12/06/2011 04:12 pm ET | Updated Feb 05, 2012

Mobile Commerce Brings the Online Offline

Retailers and manufacturers are pondering whether, in a world of augmented shopping via mobile
devices, we will see a shift away from traditional eCommerce. To help answer this question, I spoke
with a diverse and comprehensive list of retail executives, mobile entrepreneurs, and financiers,
including those at a recent conference at Stanford University titled "Beyond Bricks & Clicks: Smart
Phones & Smart Shopping." The evidence shows that mobile commerce is arming consumers with a
personal shopping assistant and offering new forms of customer rewards, while also providing retailers
and manufacturers with valuable digital advertising. As a result, mobile commerce is taking a growing
share of online transactions and, more profoundly, enhancing brick-and-mortar retail by compelling
consumers to return to stores and interact with them in new ways.

Experts predict that U.S. mobile shopping sales volume will reach $9 billion in 2011, compared with
$2.4 billion in 2010 and $1.2 billion in 2009, with as many as 74 million U.S. consumers contributing,
according to a 2011 InMobi study. But the real story is that mobile apps are making it convenient and
fun to shop in stores. About half of U.S. consumers have used a smartphone to get product information
while in a store, according to Briabe Media. Lightspeed Research found half of U.S. consumers also
believe mobile makes the shopping experience more enjoyable. For a recent report, "How Mobile
Technology is Transforming the Retail Shopping Environment
," I interviewed countless decision makers
across the retail landscape. As the head of Multichannel Marketing at a leading big box retailer
explained, "Mobile is still largely a shopping aid for the customer. It isn't necessarily a sales channel.
We're really focused on mobile in support of sales in the store."

Most major retailers now have an app to help shoppers find their stores, and once there, to better
find products, learn more about them, and increase basket size. For example, BestBuy has its own
app and is exploring mobile purchasing in its stores so that customers do not have to go to a check-out line. Ben Hedrington, Director of Web Strategy at BestBuy said, "I believe the future of online is
offline. Our challenge, in today's age of information at your fingertips, is making the experience in
the store compelling enough for people to buy here. We have the expertise, and time is the limiting
factor for most people." Marrying the online experience with the tactile and visual in-store experience,
combined with the ability to take the product home with you, is the key to utilizing the potential of
mobile commerce. And it is during the course of this shopping experience that consumers are open to
innovative forms of advertising and branding, which can lead to immediate sales conversion.

Shopsavvy is a leading price and feature comparison app that delivers ads from brands to promote the

product consumers are researching. By providing the shopper with a valuable service, mobile creates
new opportunities for advertisers to reach that shopper in the store and at the moment purchase
decisions are made. Matt Weathers, VP of Product at Shopsavvy explained, "Advertising changes on
mobile. For (CPG) manufacturers, there is an opportunity to provide the customer [who just scanned or
looked up their product] with rich media to get him to buy your product." With apps like this, in-store
mobile advertising is just taking off. But we are also witnessing innovative ways to get people in the
store in the first place.

In-store conversion rates are much higher than conversion rates for online shopping by an average
magnitude of about thirty to one. Despite this advantage, up to this point there has been no way to
directly connect online advertising to physical foot traffic in stores in the way online advertisers are paid
on a cost-per-click (CPC) basis. Mobile changes that -- it connects the online world with the physical
one. Shopkick is an innovative app that rewards shoppers with redeemable points and deals simply
by setting foot in featured stores. Aaron Emigh, Shopkick's Co-Founder and CTO explained that "the
fastest growing category in retail is actually not eCommerce; it is offline retail that is influenced by
online activities." Geo-location check-in services have allowed retailers to reward customers for
entering stores, yet are criticized for being imprecise and have realized only modest success.

Shopkick app addresses the issue of precision by using the smartphone's microphone to pick up a signal
transmitted within the store. This process better connects the advertising ability of the online to the
sales conversion prowess of the offline. We may even see new corresponding metrics arise in the vein
of CPC, such as clicks-per-store-visit.

It follows that consumer packaged goods (CPG) manufacturers have an endless world of new
opportunities to target their consumers in the store with the right message. They can provide their
retail partners with richer and more innovative product content, including product descriptions and
videos, which retailers can use to promote products. CPG manufacturers can also tap into customer
reviews to get feedback on their products and inform future launches. "Closing the feedback loop
is very important for manufacturers -- knowing what people are saying about your products is
incredibly valuable," said Bob Borchers, General Partner at Opus Capital. And now CPG manufacturers
can also go direct-to-customer with their own apps. For example, faced with declining hair care
category performance, P&G this summer launched My Beauty Adviser app, which helps users with
the 'overwhelming' task of shopping for beauty products by offering how-to's and beauty news. It
features a shopping list and an option to scan product barcodes to bring up reviews and ingredients.
Similarly, Kraft Foods' iFood Assistant app provides recipes, helps create shopping lists, and displays ads,
but it also interacts with and complements Kraft's Meal Planning Solution Center, an in-store kiosk.

A growing number of people are making purchases online with their mobile devices and retailers
must take advantage of this new channel. However, their efforts should not distract them from the
opportunity to harness the power of mobile to enhance brick-and-mortar retail. Mobile apps are
creating new ways for people to shop smarter, bringing the online offline to transform the retail
experience and entice people back to stores. As the adoption of tablet computers like the iPad
increases, the line between eCommerce and mCommerce will blur even further. We are witnessing
online commerce evolve to bridge the gap with brick-and-mortar retail, and stakeholders along all points
of the value chain should be loath to miss out on the opportunities this new dynamic is creating.

This article was originally published on