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Back-to-school shopping goes mobile

By Ylan Q. Mui
Washington Post Staff Writer
Sunday, August 29, 2010; G01

Back-to-school shopping deals are just a text message away this year as retailers wade into the brave new world of mobile commerce.

JCPenney sent customers texts with the latest fall clothing styles and discounts, and even print ads encourage users to send a text for special sales alerts. Sears and Kmart promoted a mobile app that allows shoppers to order merchandise and have it shipped to a nearby store, while American Eagle gave away free smartphones to anyone who tried on jeans. But many retailers are still waiting to see whether mobile shopping will pay off after the novelty wears off.

About 29 percent of consumers said they planned to use their phones to power through their back-to-school shopping lists, according to a survey this summer by consulting firm Deloitte. About 38 percent of those shoppers said they intended to check prices, while 30 percent were looking for discounts and coupons. Alison Paul, Deloitte's U.S. retail leader, called mobile technology a "wide open area of experimentation."

"This back-to-school season will inform retailers and consumers as to who is doing that well and who is doing that consistently," she said.

Industry experts and techno-evangelists have long predicted a day when people no longer make the long trek to the mall or even tether themselves to their desks to shop. Now, as more Americans are snapping up smartphones that can access the Internet and boast large-screen displays that make it easy to browse for clothes or microwaves, the future may not be far off.

The number of cellphone subscribers who have smartphones has grown to 25 percent this year from 16 percent in 2009, a study by market research firm Nielsen shows. That could help fuel the growth of what was a $1.2 billion mobile shopping market last year in the United States , according to ABI Research, a consulting firm.

Richard Mader, the executive director of the technology standards group for the National Retail Federation, a trade association, said stores are experimenting with mobile shopping in several ways.

The first step, he said, is usually through marketing and advertising, similar to many of the back-to-school campaigns. Kmart Chief Marketing Officer Mark Snyder said the chain's mobile app, called Kmart2Go, is targeted toward busy moms. The company launched it just before the holidays and has been trying to teach shoppers how to use it.

"It takes a while for her to understand the power of these things and how they can serve her," Snyder said.

In fact, retailers say their top two mobile retailing goals are to drive sales to their Web sites and offer price and product information -- not to complete the sale on the phone, according to a study by NRF and Forrester Research. Retailers also reported in the study that mobile browsers generate an average of 3 percent of traffic to their Web sites and account for 2 percent of online sales.

Mader warned that reaching shoppers over their phones is a delicate proposition.

"The mobile phone is very private," he said. "You'll give people your house number before you give them your cell."

Some retailers are figuring out the formula, however.

Julie Bornstein, senior vice president of Sephora Direct, said 10 percent of the chain's shoppers have used the mobile site. The company culled input on the site's design through Facebook earlier this year and spent six months designing the relaunch.

"Being present on a mobile phone is quickly becoming an imperative in our minds if you want to be there for your consumer," Bornstein wrote in an e-mail.

At Amazon, founder and chief executive Jeff Bezos said mobile shoppers from around the world have ordered more than $1 billion worth of merchandise over the past year, though that includes purchases through its popular e-book reader, Kindle.

EBay said it expects to sell more than $1.5 billion in products through mobile phones this year, more than double the amount sold last year.

Jeffrey Grau, an analyst with consulting firm eMarketer, said that eBay translates well to mobile retail because timing is such a critical component to shopping its auctions.

In a conference call with investors, eBay Chief Executive John Donahoe said mobile applications help increase the customers' interaction with eBay.

"They are not pure mobile users or pure Web site users," he said. "We're looking at mobile as an extension of the ways people interact with eBay, rather than being a separate set of customers."

Some retailers are also looking to mobile phones as a gateway to new forms of payments such as Obopay, which allows consumers to quickly send money to anyone, anywhere. PayPal, which is owned by eBay, said more than 2.5 million people have downloaded its mobile apps in the first six months of this year.

But Mader said the vision of a "mobile wallet" that allows shoppers to swipe their phones to pay for a product -- much the way you swipe your SmarTrip card to get on the Metro -- is still several years off. Nokia said this summer that it will begin equipping all of its new phones with the technology, known as near-field communications, in 2011, though few retailers have the capability to accept it.

In addition, consumer advocates have raised questions about the safety of mobile payments. Federal laws and regulations protect consumers who use credit and debit cards from fraud and disputed purchases. But payments made over mobile or other networks aren't covered, said Michelle Jun, a lawyer for Consumers Union.

Though many cellphone providers and payments firms have policies to cover fraud or disputed purchases, Jun said those terms can easily be changed.

"We're just afraid of all the loopholes that will occur if consumers aren't properly protected," she said.

But if shoppers in Japan and Europe are any indication of what's to come at home, it's clear that mobile retailing will only grow in popularity. The mobile market in Japan is estimated to be about $10 billion, according to ABI. Sales in Europe, a far more populous area, are expected to overtake the United States by the end of the year.

"It's just more reason why we have to think mobile, and we have to prepare for it," Mader said.

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