Best Buy, Amazon.com Try to Reach Shoppers Through Their Phones

Best Buy Co., the world’s largest consumer-electronics retailer, doesn’t just want you to buy mobile phones this holiday season. It wants you to use the devices to shop for the rest of your gifts.

Best Buy, Home Depot Inc. and Amazon.com Inc. are among the retailers ramping up efforts to let shoppers scan bar codes, get discounts and find product information on their phones.

The idea is to boost sales by making it easier for consumers to compare prices, read product reviews and make impulse purchases wherever they are -- even in a rival’s store. Buying via mobile phones is set to triple to $3 billion in the U.S. this year and reach $6 billion next year, according to market research firm Aite Group LLC in Boston.

“Mobile represents an enormous opportunity for retailers,” said Dave Sikora, chief executive officer at Digby, an Austin, Texas-based company that helps retailers with their mobile strategies. “In 2008 and 2009, mobile started out as a science project. It’s accelerated so fast that it’s becoming more mission-critical for retailers to deliver a mobile experience in a professional way.”

Shoppers using smartphones will account for at least $127 billion, or 28 percent, of the $447 billion the National Retail Federation predicts consumers will spend this holiday season, according to IDC Retail Insights.

Photographer: David Paul Morris/Bloomberg

Shoppers using smartphones will account for at least 28 percent of the $447 billion the National Retail Federation predicts consumers will spend this holiday season, according to IDC Retail Insights. Close

Shoppers using smartphones will account for at least 28 percent of the $447 billion the... Read More

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Photographer: David Paul Morris/Bloomberg

Shoppers using smartphones will account for at least 28 percent of the $447 billion the National Retail Federation predicts consumers will spend this holiday season, according to IDC Retail Insights.

M-Commerce

Mobile commerce, known as m-commerce, may gain market share faster than traditional online retailing, said Mary Meeker, a partner at Menlo Park, California-based venture capital firm Kleiner Perkins Caufield & Byers. Meeker is best known for predicting the rise of e-commerce while an analyst at Morgan Stanley.

Promotions on mobile phones encourage impulse purchases, and knowing the specific location of shoppers lets merchants deliver coupons and offers to users when they’re most likely to spend. That may be a boon for retailers, she said.

“Mobile is going to be transformative in terms of how consumers interact and have access to almost everything,” said John Thompson, general manager of BestBuy.com, the Richfield, Minnesota-based company’s online division. “We anticipate this continuing to grow, just as we expect our smartphone business to continue to grow.”

Mobile-application companies, such as Barcode Hero and Fashism, also stand to benefit. They focus on helping shoppers make purchase decisions through reviews and social networking. Product search engine TheFind.com released a shopping app last month that generates an ad for Best Buy when a consumer scans electronics products in rival stores.

Video Demonstrations

Golfsmith International Holdings Inc. introduced a mobile app this year that shows video demonstrations of golf clubs and advertises sales on tennis and golf gear. Home Depot’s app lets shoppers calculate how much paint is needed to freshen a room.

Even with the uptake in mobile apps, the U.S. is playing catch-up to Asia and Europe, where paying for items with phones is more widespread. About 8 percent of consumers in the U.S. have bought something with a phone. That compares with 32 percent in Taiwan, which tops the list of major industrialized countries, according to IE Market Research Corp. Finland was No. 1 in Europe, at 13 percent.

Mobile shopping isn’t always as smooth an experience as with a regular Web browser. The top 15 retailers’ mobile sites, which include Amazon, Best Buy and Dell Inc., run slower, crash more often and are less consistent than their regular sites, according to Gomez, a research firm that measures the performance of websites.

Blast From the Past

“Mobile websites are reminiscent of where the overall Web was 10 years ago, performance-wise,” said Matt Poepsel, a vice president at Gomez, part of Detroit-based Compuware Corp.

U.S. companies have made strides in creating ways for consumers to pay by mobile phone, particularly since Apple Inc. introduced the iPhone in 2007, said Paul Jacobs, CEO of Qualcomm Inc., the biggest producer of chips for wireless handsets.

“The phone is going to be the payment mechanism of the future,” Jacobs said in an interview last month. “You’ll probably just scan whatever thing it was that you’re buying. It will cause the checkout to happen. It will cause the security to happen, so that when you walk out of the door it won’t ring the bell.”

Almost 60 percent of mobile consumers expect to use their phones to help with shopping plans and holiday celebrations this season, according to the Mobile Marketing Association, a New York-based trade organization.

“You’re going to see folks completing a lot more transactions on their device, wherever they are,” said Digby’s Sikora. “It’s incumbent on the retailer to develop a great experience once the consumer gets in the door.”

To contact the reporter on this story: Joseph Galante in San Francisco at jgalante3@bloomberg.net

To contact the editor responsible for this story: Tom Giles at tgiles5@bloomberg.net

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