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Mobile shopping missing the buzz


When it comes to mobile shopping, so far there’s more buzz than buy.

As the number of people who use iPhones and other smartphones grows, companies selling everything from hardware to high fashion are touting all the new applications they’re rolling out that enable shoppers to do anything from check a store’s inventory while in the dressing room to order prescriptions.

Retailers are betting that selling their wares on a device that people carry around all day can encourage Americans to spend money during an economic downturn in which they’re making fewer impulse buys in their bricks-and-mortar stores. But so far, consumers mostly are using their phones to look up locations and compare prices and stopping short of tapping the “buy” button. Why? In part because they find it hard to shop on the tiny screens and they don’t quite think it’s safe to input their credit card information into their phone.

To be sure, mobile purchases are growing faster than online sales, which are increasing at around 10 percent a year. But mobile commerce is expected to account for $6 billion, or just 2 percent of overall e-commerce sales this year, according to Forrester Research. By 2016, that figure could rise to $31 billion — still a sliver of electronic sales.

“The transactions aren’t anywhere close to a big number,” says Siva Kumar, whose company, TheFind, offers mobile price-checking applications. “But the first stage of any revolution is that people start using the new tool.”

The use of smartphones is indeed growing. There are 82 million smartphones in circulation today in the U.S. — one in every three people 13 and older owns one — and that figure is expected to double by 2015. And smartphone users are increasingly using mobile applications: The average user spends 81 minutes a day using mobile apps, more time than is spent Web browsing on a computer or other device, according to mobile analytics firm Flurry.

But smartphone users are spending most of their time playing games, checking social networks, taking video, accessing maps and getting sports scores, according to digital research firm comScore. Shopping, meanwhile, ranks at No. 13, with less than 7 percent of mobile users accessing online retail stores through their phones.

Retailers are partly to blame for shoppers’ apathy. Less than a third of retailers polled by the National Retail Federation in May said they have a fully implemented mobile strategy, which might include an application available for download by iPhone, Droid and BlackBerry users. It’s far less pleasurable to hunt down a new pair of boots when it requires zooming in and out of a site that’s not oriented to the mobile screen, shoppers say.

For instance, Sara Margulis, who runs an online wedding gift registry in Sonoma County, Calif., uses her iPhone to buy books and diapers on Amazon, but sticks to her home computer for the majority of her electronic purchases in part because she likes the larger screen.

“If I know what I want, and it’s on Amazon, I’ll do it on my phone,” she says. “But not if it requires a lot of research.”

Another big impediment is the payment process. Typing billing information into a phone can be tedious and time-consuming, and many shoppers aren’t convinced that mobile sites are safe. In one Forrester poll, 44 percent of shoppers said they would use the mobile Web to make purchases if the payment services were more secure.

Sucharita Mulpuru, a Forrester analyst, says mobile payments are generally safe and this is a “perception issue” stemming from fear of the unknown. Overall, she says, it will take some time for Americans to fully embrace mobile shopping — just as they did with online shopping. After all, people were playing games of Solitaire on their computers before they were willing to shop on web sites.

“You have to walk before you run,” she says. “You have to do things that are easy that don’t require you to give up your money first.”

A few retailers are far ahead in mobile shopping. Although she hasn’t tested a lot of sites on her iPhone because her ATT cellphone plan caps the amount of data she can use each month, Nancy Pelaia, who works at a Christian college in Beaver Falls, Pa., said she likes shopping on the app from QVC, which is more cutting edge than many other retailers’ mobile apps. It syncs up with the sales-pitch TV network, showing shoppers the item currently being sold on-air. Additionally, users’ payment info is stored, so they need only enter a four-digit passcode to complete the purchase.

“I usually have my phone sitting right there, and they make it very easy,” Pelaia says.

The most successful mobile shopping sites are eBay and Amazon, which together account for four out of every five mobile shopping transactions. Ebay reported nearly $2 billion in mobile sales last year — more than tripling its 2009 total — and it expects to reach $4 billion this year. And last July, Amazon capped off a 12-month period of mobile sales exceeding $1 billion.

Both companies were early to invest in mobile, but just as importantly, they’ve been able to smooth the checkout process by accepting PayPal or storing payment information in users’ accounts. They’ve also worked to make searching simpler. With Amazon’s price-checking app, for instance, you can speak the name of an item and it will show the lowest price in its marketplace. And with Ebay, customers can receive a notification when they’ve been outbid or the bidding is ending for a particular item.

“You can be in a meeting and you can bid then and there,” said eBay’s spokeswoman Katherine Chui.

Their strategies seem to be working. In July, Amazon capped off a 12-month period of mobile sales exceeding $1 billion. And Ebay, which said its iPhone app has been downloaded 18 million times, reported nearly $2 billion in mobile sales last year — more than tripling its 2009 total — and it expects to reach $4 billion this year.

But other companies say even if consumers aren’t overwhelmingly using their apps to make purchases on their phones, the devices still are driving in-store purchases. Target, Best Buy, American Eagle Outfitters and others are boosting sales with a third-party mobile application called Shopkick that gives customers special offers anytime they step into their stores. And inside Home Depot, a shopper can launch the store’s app and get more information about a lawn mower or other item without having to ask a salesperson.

Hal Lawton, Home Depot’s president of online, says “that gives us opportunities to keep shoppers in our stores longer” even if the impact on the bottom line is hard to quantify.

7 Shopping Secrets Retailers Won’t Tell You

Today’s retailers have uncovered the science behind shopping. Your favorite mall stores actually hire such retail researchers as Paco Underhill, author of “Why We Buy: The Science of Shopping.”

Underhill has tracked hundreds of thousands of shoppers to study how they shop. “There is nothing random about how a store is arranged and designed. It is carefully calculated to appeal to you in every possible way,” he says.

“The stores have a plan, so you should, too,” says Dave Ramsey, best-selling author of “The Total Money Makeover” and host of a syndicated financial talk show on the radio.

The ‘Magic’ of the Display

We can learn a lesson in Underhill’s book from a story told by a retailer about a tempting display of T-shirts.

“We buy them in Sri Lanka for $3 each. Then we bring them over here and sew in washing instructions, which are in French and English. Notice we don’t say the shirts are made in France. But you can infer that if you like. Then … we fold them just right on a tasteful tabletop display, and on the wall behind it we hang a huge, gorgeous photograph of a beautiful woman in an exotic locale wearing the shirt.”

Resist the urge: “Write a monthly mall shopping budget and stash cash in an envelope specifically for that purpose. When the envelope is empty, stop spending,” says Ramsey. “A written budget makes you think twice when you are tempted by impulse buys.”

When BOGO and 2-Fer Deals Are Good

BOGOs (buy one, get one), two-fers (two for the price of one) and bundled-item promotions successfully tempt you into shopping more often and spending more to raise the store’s number of sales as well as ticket averages, or amount of each sale. They’re not always a good deal for you if you’re not familiar with the store merchandise and its regular prices. “You’re not saving if you are actually spending more than you planned,” says Underhill.

Resist the urge: “Know your favorite retailers, brands, regular prices, promotions and discounts — and always check the clearance area first to find a similar item on sale to avoid buying two of anything and spending more,” says family financial expert Ellie Kay, author of “The 60-Minute Money Workout.”

“Ask yourself, ‘Do I really need two sweaters or two of the same jeans?'”

Don’t Turn Right When Entering the Store

“Retail shopping studies have found that most people turn right when they enter a store. That’s because the majority of the population is right-handed and right-oriented,” says Underhill.

Knowing this, stores highlight tempting new items and trends to the right of the entrance. You’ll find that the music is louder and the displays are brighter to attract you where you will look and turn first. This is also where the most expensive items in the store are generally displayed.

Resist the urge: “Shop with blinders on,” says Kay. “Stick to your list with the cash in your hand. Avoid credit card debt at all costs, and head straight to what you came for.”

Why Clearance Items Are in the Back

The clearance racks are placed in the back of almost every mall store on purpose — so you’ll be tempted by everything else more expensive in your path.

You have to pass all the new trends and displays, all the sales and promotions. Retailers are betting that your hands may be full by the time you reach that clearance area, so you will not be able to stay there and search for the better deals, says Underhill in his book.

Resist the urge: “Head to the clearance area first to find the best deals,” says Kay. “This way, you will have a frame of reference for comparing prices of similar items in other parts of the store and will be able to make smarter choices.”

Why the Clearance Area is Messy

“It’s really hard to conquer the clearance area in some stores because it’s actually designed to make you not want to spend time there,” says Kay.

Retailers know shoppers want to easily find the size, price and item neatly displayed. So they purposely create the frustration of the poorly marked and poorly organized clearance area to tempt you toward the beautifully displayed and perfectly organized full-price merchandise.

Resist the urge: “Never shop when you are rushed for time,” says Kay, “because this leads to making rash decisions.” Instead, she advises setting aside time to shop, dig and search for what you truly want, need and can afford from the clearance section.

Beware the Small Stuff Around the Registers

Impulse items are tempting goodies such as jewelry, sunglasses, fragrances and magazines that you did not plan to buy. They are displayed purposely near the register. In retail jargon, these are called add-ons (in addition to your main purchase), and they can increase your credit card debt faster than you can say, “Oooooh, pretty!”

Resist the urge: Kay’s shopping wisdom is, “Never enter a mall without a specific shopping list. Then, use my ‘list test’ to justify an off-list purchase with three valid reasons including: paying cash (not credit), a great discount and necessity of the item. Not only will this hassle slow you down until the impulse passes, but you can actually reprogram your mind and habits to shop this way automatically.”

Be Selective When Shopping With Friends

“Two best-friend reckless shoppers who both give in to every temptation can overspend into a credit card debt disaster,” says Kay — and retailers will do whatever they can to encourage that. Now, you can even have your Facebook friends weigh in on whether you should buy those jeans, or use a dressing room app that elicits “buy it” responses from strangers.

Resist the urge: Kay explains that different people have different shopping personalities. “Some people get frustrated easily, some shoppers are impulsive and some shoppers persevere more than others. If you’re going to take a friend shopping with you, take someone who can balance your impulsiveness with their perseverance (or vice versa if your friend needs the help),” she says.

This article is part of a series related to being Financially Fit

Shopping Secrets: Supermarkets Spur Spending

PHOTO: A person passes a display of tea pots at Safeway's new Lifestyle store.

The next time you take your weekly trip to the grocery store, take a look around you. It turns out all of the minute details — the fresh flowers greeting you in the entrance, the shining vegetables on the tables — may all be ploys by the supermarket to get you to spend more than you thought you would.

“We’re priming the shopper to tune in to a kind of experience,” said Liz Crawford, author of “The Shopper Economy.” “It’s fall, it’s a farmer’s market. … We’re here at the farm stand.”

Soon, you’re immersed in the aisles, where items the store wants you to pair together are strategically placed next to each other. Next to the barrel of apples, for example, is caramel.

“So while I’m buying the apples, I’m thinking, ‘Oh, you know, I could also buy some a caramel and have caramel apples. Great idea.’ Now I’ve got an impulse buy,” she said. “That’s a cross-sell.”

PHOTO: A person passes a display of tea pots at Safeway's new Lifestyle store.

PHOTO: A person passes a display of tea pots at Safeway's new Lifestyle store.

The products you see, where they are displayed, even what you smell can all be a part of a sophisticated, market-tested method to get you to buy.

The apples, sitting in their pretty little baskets, look like they’re straight from the farm. They put you in a pleasant mood, thinking of autumn. That’s what they call a “symbolic.”

Vegetables also are staged to excite the senses. They are sprayed with water every few minutes — giving them a fragrant smell and a glistening appearance. Nearby, the cheese stand is loaded with choices so you have to linger to find the exact kind you want.

“So while I may have come for some feta, wow, here’s some crumble bleu cheese, which I can have as an alternative in my salad during the day,” said Crawford.

Another means of persuasion is packing food in ice.

“It signals to the shopper, ‘Hey, this is perishable. It’s perishable right now,'” said Crawford. “Now’s the time to pick it.”

Shoppers tend to stay on the edges of the store, circling around counter-clockwise. Retailers sometimes place an eye-catching sale item near the track.

“Once I get enticed down the aisle, the chances I’ll buy something go up dramatically,” she said.

Shopper Sharon McCain said she was influenced to buy something she didn’t intend to. She didn’t come to the store to buy apples — but still left the store with some.

“Well, they were stacked up and looked good,” she said. “So I bought some apples.”