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Big in Digital for 2013

Mobile commerce is primed to dominate the digital space over the next 12 months.

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NEW YORK — This year is all about becoming more mobile.

This story first appeared in the January 7, 2013 issue of WWD.  Subscribe Today.

Mobile commerce is primed to dominate the digital space over the next 12 months. Also expected in the year ahead is a rapid adoption of localizing (as well as hyper-localizing) shopping, capturing data and personalizing the online experience platform-wide. Otherwise, many of the other trends predicted to reign in 2013 are an extension — and a further implementation — of current digital concepts that have yet to widely infiltrate the industry. They include:

• Mobile ads and “native advertising.”

• A further embracing of the omnichannel experience.

• Social commerce.

• Merging in-store and online.

• Increased video content.

• Back to basics, with a focus on customer service online.

Online shopping is already responsible for shifting the retail calendar, disrupting the traditional holiday shopping cycle as the number of consumers buying online grows exponentially. The more widespread use of broadband Internet connections, combined with smartphones and tablets, is allowing shopping to take place earlier than ever — even on Thanksgiving, days before Cyber Monday.

Alan Marks, eBay Inc.’s senior vice president of global communications, said mobile continues to be the catalyst that’s changing not only how retail operates, but how consumers shop. Compared with four years ago, when m-commerce “barely existed,” eBay can now bring its vast selection (home to 105 million active users) to consumers anywhere, anytime they want. E-commerce is no longer just a largely search-based, desktop experience on Web sites.

 

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In the past two years, eBay has seen the number of sales conducted on a mobile device increase fivefold to $10 billion from $2 billion. The Web site made a big bet on mobile early, launching its first app in 2008 — the day Apple’s app store opened.

“It’s not just about the technology or the device. It’s about the behavior that mobile commerce enables for consumers. It’s what makes shopping fun and enjoyable,” Marks said. “This holiday, you saw a real fundamental shift in behavior. It’s been building for a couple of years now, but it’s the proverbial tipping point.”

For him, mobile has enabled a blending of offline and online commerce that’s resulted in fundamental shifts in how retailers engage with shoppers, as well as how innovative retailers are approaching the way they grow their businesses.

“That ability to create shoppable, inspirational moments anytime, anywhere is a huge change. There couldn’t be a bigger paradigm shift in how people shop and how commerce will operate going forward. We never saw something grow this fast,” Marks said, adding that he would be hard-pressed to find another innovation in commerce or retail history that’s created this massive shift on such a large scale.

Traditionally, retail was based on local foot traffic and drawn from a defined local geographic area, but Marks said mobile is able to break down those barriers whether users find a product they want that’s down the street, from an eBay seller in the same city or from a seller living on another continent. With the launch of eBay Now last summer, the company is leveraging its technology and its ability to facilitate same-day shipping in as little as one hour from hundreds of retailers. The service launched in San Francisco and in November in New York City, and, in addition to providing seamless mobile shopping, it merges the digital and brick-and-mortar experiences.

David Duplantis, Coach Inc.’s executive vice president of global Web and digital media, also projects that there will be “exponential leaps” in mobile and tablet engagement this year, and taking advantage of the marketing opportunities available on these devices will remain a key strategy for the company. Video is another category that will grow in importance for Coach, Duplantis said, citing an increase in bloggers and online influencers looking to video as the medium to spread their message.

Tory Burch chief marketing officer Miki Berardelli echoed Duplantis.

“We anticipate significant continued growth in sales influenced by mobile, both online and in our stores,” Berardelli said.

The brand’s mobile traffic increased by 70 percent this holiday and mobile sales volume grew by more than 35 percent. “We are encouraged by the results of our mobile app, Tory Daily, both in terms of strong sales, downloads and 80 percent of users coming back on a regular basis,” she said.

CreatetheGroup chief executive officer James Gardner said although there is widespread acknowledgment of mobile’s impact, brands still aren’t allocating significant budgets to the category — something that he expects to change this year.

Citing data that projects 2015 will be the year that mobile will surpass desktop usage, Gardner believes this will occur sooner, accelerating to perhaps as early as 2014 due to ongoing device manufacturing in the smartphone and tablet markets.

“Mobile commerce is the first priority — it’s all about making it quick and easy to shop on devices with an optimized experience,” Gardner said.

His firm’s research has found a more than 150 percent increase in tablet transactions for 2012, year-over-year. He noted that only 3 percent of tablet transactions thus far have come from Android-based devices, but he’s seeing a high growth rate in this area and expects the operating system to becoming increasingly important in driving more direct sales.

Mobile advertising and platforms adopting a “native” marketing approach for smartphones and tablets are also expected to undergo a surge this year.

According to eMarketer, as the amount of clicks from smartphones and tablets from consumers continues to increase, marketers are seeing mobile advertising as more of a priority. According to research conducted by the firm, Facebook, Twitter and Google have begun to see significant growth in mobile ads — due to the implementation of ads that are tightly integrated with the core user experience. The rise of “native advertising,” which includes ads in the newsfeed (for Facebook) or in promoted trends (for Twitter), mean that ads can be viewed seamlessly by users no matter what device they are accessing a platform from.

“Developing campaigns and marketing programs for mobile is going to become equally as important as creating them for the desktop [experience],” said Clark Fredricksen, eMarketer’s vice president, communications, who added that Facebook launched native ads in newsfeeds for mobile devices in 2012. In less than one year, Facebook went from having no presence in this sector to becoming the market leader in terms of mobile display advertising. Currently, Facebook represents 18.4 percent of the overall market, while Google, Pandora and Twitter earned 17, 12 and 7.3 percent, respectively.

“The companies that have launched native ad products on Facebook and Twitter have been able to monetize shifting mobile user behavior much more efficiently than companies with more traditional ad delivery that are often hampered by small screen sizes,” Fredricksen explained.

Although mobile will be a tremendous focus for 2013, brands and retailers trying to nail the multichannel experience will remain of paramount importance. Omnichannel is among a few crossover buzzwords from last year, but Macala Wright, a digital strategist who’s worked with Universal Pictures, eBay Fashion, Aldo, Cynthia Rowley and Hotel Shangri-La, has her own take on the topic. Wright said if you boil down all the talk about storytelling and narrative moving into marketing and social — and using that as a layer to connect your omnichannel marketing strategy — you get “connected commerce.” The term takes each of these elements, from leveraging content and conversation to driving e-commerce transactions, both to acquire new customers and appeal to existing ones. Connected commerce takes several factors into account, including balancing social dialogue and content surrounding that conversation, as well as the ability to find retail opportunities.

She’s already seeing a few companies that view technology as a competitive differentiator in excelling in the digital space.

“Retail businesses are under a huge pressure for cost-efficiency, driven by shareholder concerns. It’s not rocket science why they’re looking for other and cheaper channels to promote their products and messages through — hence connected commerce,” Wright said.

Thus far, platform BumeBox, which Wright worked with while handling digital strategy for MAGIC trade shows in Las Vegas last year, was successful in connecting event partners eBay Fashion, Teen Vogue and American Express. In four days, BumeBox was able to amplify each party’s efforts, driving 17 million social media impressions around the MAGIC show and all things happening surrounding it. The event trended on Twitter twice worldwide with the hashtag #magiclv in a 72-hour period. According to Wright, this had a social media dollar value of $292,000.

“Had we bought Twitter ads in order to do that, that is what we would have spent for 17 million impressions. But instead, that’s what we earned through all the activity from the designers, bloggers, media and the attendees of the show,” Wright explained. The project drove awareness from business-to-business professionals, while Teen Vogue and eBay Fashion helped add a consumer dimension, too.

Recently, Wright worked with BumeBox on Aldo’s 40th anniversary campaign, where an aldo40.com microsite was created for the project. The immersive, 40-day experience’s initiatives spanned e-commerce, content, live chats and social that all bled into e-mail and the in-store experience. The site was optimized for mobile devices, working on smartphones and tablets, a critical factor that’s still very much in its infancy. Wright called this a “major problem” because many brands don’t optimize tabs on Facebook and Twitter to fit the mobile environment. “They just leave them as if [everyone] is sitting on a laptop or desktop,” she said.

During this period, Wright said 21.8 million social media impressions were driven through the hashtag #aldo40. The portal was powered by BumeBox and had 132,547 unique visitors and more than 1,830 images processed from Instagram. It also drove 2,900 online transactions as a result of social media activity, resulting in earned social media impressions that equaled $272,500.

In September, BumeBox powered live social experiences for Marc Jacobs, Calvin Klein, Michael Kors, Oscar de la Renta, Rebecca Minkoff, DKNY, Donna Karan and Proenza Schouler, said Jon Fahrner, ceo of BumeBox. Combined, the initiatives had more than one billion social media impressions, and the BumeBox application saw on average 20 times more viewers than those who simultaneously streamed on YouTube. De la Renta’s show had more than 200,000 viewers, and the show trended globally twice — the first time that happened for a designer during New York Fashion Week, Wright added.

Marc Jacobs’ first season live-streaming on the portal was in February for the brand’s Collection and Marc by Marc Jacobs fall runway shows, and the designer did it again in September for both spring collections.

According to the brand, both shows resulted in more than 50,000 visits with more than 15 minutes of average viewing. The average unique live video views for both shows was 13,000, and the events saw more than 90 million social media impressions and 18,000 fully branded Marc Jacobs tweets by fans. There was a 20 percent click-through rate to marcjacobs.com during the show. The company added that it partnered with Twitter for fashion’s first Tweetbox widget on its revamped digital flagship that relaunched in November, and there are Fancy and Svpply share options on product pages that allow consumers to make ad share social discoveries.While Web sites, social media outreach and content creation get more elaborate as technology evolves and brands become more comfortable in the digital world, experts are touting “back to basics” trends — such as a focus on delivering traditional customer service — as integral to digital strategies in 2013.

With respect to customer service online, retailers are very much ahead of their brand and designer counterparts, according to Gardner. For him, Amazon and Zappos set the standard, as well as Net-a-porter and sister Web sites The Outnet and Mr Porter.

De la Renta introduced a live chat and online personal shopper when it relaunched its site late last summer, and Gardner called this “back to basics” online customer service, what luxury is really all about. He cites data collected by his firm that showed a great opportunity lies in brands catching up to retailers in terms of operations excellence. For example, an e-mail inquiry from a consumer to a multibrand retailer gets a response (on average) in one hour, 22 minutes, versus the monobrand sites, where the average response time is 22 hours, 46 minutes.

For Oliver Walsh, founder of Wednesday Agency, whose clients include Aldo, Proenza Schouler, Tory Burch and H&M, this year will also bring a return to customer-centricity.

“In the past, people have talked about caring about the customer and they haven’t really [delivered]. A lot of companies in the next year will put into place initiatives that are genuinely customer-centric. This year will be the time when people start executing this,” Walsh predicted.

He said technology and its ability to deliver a certain level of personalization are a conduit to this back-to-basics approach and called the “mobile-centric customer experience” the microtrend within the macro omnichannel theme. Walsh views being present where your customer is, whether it’s through live chats with sales representatives or responsive mobile sites, as creating a level of experience that was previously impossible.

In the spring, Iras, a joint venture between digital firm King & Partners and creative strategist Basil Farano, will roll out as a service for luxury brands as an iPhone and iPad app to more efficiently drive foot traffic in-store. Consumers can use Iras to follow their favorite brands, while sales associates can use it as a tool to connect to their best customers.

Tony King, founder of King & Partners, clarifies that Iras is not a mass customer relationship management tool, but rather aimed at a consumer who already knows the brand and sales associate. He likened the ability to make an appointment at a store to the Apple Genius Bar, adding that if a salesperson at Phillip Lim, for example, has 30 or 40 favorite clients, he or she can send product recommendations, reserve the items and put them on hold for the consumer, who can use the app to book an appointment.

The service will be free for consumers and works on a monthly subscription base per user for each retailer, King said.

Gary Lombardo, solutions marketing lead at Demandware — the commerce platform with clients like Ugg Australia, Lands’ End, Perry Ellis, Pacific Sunwear, Lancôme, Diane von Furstenberg and Ethan Allen — foresees the convergence of online and offline as the biggest change to hit the retail industry overall. He said this will manifest itself in traditional cash wraps eventually being replaced entirely by mobile points of sale.

Lombardo also thinks the year will bring the arrival of more intelligent and digitally oriented destination-based stores. Instead of physical inventory, these stores will offer more virtual inventory, including “endless aisle” apps that allow consumers to access online inventory that isn’t available in-store. This simultaneously allows for better data tracking.

“Instead of seeing tons of racks, you might see less items. That will free up space in the store to do any number of things,” Lombardo said. For example, Lululemon offers yoga classes in-store, which converts consumers and creates brand loyalists.

Maureen Mullen, director of research and advisory for New York University think tank Luxury Lab, or L2, reinforces the importance of multichannel. In her view, businesses that will drive the greatest returns on e-commerce in the next five years are going to be organizations that really strengthen the connection between their e-commerce sites and the brick-and-mortar retail experience. Nordstrom and Sephora were early adopters of welding online and offline, with the former rolling out same-store inventory check on its Web site in 2010 and the latter introducing a real time inventory check upon a site relaunch last year.

“In a study from earlier this year, the Web site for the first time surpassed the brick-and-mortar store as the channel consumers cited most influenced their purchases,” Mullen said. “The vast majority of purchases are occurring via traditional retail, but often times, the digital platforms — particularly the site — are really influencing some of those purchase decisions.”

Mullen stressed data capture is the key component that companies will need to incorporate into their digital planning. She pointed out that in 2010 the hottest job across retail and luxury was that of a “social media manager,” while in 2013, titles like “data scientist” are likely to emerge in organizations. These positions will fast become some of the most important in terms of driving customer value.

She believes that the use of data will “make or break” businesses in the next five to 10 years, especially the incorporation of data within a multichannel environment. E-commerce allows companies to more seamlessly capture this data.

“The organizations that use that across channels can begin to look at how that customer is tracking across brick-and-mortar and third-party retail, too, and they will have such a tremendous advantage in the marketplace,” Mullen said.

Ranging from loyalty programs to surprising and delighting customers to better target what’s being marketed will be the facets of the organization that drive disproportionate value, Mullen believes, and the consumer data-focused Sephora Beauty Insider program is a good example of this.

“The number-one organization from a data perspective is Amazon, and that is what they do obsessively. Every brand needs to emulate that strategy. It’s how do you make the shopping process more efficient and that’s what great service is. That comes down to use of data,” Mullen continued.

While Amazon.com doesn’t possess any of the traditional customer service elements — no big live chat box, no 1-800 numbers all over the site — the e-tailer does target every aspect of the shopping experience specific to customer preference and operationally fulfills this with two-day delivery. She revealed that Amazon is growing at three times the rate of overall e-commerce domestically, and potentially its mobile commerce growth has the ability to outpace that because of the superior experience offered on the site.

“Any channel growing three times the rate of the market, that’s a huge threat to the entire industry. They are effectively rewriting the retail industry,” Mullen said.

Social commerce will continue to play a key role this year, but the term means more for brands than just being active on Facebook or Twitter. Jon Kubo, chief product officer at social commerce solution 8thBridge, cited the second annual Social Commerce IQ conducted by his firm released last month that looked at the retail leaders that adopted varying successful social strategies in 2012. The emphasis this year will be on e-commerce sites, whereas last year’s study was all about Facebook commerce, or F-commerce, and in the future the most important opportunity in social commerce lies in product curation.

For Kubo, brands that want to be successful in being social with customers must shift the emphasis to what shoppers are interested in and letting the social input around the products offered remain the focus — and then turning that into some form of shoppable activity.

“Social has taken a new turn — it’s not about your friends, it’s about people who have similar interests. Pinterest tracks people that have your same interest, and in that we will understand what people want and they aspire to have,” Kubo told WWD. “I’m not saying that social media and Facebook marketing isn’t a necessary thing, and it serves a purpose, but it serves more as a brand awareness tool on this network.”

Of the 475 companies in the study, 51 percent have “Pin It” buttons on product pages. This is an aggressive number for Kubo, considering that it took two years for Facebook “like” buttons to show up on 64 percent of retailers’ product pages.

The big takeaway for him is a trend that’s been occurring for the past decade: The barriers of traditional gatekeepers of trend and taste are falling — rapidly. With all of the curation and social discovery happening in the digital space, Kubo has witnessed firsthand the blurring of the lines between what was once considered a traditional tastemaker and a Pinterest user with a massive following and distinct point of view.

“The technology of social discovery has fueled people to express what they have a passion for. Instead of concentrating on maintaining this gate of fashion and taste, the number-one thing brands need to do is understand a consistent brand message while leveraging these tastemakers in social curation and influence. That’s the key. The people who figure that out are the people that are going to win. They will have armies of tastemakers curating, and essentially maintaining a consistent brand message across this community,” Kubo explained.

He’s observed that the method for most brands to date is just to moderate the conversation, and this isn’t the way social commerce should be approached. Brands need to decide if they want to be gatekeepers of taste or try and make social part of their DNA.

Fab.com nabbed the top spot in the study, despite the fact that the e-tailer has a relatively small fan base of almost 225,000 people, one quarter the amount of the average Internet Retailer Retail 500 company. Fab.com has over 10 million daily active users worldwide of the site’s social functionality, and all of those people are generating millions of shares that go back to Facebook. The e-tailer also uses traditional Facebook tools to advertise, which only serves to amplify that sharing. It has one expression — “fave” — and anyone can “fave” any item and that gets broadcast on Facebook, and since so many people use an app with this social expression, people are seeing a “faved” item from Fab.com on Facebook frequently, according to Kubo. He added that Fab.com takes these “faved” items and displays them on an activity feed on its digital flagship, and everyone can see socially what items are consumer favorites.

Its process represents a complete paradigm shift, explained Kubo, because instead of companies just starting Facebook pages and not having users engage at more than a brand-awareness level, fans are having that initial discovery on the social network and then being driven back to a digital flagship.

“They get huge conversion off of socially discovered activity feeds. Fab themselves have said that 15 percent of people who go to the feed buy something,” Kubo said, adding that the site socially rewards users for sharing and referring friends. “Social rewards will do well when it has a purpose of either getting a new acquisition or just getting you to express what you’re interested in so the retailer can personalize the site.”

He clarified that in the beginning, rewards will be most concentrated on referral traffic and getting users to try and do something. The more sophisticated companies will convert rewards based on understanding what the users want by getting them to express their “fave,” “want” or “love” because, in the end, that’s more valuable than the referral traffic of another friend.

“The leaders understand that expanding out this interest graph is key to getting better conversion, getting more frequency on the site and personalizing that shopping experience,” Kubo said.

 

 

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