For sellers and buyers, a very app-y holiday

The holiday 2010 shopping season is marked by the move of most retailers, especially gadget sellers, to allow purchasing in their own mobile apps--giving deal seekers the upper hand.

Attention bargain hunters armed with smartphones: you have the upper hand this holiday season.

Thanks to a glut of product comparison mobile apps and the now-standard practice of retailers to offer their own iPhone and Android apps for product purchasing, shoppers have it easier than ever when it comes to getting deals during what is for retailers the most critical time of the year.

This holiday season is shaping up to be the first that mobile shopping has a significant impact on retailers' bottom lines. With well over 50 million smartphones in hand in the U.S., and hundreds of shopping-related mobile applications, people browsing stores have more instantly available information about that GPS device, set-top box, or TV they're shopping for than ever before. They also have the ability to shop any time and any place there's a Wi-Fi or 3G connection.

But while sales via more channels is usually a good thing for those hawking their wares this holiday, it also may be a Catch-22 for retailers who have to face off with their competitors even inside their own stores.

We know mobile apps have been growing like a weed since the launch of Apple's App Store in 2008. And now every major consumer electronics retailer has an iPhone app (and likely an Android app too): Best Buy, Wal-Mart, Amazon, eBay, and more. And the rise of apps that want to help you compare products, get coupons, or offer discounts is well documented: Shopkick, Foursquare, Yelp, TheFind, and of course us here at CNET too.

Thanks to apps like TheFind, you can browse retailers' Web sites, nearby stores, and favorite shopping locations from inside a competitor's store.
Thanks to apps like TheFind, you can browse retailers' Web sites, nearby stores, and favorite shopping locations from inside a competitor's store. Screenshot by Jason Parker/CNET

As a result, the sales derived from people wielding smartphones while shopping this year will be bigger than ever: people looking for gifts with their mobile devices will account for 28 percent of the expected $447 billion consumers will spend between now and the end of the year, according to analyst firm IDC.

What may have started off as an experiment last year for some retailers, is now becoming an integral part of most of their strategies in attracting customers. Wal-Mart, the world's largest retailer by volume, started offering the ability to buy electronics items only via its own app in 2009. This year the retailer has expanded its appeal beyond just techies--now anyone with the app can buy any item Wal-Mart carries through a mobile device.

"We chose to expand our mobile assortment to include all general merchandise based on the increase in customer demand," said Wal-Mart spokesman Ravi Jariwala.

Best Buy, the dominant big box electronics retailer, is being a bit more daring with its mobile offerings this season as well. Besides its own app, it partners with Shopkick, a location check-in app that doles out discounts instead of badges, and Tecca, which is a gadgets-only price comparison app.

"Both Shopkick and Tecca are relatively new, but we've been pleased so far with the adoption rates," said Best Buy spokeswoman Kelly Groehler. "Both are experiments for us, and we're learning and changing variables as we watch the consumer engage with them."

Shoppers wielding smartphones
Research from analyst firm IDC shows that a growing number of people want to shop with their mobile devices.

In a study released this week, IDC found that 10 percent of shoppers, a group described as "hyper-connected, attached to their phone, using their mobile Web browser and onboard applications often and with ease," say they use their mobile devices for all aspects of shopping. That's product research, customer reviews, price comparison, and local availability. In other words, the kind of people who have their mobile device on them at all times.

The same study found that 14 percent of shoppers this holiday say they will at least do some research on shopping list items on their phones while they're out with the hordes of deal hunters this season. The rest of those surveyed (more than half) might use their phone while shopping, or won't at all.

So while it's not everyone with a smartphone that will shop via an app, it's a group that is adding to its ranks. And lest you think this is just the young, Foursquaring-Facebooking crowd doing this, well, you'd be wrong. IDC found that adults between the ages of 25 and 44 are more likely than 18- to 24-year-olds to use information they glean from comparing products via a mobile app to their advantage--in other words, they'll actually ask for a price match, or are not afraid to wheel and deal with the sales associate.

But what does that mean for retailers? That they have way more competition for customers' dollars and attention even while they've got them inside their store. While browsing the aisles of Best Buy this holiday, opening up Amazon's app to compare its Blu-ray player prices to what Best Buy is offering is the equivalent of a seeing an Amazon ad pasted on a wall inside that store.

"In the past you walked into a store and your world is the store when you're shopping. Maybe you bring in a printout from what research you've done on the Web, but other than that, you're pretty much captive in the store to seeing all the visual merchandising, information, what the sales associate would tell you," said Greg Girard, the manager of the study at IDC.

"Now fast forward to a 'mobile warrior' who comes in with a smartphone and who would use it any number of ways. The store is now porous because search-ability, browse-ability comes into the store with them. They have a window back out to the world from the store."

Amazon's new Price Check app.
Amazon's new Price Check app. Amazon

A not-so-captive audience
IDC found that 45 percent of shoppers say they will compare prices at a nearby store while they're in another store. That means the burden on the salespeople inside a particular store is that much greater. Sites like Amazon and Overstock don't really have that much to worry about losing customers this way since they're not physical stores. Instead, they stand to gain more sales because they're often known for being able to offer low prices. Being instantly available via a smartphone app just helps their cause that much more.

Customers who have a shopping app on their phones can "pull up the app, price compare and, say, 'Wait a minute. Can I get a better deal, is there something similar?'" said Stormy Simon, senior vice president of marketing at Overstock.com, an online-only retailer, describing the strategy behind their app. "Even if they're not completing the transaction," that's OK.

"We've seen those numbers (of people price comparing) increase over the course of the year," since Overstock first introduced its free app last year, she said. Without saying what percentage of its sales come from mobile transactions, Simon did say this: "It's increased over 100 percent year-over-year as far as how many people are completing the transaction."

It's different for brick-and-mortar retailers Wal-Mart, Best Buy, Frye's, Radio Shack, and thousands of other regional retailers. The constant competition with customers' instantly available knowledge of better deals or lower prices puts the onus on their salespeople to be shrewder, and more flexible.

In other words, this is beyond just price matching, a salesperson who is on their game may be able to close a sale by throwing in bundled items (say a Blu-ray player with a TV) or free accessories on the spot.

"They might be taking some price reduction on something that's high margin," said IDC's Girard. "They have an opportunity to change the bundle of what they're selling and differentiating the sale."

Best Buy, for its part, said it's not worried. "We sell the technology that makes it possible, so we see value in how they help our Blueshirts (sales associates) and (Geek Squad) agents help customers with their questions about technology. And we continue to price match on items with the same SKUs."

The takeaway for shoppers this holiday? Let salespeople know you're comparison shopping on your phone right in their stores, and don't be shy about asking for a deal. They know that you know there's a better deal out there somewhere.

About the author

Erica Ogg is a CNET News reporter who covers Apple, HP, Dell, and other PC makers, as well as the consumer electronics industry. She's also one of the hosts of CNET News' Daily Podcast. In her non-work life, she's a history geek, a loyal Dodgers fan, and a mac-and-cheese connoisseur.

 

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