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‘App’ advantage: Luxury brands at consumers’ fingertips through mobile devices

by Carolina Herrera and Amelia Kaufman
Jan 22, 2013


MobileApp

Amelia Kaufman and Carolina Herrera/MEDILL

Mobile apps for sites such as Gilt Groupe, Rue La La and HauteLook are gaining popularity with consumers.


Carolina Herrera and Amelia Kaufman/MEDILL


The word is out: Quick fingers and endless accessibility can snag you a $1,600 Vera Wang evening gown for $350 – but you’ll have to beat 10 million other shoppers racing to out click you.

 
Not long ago, shoppers needed to be sitting in front of their computers to access flash-sale sites such as Gilt Groupe Inc., Rue La La Inc. and HauteLook Inc., which offer overstocked luxury goods at bargain prices. But mobile apps are eliminating that constraint and giving shoppers access to deals anytime and anywhere: on the bus, waiting in line for takeout, or in a doctor’s waiting room.

“We’re always looking to provide our members with exclusive deals that they can’t find anywhere else,” said Christopher Gonzalez, director of mobile product management at Gilt Groupe, “so offering mobile-only sales was a great way to give access to even more of what they love about Gilt.”

Mark Geller, head of mobile products at HauteLook, agrees: “The flash-sale shopping experience fits well within mobile commerce because our members want to shop new sale events no matter where they are.”

Mobile commerce is defined as a transaction that begins with the purchase of a good on a smartphone and ends with the customer receiving a physical product or service, according to Forrester Research Inc. The Cambridge, Mass. firm predicts the market will triple by 2017 to $31 billion in sales.

“Our mobile shoppers are some of HauteLook’s best members, and it’s important to give them a multi-screen experience. We expect to see mobile commerce continue to grow in 2013,” Geller said.

Although mobile retail accounts for only 3 percent of online retail sales excluding travel, Gilt, Rue La La and HauteLook have cashed in on the opportunity.

Gilt, which is privately held, launched its app in 2009, and the company saw its revenue increase to $425 million in 2010 from $170 million in 2009, Forbes reported. Since the adoption of mobile commerce, 30 percent of Gilt’s daily revenue streams in through its mobile app. Gilt had experienced more than a three-fold increase in subscribers from 2007 to 2011, according to Forbes. To date, the company’s 7 million customers have downloaded the company’s app more than 5.6 million times.

Around half of HauteLook’s total traffic stems from mobile with 25 to 35 percent of weekday sales coming through that channel. The company has a member base of 11 million and its app has received more that 1 million downloads to date.

Rue La La, with 7.5 million members, reported in November that more than half of total sales are coming from mobile devices. The company did not specify number of downloads.

The growth of smartphones and tablet computers has opened up the opportunity for retailers to target customers 24/7. Twenty-five percent of mobile Internet users made purchases via their phones in 2012, according to Forrester. This increase in accessibility is a large part of what drives e-commerce companies to enter the mobile market.

“We know our customers aren’t always at their computers, so we wanted to create a user-friendly and exciting way for them to access our sales anytime, anywhere,” Gonzalez said.

Although the companies’ sales growth indicates that consumers are using mobile apps, several Chicago consumers have mixed opinions regarding the benefits. Some said they attempt to refrain from using the apps for fear of excessive shopping. “I do enough online shopping, so I don’t know if I need the app,” said Jennifer Wenz as she was leaving a popular Lincoln Park brunch spot Sunday.

Vaughn Roland, an employee at a Halsted clothing store, said he feels that shopping sites constantly pinging him “is a little bit intrusive to me.

 

All three of the flash-sale sites reported an increase in sales on weekends. HauteLook’s mobile sales rise to between 35 and 40 percent on Saturdays and Sundays. Gilt, which employs a “ding” to alert customers to the start of sales, offers ‘Sunday Night Steals’ that sometime reach a 70 percent discount.

Although all three companies offer the apps for free they still require users to register, which isn’t much of an impediment. “I really don’t have anything going on on Sunday,” said Abby Baise as she was leaving a Starbucks at Armitage and Sheffield avenues. “I’m going to sit on the couch and maybe download some apps.”