Retailers Answer Call of Smartphones

By DANA MATTIOLI
THE WALL STREET JOURNAL June 11, 2010
As More Consumers Shop via Mobile Devices, Stores Tailor Sites to Make Viewing, Ordering Easier

As Apple Inc. Unveils its new iPhone, more retailers—from Home Depot Inc. To Lilly Pulitzer—are looking to generate sales from smartphones' surging popularity by making it easier for people to shop via cellphones.

Mobile e-commerce is a small but high-growth area in retail. Shoppers will order $2.2 billion of physical goods from websites via cellphones this year, $1 billion more than last year and five times more than 2008, projects ABI Research Inc., a New York technology research firm.

Regular e-commerce sales, excluding mobile orders, are expected to grow more slowly— around 11% to $144.8 billion this year, says ABI, while retail sales overall are expected to creep up 2.5%, according to the National Retail Federation.

Currently, about 30% of retailers have mobile-commerce websites, simpler versions of their sites that make it easier for shoppers to place orders with cellphones, says Dave Sikora, chief executive of Digby, a software company that helps retailers create mobile sites. It costs retailers roughly $50,000 to $100,000 to create and launch a mobile site, he estimates.

Women's clothing retailer Lilly Pulitzer is launching a mobile-commerce site June 15 and is rushing to debut an iPhone application, which will let users browse its catalogs and place orders. "We're full steam ahead and trying to get it out as fast as we can, since we know the new iPhone will help adoption rates for smartphones," says Michelle Kelly, vice president of e-commerce, online marketing and stores for the brand.

Ms. Kelly says she pushed to create the mobile site after noticing an increase in mobile visits to Lilly's website. In May, mobile visits totaled 4% of Web traffic, up from half a percent in July. Customer-service representatives also noticed that more than half the emails they fielded came from iPhones.

Sales remained slim, however, because ordering via cellphone on Lilly's regular website is clunky. Ms. Kelly says she hopes the new mobile site will make that easier and perhaps drive impulse shopping. "I have a vision of a target consumer being at a party and thinking a friend's dress is gorgeous, looking it up on her phone and buying it," she says.

In August, Home Depot will launch a mobile-commerce site geared toward smartphone users and will introduce an iPhone app at around the same time.

"I think within two or three years a material percentage of our site visits and online revenues will come through mobile phones," says Hal Lawton, president of Homedepot.com. By 2014, he expects perhaps 30% to 40% of Homedepot.com traffic to come from mobile phones.

In January, Home Depot launched a basic mobile site for consumers who don't have smartphones. Mainly, consumers look up store locations, products and call stores. Its current iPhone app, which launched in January, lets visitors browse products, access how-to guides and watch videos, but not make purchases without being redirected to its website; it has about 250,000 downloads so far.

Retailers that have launched mobile-commerce sites say sales are growing. Armani Exchange, owned by Giorgio Armani SpA, launched its mobile-commerce site in November after seeing strong traffic at an earlier mobile site that let visitors view collections and videos but not place orders. The new version lets users make purchases.

By May, 5% of Armani Exchange's e-commerce sales came from mobile phones, and June is trending near 6%, the company says. "We've had some pretty fantastic growth with it," says Harlan Bratcher, chief executive of Armani Exchange, which is the youngest and most casual of the Giorgio Armani brands. Mr. Bratcher says mobile appealed to him because it is the way his customers—who typically are 18 to 25 years old in urban areas—prefer to communicate

1-800-Flowers.com Inc. Created its mobile site in 2006 and has seen mobile orders increase from a few thousand dollars a month to tens of thousands of dollars a month, says spokesman Joe Pititto. The mobile site's homepage features popular items, such as a dozen red roses, and minimizes the number of clicks required for a purchase.

"It's probably our fastest growth channel right now," says Vib Prasad, vice president of Web marketing and merchandising for the flower-and-gift retailer, where overall revenue fell 7% to $502.3 million for the nine months ended March 28.

James O'Brien, a 34-year-old senior Web developer from Levittown, Pa., in the last few weeks has used his iPhone to buy clothes, a bike rack and workout weights. On a recent trip to American Eagle Outfitters at the mall, he discovered the store was out of a style of jeans he likes. He ordered them on his phone instead.

He says he likes the immediacy of mobile shopping. "By the time I get home there's a good chance I'll forget about it," he says.