MAY 21, 2010 - Scott Dunlap
NearbyNow designs mobile shopping applications for magazines, brands and retailers that enable consumers to receive updates and information on hot products at retail stores, find those products at specific locations and place them on hold. CEO Scott Dunlap spoke with eMarketer about how in-store mobile apps and smartphone usage are changing the game for retailers.
eMarketer: How is NearbyNow different than some of the other retail-oriented mobile apps like Shopkick and Shopssavvy?
"NearbyNow is a bit different in that our goal is to drive shoppers into stores, rather than address consumers who are already shopping."
Scott Dunlap: We are big fans of Shopkick and Shopssavvy. They've done a good job of creating mobile applications that help consumers who are already in stores and considering purchases. NearbyNow is a bit different in that our goal is to drive shoppers into stores, rather than address consumers who are already shopping.
We do this by creating applications that aid discovery. We're helping to identify hot products, telling people where they can find them and enabling them to place their size on hold at a store nearby.
eMarketer: How has your business model evolved?
Mr. Dunlap: Three years ago, when we started, we thought the goal was to point the mobile shopper to every nearby store that has a particular product that they're interested in, particularly if it's in their size. Then we wanted to track what mobile shoppers purchase in stores. That's what we set up NearbyNow to do. We wanted to get people into the store.
We started off with one business model but we ended up with a slightly different one. Originally, we made shopping malls searchable so that you could walk into a mall and just say, "I'm looking for a black dress, size 8," and we'd light up every store in the mall that had that dress and size, show all the prices and even offered real-time coupons for you to try one store versus another.
That worked pretty well, until the 2008 the recession hit. We found retailers were quick to cut mobile because it was an experimental budget. At the same time, we also noticed that there was a rush on specific items that are highly featured in magazines and TV shows. It was like these people didn't even know the recession was happening. They wanted something featured in Lucky Magazine or Cosmopolitan. People would buy the item until it sold out at list price. So we started to develop mobile applications that help you shop your favorite magazine.
eMarketer: What are you learning about consumer shopping behavior from your apps?
"Mobile shoppers are simultaneously in the physical world and in the online world.... They're always considering both options.... They just don't want to feel stupid by finding out later that it's 30% off on an online shopping site. I think it's almost a peace-of-mind thing."
Mr. Dunlap: Mobile shoppers are simultaneously in the physical world and in the online world at all times. They're always considering both options. They want you to find the item for them at a store nearby and, when they're in the store, they want to know if it's cheaper online. It doesn't always indicate that they want to purchase the item online, but they just don't want to feel stupid by finding out later that it's 30% off on an online shopping site. I think it's almost a peace-of-mind thing.
I think it's very smart for a retailer to put a mobile shopping app in front of consumers because if they end up going to Amazon.com, that retailer is going to get underbid—guaranteed. Retailers need to reward people for showing up in their stores.
The truth is there are a lot of things that people want to try before committing to a purchase—like electronics. Most people want to hold it in their hands first, they want to see if the shutter speed on the camera is fast enough and what the big screen looks like. Trial before purchase remains an important step.
eMarketer: Why would a national retailer like Macy's, Nordstrom or Kohl's want to work with NearbyNow if they have their own mobile apps?
Mr. Dunlap: If Macy's has an app, it's going to attract people who already identify with Macy's. That's great. But if Macy's wants to attract new consumers, it needs to use a different kind of app, like this one. In order to work with us, a retailer like Macy's needs to make sure we know the inventory in the store. When I talk to Macy's people, they understand what we need to enable real-time access to information about specific items in nearby stores.
eMarketer: Are consumers also researching in-store via mobile and then buying elsewhere, or are they more predisposed to purchase at the store in which they are doing the mobile browsing or research?
Mr. Dunlap: Honestly, there is some of both. Our data shows a lot of it depends on the product category. Soft goods (apparel, shoes, accessories, beauty products) tend to be purchased in-store, even if the consumer is accessing other Websites for more information from within the store. Hard goods (consumer electronics and small appliances) tend to have more purchasing occurring online if the price differential is more than 15%.
eMarketer: Do your retail clients care whether someone purchases online or in the store? Would they prefer an in-store purchase?
Mr. Dunlap: I think it depends on the item. For shoes, apparel and beauty products, they prefer an in-store purchase because people end up buying entire wardrobes. It's been hard for e-commerce sites to figure that out—how to get people who come in for one item to buy a whole outfit. But in a store, you have a sales assistant helping and friends around you. It's a lot easier to do.
"The conversion to purchase from a mobile phone is very high—it's about 5.8% on average for us."
We track the conversion to purchase, and how many people buy the product in a store versus buy it online. The conversion to purchase from a mobile phone is very high—it's about 5.8% on average for us. What that means is that 5.8% of the people who open up our applications end up making a purchase.
I can go in and look at that 5.8%, and this is where it becomes fascinating. For apparel, shoes and a lot of the soft goods, 5.5% of that 5.8% is people purchasing in a store, and 0.3% of it is people buying from an e-commerce site from their phone. That's the Amazon.com purchase. Our data which compares online and in-store purchasing finds that a price differential must be at least 15% to encourage flipping from an in-store purchase to an online sale.
We track the location of where people are doing this, and most of it occurs when they are out and about. These people are not at home. And then, oddly, they don't have a magazine in front of them either. They tend to be out shopping. They're in malls. On college campuses. We've noticed when you give someone a local alternative for trial and purchase, a huge majority of people end up doing that. But that's not for all product segments.
eMarketer: What should a savvy national retailer do when a consumer is shopping in their physical store locations with a smartphone?
Mr. Dunlap: That's a great question because a lot of it depends on how intrusive you want to get. But I would say, if you've done a lot of work to get people into the store with alerts, I would think the first two things you do right away is create an application where people can keep a wish list. If the size isn't available, the wish list should notify the person when it is available.
And the flip side is if a retailer can't sell a certain SKU of dresses but it knows a bunch of people want that style, they should offer them a private sale. The retailer gives them the first shot to purchase the dress when it goes sale with a special invitation. Or the retailer might alert someone's wish list if or when the item is marked down.
http://www.emarketer.com/mobile/article_m.aspx?R=1007708
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