Newsosaur: Smartphone Shopping Perils Publishers
Posted: 1/9/2013  |  By: Alan D. Mutter
The smartphone has emerged as the hottest shopping accessory since the brown paper sack, the latter of which, as a matter of law, now costs a dime if you don’t bring your own environmentally sustainable tote into a supermarket in my part of California.

With nearly one out of five consumers now consulting their mobile gizmos when making a purchasing decision, smartphone shopping represents a profound threat to newspapers, because it strikes at the heart of the historic value of the medium to the merchants who buy the preponderance of newspaper advertising.

The stakes hardly could be higher: Based on the newspaper industry’s performance for the first nine months of last year, I estimate that national and retail advertising likely generated three-quarters of the approximately $19.3 million in print advertising sold by publishers in 2012.

Here’s why smartphone shopping matters:

While local media in the un-wired age were the primary conduit for connecting sellers with potential buyers, the efficiency and immediacy of smartphone-assisted shopping has created an unprecedented opportunity for both on- and offline retailers to build powerful, personalized and direct relationships with consumers. The stronger and more efficient those ties become, the less merchants will need to buy ads from such traditional intermediaries as newspapers, radio, and television.

This is not some threat in the distant future. The popularity of smartphone shopping rocketed last year during the holiday shopping season.

On Cyber Monday (the first day back at work after the national Thanksgiving-weekend shopping orgy), more than 18 percent of consumers used mobile devices to visit a retailer’s site, according to an analysis compiled by IBM Corp. The number of smartphone shoppers was 70 percent greater than in 2011.

And the mobile-ized shoppers weren’t just browsing. IBM said smartphone-powered sales nearly doubled between 2011 and 2012, reaching “close to 13 percent” of digital volume for Cyber Monday, which historically is the busiest day of the year for online merchants. Based on comScore data that pegged Cyber Monday turnover at a tad less than $1.5 billion, smartphone shoppers bought some $200 million of goods in a single day.

Beyond their obvious convenience as point-of-sale devices, smartphones are used by one out of five consumers to share pictures of products they are considering; to consult with friends, social networks, or product review sites about a prospective purchase, and to scan barcodes to search for product information or better prices, according to a report by Business Insider.

With more than half of Americans now wielding a smartphone as they prowl the aisles, merchants are moving quickly to respond to both the challenges and opportunities the phenomenon represents.

According to a survey last year by CrossView, a mobile marketing consultant to the retail industry, merchants are equipping stores with Wi-Fi, producing branded mobile apps and, to a great degree, matching in-store and online pricing to avoid angering bricks-and-mortar customers who check the Web to ensure they are getting the lowest-possible price. At Christmas, Best Buy even promised to match prices offered by Amazon and other leading online discounters.

Smartphone shopping is popular among all ages and genders, according to CrossView. “The local retailer who makes inventory positions available to the mobile shopper has a significant competitive advantage,” the firm said. “Clearly, top retailers understand this — and it’s why 80 percent of those we surveyed allow customers to use their mobile device to see if products are in stock at a particular store.”

Though the transparency is bound to please customers, merchants aren’t doing this sort of thing to be nice. The real reason retailers are embracing mobile commerce is to develop far more targeted and actionable relationships with consumers than was possible in the un-wired era.

The more shoppers use their phone to compare products, to research purchases and to scout for deals, the more digital breadcrumbs they leave for merchants to analyze, including who they are, where they are, what they have purchased, and what they might buy next. The more data that merchants capture about individual consumers, the more data they can crunch to predict the types of products or services an individual might buy, thus tailoring offers in terms of time, place, features, and even pricing.

Unless newspapers want to get shut out of their lucrative and longstanding relationship with the retail industry, the shift to smartphone shopping merits their full attention. Unfortunately, according to the Newspaper Association of America, only 110 (8 percent) of the nation’s 1,382 dailies have gotten around to launching apps for the tablet, which happens to be the fastest-growing electronics product since electricity was discovered.

To play in the new order of things, publishers need to (a) talk with astute merchants to discover their needs, (b) partner with savvy technologists to meet said needs, and (c) get serious about investing in modern mobile platforms.

Alan D. Mutter is a newspaper editor turned Silicon Valley CEO who today consults with media and technology companies. He blogs at Reflections of a Newsosaur (