In 2009, a buyer sitting on a chairlift on a Colorado ski slope was awkwardly browsing through the company’s desktop-oriented Internet website on the small screen of an iPhone. He was looking for a New Year’s gift and saw “something that he liked,” said Jon Sainsbury, Blue Nile’s head of strategy.
When the customer rang up the company and bought a diamond bracelet worth more than $100,000, it was a wake-up call for Seattle-based Blue Nile, which expects its customers to gravely ponder even the average $6,000 engagement ring.
“We didn’t think anybody was going to make those kind of purchases on an iPhone,” Sainsbury said.
Now about a quarter of all of Blue Nile’s transactions originate, develop or finish on a mobile device. Nearly half of its traffic comes from phones and tablets.
The surge in mobile shoppers has brought about a “moment of incredible change and disruption,” he said.
On the one hand, companies’ opportunity to sell their wares online has grown as consumers browse on smartphones to kill time on a train ride or at the doctor’s office. On the other, retailers must re-imagine and re-engineer their e-commerce platforms to be functional and enticing on devices that have small screens and cramped keyboards.
“It’s definitely not as good an experience,” said Sucharita Mulpuru, an analyst with Forrester Research.
That may be why smartphone-conversion rates — the percentage of customers who visit a retailer online and actually make a purchase — “are pretty terrible,” she said.
Yet nearly half of the minutes consumers dedicated to online shopping in June 2013 were spent looking at a smartphone — up from 17 percent in 2010, according to a joint study by the National Retail Federation and ComScore. Seattle’s Amazon, the world’s biggest online retailer, said more than half of its customers shopped using a mobile device at some point during the holiday season.
Retailers this year “overwhelmingly” agreed that mobile commerce must be their top digital priority, according to the retail federation.
While smartphones are quickly becoming consumers’ main window into the world of online shopping, retailers are discovering it isn’t easy to offer them a good view.
Comparative shopping and customer reviews, which many consumers rely on when shopping on PCs, don’t translate well into a 5-inch screen. Virtual keyboards are a pain for entering long credit-card numbers.
The result is that only 1 percent of visitors using a smartphone bought something from a site, whereas 4 percent of those using more traditional laptops or desktops hit the purchase button, according to a study by consultancy Monetate during the start of last year’s holiday season.
And smartphone buyers tend to spend almost 20 percent less — $133.60 versus $167.31 on a PC, the report said.
So retailers are scrambling to crack the code of the smartphone era in order to make consumers feel more comfortable and spend more. They are crafting their sites with “responsive-design” elements that translate equally well on PC, tablet and mobile devices, and embracing the marketing possibilities offered by GPS location services, push notifications and touch screens.
Blue Nile, for example, recently launched a redesign of its site under responsive-design guidelines so it renders nicely on all devices, Sainsbury said.
Amazon has embraced the smartphone revolution in ways that sometimes irk its competitors. In 2010 it launched a price-check app that helped buyers walking through a retail store compare the price of an item with Amazon’s price, just by scanning a bar code.
In February it integrated image recognition into its iPhone app so buyers can add an item to their Amazon cart by capturing its image.
Some analysts now see the smartphone as the critical link tying together an increasingly integrated shopping experience that extends from the store floor to the desktop computer. It’s what retailers refer to as an “omnichannel” strategy.
Even brick-and-mortar companies such as Starbucks are starting to consider phones a critical part of the store experience.
“There’s no question that the smartphone has become an essential part of the overall purchase process,” said Barbara Kahn, director of the Jay H. Baker Retailing Center at University of Pennsylvania’s Wharton School of Business. “The thing that seems to seamlessly connect online and offline is the phone.”
Brick-and-mortar stores in general have been pummeled by the rise of online commerce, but some are finding that smartphones are a perfect enhancement to their ubiquitous physical branches.
The app produced by pharmacy chain Walgreens is a good illustration of that harmony, Forrester’s Mulpuru said. The app enables customers to refill their prescriptions by scanning them; set up reminders to take pills; and manage coupons, in addition to more standard services such as finding store location.
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