Facebook, Mobile Phones and the Future of Shopping

Forget the mall. Retailers are tapping Facebook and mobile phones to get closer to customers wherever they are.

CIO Magazine

At least 22 retailers have been driven into bankruptcy protection during this recession, including RedEnvelope and Eddie Bauer, or gone out of business altogether, like Circuit City. Blockbuster, Virgin Megastores and many more have closed stores. Survivors, suffering deflated profits and slow sales, warn of bleak holidays: The National Retail Federation predicts a 1 percent sales decline for the season compared to last year. Even Wal-Mart feels the slump, with same-store sales down 1 percent in its second quarter—its first such drop in years.

Baby, it's cold outside.

But smart retailers are going where it's warm: the hot little hands of cellphone—and laptop—toting consumers who want to shop right now, wherever they happen to be sipping their lattes or watching their kids' soccer games. Technology-backed projects to increase revenue include mobile e-commerce, coupons by text message, even storefronts on social networks. As enablers of these projects, CIOs are moving ever closer to the customer.

Social Shopping

E-mail marketing is in full swing now; the number of messages expected to be sent this holiday shopping season will far surpass last year's four billion, according to Experian Marketing Services, a consultancy. Of course, just a fraction of these will be opened. Even fewer messages will coax recipients to visit a website and buy something.

"Websites and e-mail—that's just too many steps now," says Brett Michalak, CIO with Tickets.com, which sells tickets to games, concerts and other events as well as its own ticketing technology.

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Royal Oak Music Theatre, a Michigan music and comedy venue where acts such as Train and Bob Saget have played, started mobile ticketing three years ago and has adjusted its marketing to cover for finicky technology.

Anyone who's done self-check out at the supermarket knows that scanning takes a special, knowing touch. Still, scanning barcodes on the screens of mobile devices often requires extra wiggling of the phone and slanting it at different angles. It's slower than scanning paper tickets. To avoid ticking off patrons lined up to run in and grab general-admission floor spots, Royal Oak created a separate VIP entrance for the mobile customers. There, staff use the newer model scanners required for reading mobile barcodes, and it's not so apparent that the scanning takes longer, says Diana Williams, box office manager.

Mobile customers are also allowed to get into the theater a few minutes before traditional customers, which encourages more people to buy their tickets by cell phone, she says. That's cheaper for the theater than handling paper tickets—saving money and hassle time is Williams' goal. But it also positions the theater well for collecting future revenue.

Mobile ticketing skews young, Williams observes. The theater does shows for all ages, and for a typical adult event, 16 percent of tickets sold are through the mobile channel. But for a recent show by the boy-band Hansen, popular with tween girls, mobile accounted for nearly 40 percent of tickets.

"There's an age—around 22 or younger—where it would never occur to patrons that you couldn't buy a ticket from your phone," Williams says.

Impulse Buys

Mobile and social commerce projects will change the business of any company that invests in it, says Russ Stanley, managing vice president of ticket services and client relations for the San Francisco Giants.

For example, instead of being a long-planned activity, a Major League Baseball game can become an impulse buy, Stanley says, bringing in more sales for the organization.

Every game day, the Giants have 40,000 seats to sell. If they've sold only 30,000, 10,000 spoil every bit as badly as old pears. Last year, the team changed prices daily on about 2,000 seats. Stanley imagines the day when he'll have a database of fans who, say, live within a mile of the ballpark to whom he can text last-minute offers. "Hey, the Giants have $5 tickets left for tonight. For $5, I'll walk down there," he says. "As they're walking up to the entrance, they're buying on the mobile."

The Giants started to offer mobile tickets midway through the 2008 season, when they sold about 100 tickets that way per game. In 2009, it was about 200 and Stanley expects to do about 400 per game in the coming year. "Fans who use it love it. It's getting the people to use it," he says.

Like hot dogs and cold beer, holding a ticket is part of the rite of baseball, he says. Plus, there's the souvenir value. When pitcher Jonathan Sanchez threw a no-hitter against the San Diego Padres in July, about 50 mobile fans, as well as people who had bought tickets online and printed them on plain paper at home, later requested the team print "real" tickets for them to commemorate the event. "We did that for them. It's good relations," says Stanley. And, he adds, it could turn into a money-making service in the future.

Start small and expand gradually, Stanley advises. He could outfit all 42 entryways at AT&T Park with scanners to read mobile tickets, but the Giants just don't sell enough of them yet to make that cost worthwhile. Not until about 1,000 mobile tickets are sold per game—81,000 in a season—does he expect to see real labor savings compared to handling paper tickets. Ramp-up may be slow, but commerce in these new outlets is a commitment these early adopters say they will keep.

"Eventually there will be far more things that are accessible via your phone," Williams says. "I would rather have our box office be on the forefront of that than scrambling to catch up years down the line."

Today the payoff comes in other ways, she says. The novel technology makes retailers who use it more memorable among consumers and no paper—or less, anyway—makes it a greener way to do business.

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