 billion before increasing to $2.2 billion in 2010 and $10.7 billion in 2015.

On Cyber Monday, the Monday following Black Friday, mobile payments processed by Web transaction service PayPal jumped 732 percent from last year’s total. In February 2008, there were 150,000 registered .mobi websites (the extension for sites designed for mobile users). By April 2009, there were 1.1 million. (Not all mobile sites carry the .mobi extension.)

That would be frothy growth in any environment. It’s particularly striking after the worst recession in decades. Internationally, the growth potential may be even greater, Mr. Beccue says. Of the 330 million or more Chinese Internet users, half access the Web solely from a mobile device, he points out.

“Particularly in Asia and Europe, e-commerce was not a big deal,” he says. “Now they’ve discovered online shopping. There is exponential growth going on in a five-year forecast on e-commerce.”

New way to connect with customers

It’s not just consumers who are excited by mobile shopping. Cutting-edge merchants are finding they can interact with customers at a local level as never before.

Using the social-media platform Foursquare, for example, mobile shoppers can “check in” to local stores via smart phone in order to check out special discounts. By letting Foursquare’s mobile application know where you are, nearby restaurants, coffee shops, or other venues can offer special discounts, like free Fair-Trade chocolate every fifth check-in at Ten Thousand Villages in Austin, Texas.

New York City-based Foursquare doesn’t stop at the US border, either.

Show an attendant at the Police Museum in Vancouver, British Columbia, that you’ve “checked in” with Foursquare and you and a friend will receive free admission – and 25 percent off in the gift shop.

While the technology is built to lure new customers, it can also strengthen bonds with existing ones. “If you can know in real time when your absolute loyal customers are checking in, how powerful is that?” asks Tristan Walker, vice president of business development at Foursquare. “That’s an opportunity for the venue owner to come out and say, ‘Thanks for coming, we appreciate you, and, oh, are you going to have the chicken again?’ ”

By accruing the most check-ins at Meltdown Comics in Los Angeles, Adam Dorsey picked up the Foursquare designation for a location’s most common patron: “mayor.” It took Mr. Dorsey a couple of visits to “work up the guts to show my iPhone screen to the employee, as it seemed like a ridiculous idea to tell someone that I’m ‘the mayor’ of their business,” he says. Now they honor him with a little bow and the title of “Your Excellency” – not to mention giving him free bags and boards for his comics.

He’s also the “mayor” of Golden Apple Comics, although the slight discount at Meltdown makes him a more regular patron there. “I hope to see more deals like this in the future, and although I could see it leading to cheating in Foursquare just to be the one to get deals, I think it will ultimately increase the enjoyment of Foursquare, get more people using it,” Dorsey writes in an e-mail. “More people means it’ll be a better user experience for me, with more tips, to-dos, and friends.”

Find it online, then buy it locally

Groups like NearbyNow are trying to bring the power of the wider Internet to mobile shopping. The premise of the NearbyNow mobile applications is simple: You pick the product you want and NearbyNow determines which local stores have it in stock.

Looking for bridal wear? Track it down on the Brides application and schedule an appointment at a local store to try on your favorite dresses through the app. Running shoes? The Runner’s World application makes it possible to find which stores have your shoe (in your size and style) in stock within 10 minutes – and to put that shoe on hold with the touch of a button.

“It’s a very personal way to connect to shoppers, and when done right, only connects when shoppers are in the mood to shop,” writes Mr. Dunlap, the CEO of NearbyNow, based in Mountain View, Calif.

Mobile shoppers are 17 times more likely to buy from a nearby store than buy online, says Mark Dixon, vice president of product management at NearbyNow.
At the same time, online retailers are turning their bricks-and-mortar competitors into display cases for their own merchandise, mobile-shopping experts say.

“You’re in Wal-Mart. You see the product you’re looking at cheaper on Amazon,” via a smart phone, says Luke Knowles, cofounder of online coupon distributor Coupon Sherpa, “and you can be physically standing in Wal-Mart and buy something on Amazon.com.”

Not all instantaneous shopping decisions depend on big online retailers.

Kangogift founder Todd Horton hopes to capitalize on the connection between impulse purchases, loyalty to local shops, and the rapidity of online delivery.

Kangogift allows users in the Boston area to purchase gifts from retailers online and then deliver a voucher to the recipients’ phone.

All the recipient has to do is show the Kangogift voucher. In short, buying friends an ice-cream cone or elaborate dinner from a shop along their walk home blends social interaction with Web-based shopping.

Consumers are still skittish, though

Mobile shopping does have its limitations, however.

“Even if I’m comparison shopping across five websites, I don’t know if I’m getting the best price, because there are five more websites and because they are having a sale for three days and their sales price isn’t coming up in my searches.” Panarelli says.

Then there are the usual privacy issues: How much information will consumers give out? Even when consumers surrender their data, clinching a deal through a smart phone still unnerves even some Web-savvy users.

“Nobody I know has bought a TV via phone,” says Dan de Grandpre, editor in chief at online sales aggregator dealnews.com. “For some reason, they couldn’t get over the ledge of buying a large purchase on their phone. They understand that the website is the same website that they would use from their PC, but there is a psychological hurdle still to climb for people not just to comparison shop or find coupons from their phone.”

Companies, too, aren’t yet fully mobilizing their operations, because online sales staff shy away from mobiles’ low overall sales rate and in-store personnel aren’t Web-savvy enough. There’s also the danger that mobile apps will only work with certain smart phones, because writing mobile applications for multiple platforms is expensive and time-consuming, Mr. de Grandpre points out.

But at some point, the technology will prove too convenient to ignore, supporters say.

“I love the way you can bridge the information from the online apps to the real world. For me to take maybe an hour to run errands to go pick things up from stores, that is way more efficient than buying them online and then waiting a week for them to show up,” Panarelli says.

Mobile shoppers are blowing away industry estimates for how fast commerce could migrate to mobile devices. How are you using your smartphone? Let us know on Twitter.

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