Local Stores Become Showrooms for Online Buying (Part II)

Following my column last month, where I took a look at mobile local shopping data (and the dreaded “showrooming” effect), I had the chance to catch up with eBay’s head of local, and Milo founder, Jack Abraham to talk a bit about where the space is headed.

As explored in the last column, shoppers are utilizing on-hand devices to bring transparency to the retail showroom floor. And smart companies like Amazon not only provide apps to get product details (via barcode scan), but even offer e-commerce deals for items scanned in-store. That’s a daunting prospect for retailers — as their customers are getting poached right out from under them. You’d think that might be their cue to adopt mobile tools to keep users engaged and in-store.

Abraham claims that retailer adoption has increased for its inventory data over the past two years, but there’s still lots of room to grow. For those unfamiliar, Milo works with retailers and publishers to provide a valuable layer of searchable product inventory data on any app.

Retailers, overall, are showing laggard adoption, considering the situation they’re in and the availability of tools like Milo, apps like Shopkick; and competitive pressure from the Amazons of the world. They need to fight fire with fire, but still many aren’t. The latest example: a December survey from AisleBuyer revealed that 55 percent of retailers have a mobile app with m-commerce functionality. Many offer store locators (87 percent) or product search (74 percent). But real-time inventory or transactional features… not as much.

“There’s a lot of talk about retail going away, says Abraham. “It’s our position that it couldn’t be farther from the truth. The way it’s going to survive is partnering with companies to get in front of consumers at that decision point.”

Merchant-facing tools aren’t far behind, exposing little retailer interest in arming clerks with tablets or smartphones for more effective on-site customer service, inventory search or payments. With the latter, Apple Stores are the glaring exception (no surprise).

But who else is doing it right? The last column mentioned Best Buy and Home Depot for their work with Shopkick and PayPal respectively. There are other early adopters of mobile shopping tools and apps we’ve seen such as seen such as Macy’s, which works with Shopkick as well.

Sports Authority also receives high marks for its work with mobile tools and apps like Foursquare — offering in-store deals and payments (via Foursquare/Amex partnership). Also look out for Bloomingdales, Nordstrom and Crate & Barrel (whose CTO hails from Feedburner).

Abraham says that category leaders tend to adopt Milo’s technology first, and then others follow out of competitive pressure. Interestingly, he adds that adoption usually progresses down the line in the same descending order of the sector’s market share.

Categories generally showing the greatest adoption are electronics, home & garden, and apparel (in that order). These certainly make sense for mobile tools to aid in offline shopping, as they’re high consideration purchases, non-commodity, and visually oriented. “It’s stuff like cameras, guitars, televisions, speaker systems and things you want to see in person,” said Abraham. “It’s also things you don’t want to have shipped.”

As for categories that are lagging (read: where there’s growth opportunity), look no further than the grocery aisle. Factors like perishable inventory and high volume/low margin sales make it difficult. Consumer packaged goods are one thing, but produce is entirely different. “How do you deal with an avacado?” says Abraham. “Every one in the bin is different.”

The other challenge for players like Milo will be moving downmarket from big box to mom & pops. There, the barrier is one of data aggregation in the face of massive fragmentation. But it’s making headway Abraham says, and there should be more to disclose in time.

But the big message from Abraham — reinforcing Part I of this column — is the collision of online and offline worlds; consumer buying decisions being made between the two; and the retailer survival imperative to step up to that reality.

“There’s a lot of talk about retail going away, says Abraham. “It’s our position that it couldn’t be farther from the truth. The way it’s going to survive is partnering with companies to get in front of consumers at that decision point.”

Mike Boland is senior analyst at BIA/Kelsey, where he heads up the firm’s mobile local coverage. Previously, he was a tech journalist for Forbes, Red Herring, Business 2.0 and others.