Appeared In
Special Issue
WWD Collections issue 11/19/2012

Not all screens are created equal—or so says Scott Galloway, New York University professor and cofounder of NYU think tank Luxury Lab, or L2.

Smartphones and tablets are revolutionizing online shopping, especially within the luxury category—but, according to Galloway, it’s important for brands to realize that smartphones and iPads serve different purposes to consumers.

This story first appeared in the November 19, 2012 issue of WWD. Subscribe Today.

Mobile commerce has emerged as the fastest-growing retail channel. But as higher-end brands adopt these practices more aggressively than ever as a way to cater to their consumer, who is increasingly shopping on any number of devices, they should not underestimate the iPad as a significant commerce source.

He cites iPads as having 20 times the conversion rate of smartphones, and explains that 60 percent of searches conducted from a smartphone are done with some sort of local intent, whereas the iPad is more about leisure and shopping. In June, his firm found that watch and jewelry brands constitute 11 percent of all tablet sales—the highest proportion of any industry.

Last month, L2 released its fourth annual Digital IQ Index: Jewelry & Watches, ranking 47 prestige brands according to their online competence, and of those ranked, 43 percent have mobile-optimized sites, up from 23 percent last year. In light of this group having the highest sales rate from tablets, 15 brands in the study, or nearly a third, have customized iPad mobile sites (a 16 percent increase from last year). For these luxury brands, it’s clear there is more focus on the iPad than the iPhone.

He points out that high-ticket, more-informed purchases that appeal to men—a $5,000 watch, for example—do especially well with respect to the iPad.

“Smartphone usage peaks during work hours and iPad peaks at evening hours. It’s a little bit dangerous to lump iPads and smartphones into one general category,” Galloway warns. “The lure of retail margins and the explosion of iPads may set off an e-commerce arms race in the watch and jewelry industry.”

Tiffany & Co. nabbed the top spot in the index. According to the study, its e-commerce mobile site was one of the highest-scoring of the year—and L2 still refers to the brand’s Engagement Ring Finder app, released in June 2010, as an “industry hallmark.” Additionally, a partnership with the Weather Channel’s mobile app in September featured targeted banner ads from the jeweler to direct shoppers to Tiffany’s new shop in New York’s SoHo, with geo-local ads letting consumers know how far they are from the store.

De Beers was one of the biggest winners in this year’s study, jumping 34 percent in the ranking, due in part to the launch of its bridal mobile app that has vast customization options.

Galloway also believes that the tablet may serve as a transformative device when it comes to in-store behavior. He believes iPads are helping facilitate purchases for consumers at the brick-and-mortar level.
“The velvet security guard and steel cases of a retail store are intimidating to a lot of people, so many would rather buy online than interact in-store with an associate,” Galloway says. “We’re going from high-touch luxury—dealing with a thoughtful, educational consultant—to a new generation of luxury consumers that would rather deal with technology.”

Additionally, L2 released its fourth Digital IQ Index for fashion brands spanning all categories, with mobile compatibility, optimization and marketing comprising 20 percent of the overall rankings. He calls Sephora the “mobile-commerce benchmark,” and also lists Ralph Lauren and Tory Burch as excelling in the space.

Galloway says smartphones are becoming a force to be reckoned with for the industry, noting that 25 percent of online searches relating to fashion brands come from a mobile device.

“We just wouldn’t have predicted that [number] a year ago. If it keeps growing this way, in 24 to 36 months, the majority of fashion searches will come from mobile. The little screen is becoming the primary looking glass through which people interact with brands.”

On Oct. 24, Facebook’s stock jumped to its highest level since July—due in part to the platform’s advances in mobile.

During an earnings call that week, chief executive officer Mark Zuckerberg projected Facebook will monetize better from mobile than desktop—eventually. He said the platform reaches 600 million users via mobile device—up from 376 million in 2011—and in the six months since bolstering its mobile ad business, 14 percent of Facebook’s ad revenue comes from mobile.

Other research continues to support mobile’s rapid growth. According to ComScore, smartphones on competing platforms now outnumber feature phones for the first time in the U.S. Some 40 percent of homes have three or more devices—besides PCs and TVs—and one in eight page views online occurs on a smartphone or a tablet, a statistic that’s doubled since last year. One in 10 U.S. e-commerce dollars is spent on a mobile device.

And the phenomenon has caught fire globally. Late last month, Visa partnered with TNS, a market research provider, on its e-commerce Consumer Monitor Research 2012 study, which found that consumers in Asia, Russia and Africa are using mobile devices and tablets more than ever. Of the 8,000 18- to 55-year-olds surveyed from the three regions, the study revealed that in a mature market like Hong Kong, 13 percent of online purchases were conducted on a smartphone and 11 percent on a tablet.

With the holiday shopping season creeping up, data from the National Retail Federation shows that mobile shopping will continue to constitute a large portion of the consumer holiday shopping experience. Besides transacting sales, 52.9 percent of smartphone owners and 64.1 percent of tablet owners intend to use their respective devices to research gifts, decor and even food items. Nearly 33 percent of consumers with a smartphone will research and compare prices, and almost 20 percent will use apps to do the same. The projected result is that 15 percent will make a purchase. Mirroring Galloway’s sentiments, the survey also revealed that tablet owners are more likely to use their tablet in making these purchases.