Mobile Commerce Gains Momentum

Macy’s plans to enter the m-commerce arena this year with an iPhone app, and already four million consumers have downloaded eBay’s version.

LAS VEGAS — Mobile commerce is heating up as retailers gamble on the small, but growing, online channel.

This story first appeared in the October 14, 2009 issue of WWD.  Subscribe Today.

Macy’s plans to enter the m-commerce arena this year with an iPhone app.

“It will be one of the most advanced iPhone apps offered by any retailer,” said Terry J. Lundgren, president and chief executive officer of Macy’s Inc. during a keynote at the Shop.org Annual Summit here late last month. “The amount of e-commerce done by mobile phones is growing quickly and is expected to triple over the next few years. We are moving fast to anticipate and capitalize on this opportunity.”

Other apparel and beauty companies offering mobile commerce include Polo Ralph Lauren, Gilt Groupe, Tommy Hilfiger, Urban Outfitters, Yoox, Victoria’s Secret, CVS, Rue La La, Sears, Amazon, eBay, Etsy and Net-a-porter.

Lundgren did not estimate what share of the company’s online sales could migrate to mobile devices, but he did say Macy’s and Bloomingdale’s direct-to-consumer sales are up 13 percent over last year and will exceed $1 billion for the first time this year; Macy’s initially expected to reach that sales milestone in 2008 before the banking crisis hit.

Macy’s has spent some $300 million on e-commerce infrastructure over the past few years, he said, while acknowledging the company’s progress with multichannel integration is only beginning. To help bolster its multichannel efforts and better understand customers, Macy’s teamed up with Dunnhumby, the consumer insights research firm that helped U.K. supermarket giant Tesco with its successful card-based loyalty programs. Macy’s has been quiet about the partnership, but Lundgren shared a few recent findings on its customers.

Analysis of buying behavior shows Macy’s customers who shop both online and in-store spend double that of the store-only shopper. And every dollar spent on macys.com influences an additional $5.77 spent in stores within 10 days. Further, online shoppers who use the “Finder” fit guide convert to buyers three times more often than shoppers who don’t use that feature.

Lundgren said Macy’s is also diving into social networking and the company’s Facebook page launched two months ago has attracted 75,000 fans thus far.

Though retailers are moving forward on social networking initiatives, most are still struggling to understand and monetize that channel, said Forrester Research vice president Sucharita Mulpuru during her Shop.org keynote. Half of U.S. companies pursuing social networking strategies today are doing so only because there is tremendous “buzz” about it; 66 percent said the return on investment is unclear.

Mulpuru advised retailers to “like social…but love mobile.” And, it’s clear they do love their mobile devices.

EBay president and ceo John Donahoe said mobile commerce continues to grow on the auction site (which also owns online payment company PayPal). So far, four million consumers have downloaded eBay’s iPhone app. The company has done more than $380 million in sales volume over it. Though he described the software as “kludgy,” its cumbersome nature didn’t stop one shopper from buying a $350,000 Lamborghini or another from buying a $150,000 boat over eBay via the iPhone.


Although Apple iPhones have a small share of the smartphone market (about 8 percent, he estimated), Donahoe said iPhones have a disproportionately large share (about 40 percent) of Internet access via mobile devices.

“We see this having a powerful impact on commerce and payments,” he said.

Drugstore.com chairman and ceo Dawn Lepore acknowledged mobile commerce will be “huge,” but the company is starting small in that channel. “We are not going to run out and assume all consumers will move their purchases to mobile,” she said during her keynote.

A more compelling trend, Lepore said, is how shoppers today refuse to be categorized in traditional buckets like “value shopper” or “prestige shopper.” Drugstore.com shoppers are trading up on some items and down on others. A typical online order might include a $95 facial peel, special offer Pampers and a buy-one-get-one-free Maybelline mascara, she said.

“Even in an uncertain economy, the world of prestige and the world of mass beauty seem to fit very nicely in the same basket,” Lepore said. “The question for all of us is: Are these changes temporary, or are we seeing signs of a deeper secular change in consumer attitudes? The truth is, we don’t know yet.”

Another area to watch, Lepore said, is what she termed “Promos Gone Wild,” driven by the proliferation of coupon Web sites and zealous bargain hunters sharing tips on getting great deals via social networking. At Drugstore.com, coupon redemption jumped 198 percent during the first half, even though the site itself only offered 26 percent more coupons. Drugstore.com has since begun offering coupons via Twitter.

Consumers’ shopping behavior continues to be a challenge to analyze as they grapple with spending realities in a tough economy. At Drugstore.com, sleep aides are up 22 percent, a sure indication that the ambiguity will remain a while.