Multi-Brand Apps Gain Ground in Fashion

Multi-Brand Apps Gain Ground in Fashion

Tuesday, March 24 2015

The lone fashion brand fighting for coveted real estate on a consumer’s smartphone or tablet is losing out to apps that give shoppers a path to multiple labels

By Rachel Strugat

When it comes to apps, the more brands, the better.

The lone fashion brand fighting for coveted real estate on a consumer’s smartphone or tablet is losing out to apps that give shoppers a path to multiple labels — and the stakes are high, since apps serve as the venue of choice for a company’s top consumers, according to many who already have established app presences.

Nielsen reported 89 percent of time spent on mobile is through an app and Goldman Sachs predicts in three years’ time, mobile will make up almost half of all e-commerce sales. Mobile sales grew 36 percent last year to about $49 billion, according to Adobe Digital Index. But while mobile is the fastest-growing commerce channel, many brands still don’t have a clue what kind of app experience — if any at all — is best suited to their brand.

The consensus is that multibranded apps — including retailers, marketplaces and aggregators — already have a leg up on monobrand ones.

“Single-branded apps are a really hard sell,” said Maribel Lopez, founder and chief executive officer of Lopez Research. “If you’re going to do a single-branded app, you have to ask what people are going to do with it that will make it more compelling and what are you missing in other channels that you can use mobile to do. Do I want to check out the latest Louis Vuitton handbags in an app? Probably not.”

Lopez said the issue is that most brands try to take their existing Web site and transfer it directly to an app. This can result in an app experience that is lacking, especially for a single brand.

While people typically download between 75 and 200 apps to their phone or tablet, she said they actually use fewer than two dozen of them regularly — in other words, no more than one out of every three to five apps ever truly become key for users.

The difference between just downloading an app and actually engaging with it is crucial, especially for a company that’s using the app as a branding vehicle and not for transactions (even “engaging” is relative — it doesn’t mean using an app daily; it can mean downloading the Con Edison app to pay one’s electric bill once a month).

“If you’re trying to do a transaction, [going to] a retailer’s app makes sense [because] people might come and find a wide range of products,” Lopez said. “If you’re a brand and there’s no effective call to action at the end of it, then why?”

She said Coach and Burberry are notable exceptions that can be single-branded apps — branded or transactional — because of their digital efforts, presence in the market, brand heritage and overall prowess in the space.

But Matt Nemer, an analyst at Wells Fargo, said vying for time and space on someone’s device can be difficult for retailers.

Every brand has its group of highly engaged brand loyalists, but on the whole, it’s the larger organizations and big-box retailers like Wal-Mart, Target or Costco that will win with apps because of their broad assortment of products. This includes Amazon, as well as marketplaces eBay and Etsy.

Nemer also takes issue with the way people talk about mobile. He said brands are measuring the wrong things and that instead of having this intense focus on what percentage of overall sales come from mobile, companies need to look at retail as a unified channel.

“There’s a lot of measurement about where the transaction was consummated,” he said. “You might be in the store and you decide to buy it on your phone because there’s a line at checkout. Does it mean that’s a mobile transaction?”

Measuring mobile sales and traffic means little unless brands are able to prove mobile customers spend more, that their average order value is higher and that they’re buying items that result in a greater margin. He noted a lot of orders that occur on mobile would have happened otherwise, so being able to analyze the numbers and figure out which purchases are truly incremental is key.

“The question is, are the economics any better? If you’re in a store, you’re more likely to buy something you didn’t intend to buy. That doesn’t happen as much on mobile,” Nemer said. “Are these good orders? I have yet to see anyone provide tangible evidence. I’m not sure if [mobile’s] a net positive all the time for retail and that’s the way the industry has painted it.”

Barneys New York said its app user is its most engaged and highest-value consumer. This person typically has a 175 percent higher conversion rate and 25 percent higher average order value than the retailer’s average shopper. They are also 70 percent more likely to shop through editorial content on the app.

Neiman Marcus is seeing 30 percent month-to-month growth in traffic to its app, with 90 percent of mobile app customers shopping during their visit and 44 percent visiting the mobile message boards. The retailer has growing mobile Web traffic, as well, although the app customer comes back more frequently and is more engaged, clocking in a higher number of page views per visit.

The pure-play digital sites are also getting lots of play on their apps.

Sarah Watson, head of mobile at Net-a-porter, said 40 percent of the company’s sales are made from a mobile device, with traffic from mobile clocking in a bit higher. The company, which has had an app since 2009, recently turned the focus to the mobile Web experience.

The current Net-a-porter app sees about 30,000 new downloads a month, and is considerably more advanced than its first app experience, which launched six years ago and was solely focused on the “What’s New” category. To date, the Net-a-porter Group has seen almost four million downloads of its apps, including Net-a-porter, The Outnet and Mr Porter, as well as an app for bimonthly Porter magazine. An “I Am Porter” app came out last year as a promotion surrounding the launch of Porter magazine.

“Average order value is slightly higher, but not significantly,” Watson said when asked if the app consumer spends more than its desktop or mobile Web counterparts. “It’s more about repeat business and coming back more frequently than mobile Web [shoppers].

Another point of differentiation for customers is that the app has push notifications, allowing Net-a-porter to communicate instantaneously and in a relevant way to that user. This could mean letting them know when an arrival from their favorite brand or designer has gone live or about an exclusive capsule collection.

Yonatan Feldman, Gilt’s vice president of mobile, also credited push notifications as among the reasons a shopper would use the flash-sale site’s app over its mobile Web experience. Perhaps a more compelling reason are mobile-exclusive sales that take place almost daily.

Gilt has upward of nine million active members globally, with most of these accessing the app via iOS devices. According to Feldman, more than half of the company’s sales come from mobile: a combination of mobile Web and purchases made through the Gilt app — which has received 10 million downloads to date across versions for iPhone, iPad and Android. Forty-eight percent of consumers from the past year have ordered on a mobile device and 34 percent of members who have visited Gilt in the same time have done so on mobile.

Gilt’s app users visit more often, spend more and have higher conversion rates. A lot of mobile Web traffic occurs when members open e-mail on their phone.

“Will 100 percent of our sales come from mobile or tablets? Probably not,” Feldman said. “There is room to grow and we’ll continue growing. I don’t think we’ll stay hovering around 50 percent.”

As the mobile market continues to evolve — and evolve rapidly — new options and functionality continue to crop up, with the tech giants such as Apple with Apple Pay and the Apple Watch vying for their piece of the action.

David Tisch, cofounder of Spring and managing partner at investment fund BoxGroup, said the five-month-old Apple Pay is playing a larger role in the payment process, making up 23 percent of the app’s orders. Of these Apple Pay users, 22 and 26 percent are more likely to place a second order and place a larger second order than their first, respectively.

For brands, Spring blends the benefits of having a controlled commerce experience with a shared distribution platform. Since its launch in August, the iOS marketplace went from carrying 195 brands to more than 700, including Pierre Hardy, Everlane, Soludos, 3×1, Greats, Solid & Striped and Illesteva. More than 89 percent of users on the app have discovered a new brand and the average session time on Spring is five-and-a-half minutes a day, with 43 percent of customers counted as repeat customers.

Tisch’s rationale for creating Spring was that consumers were not using monobranded apps, and if they were, it was likely more for community and content purposes rather than commerce. He estimated the maximum number of single-branded apps a typical mobile user wants to have is just one.

“If you’re a Nike fanatic, you’re going to download the Nike app, but the app has a lot more than commerce — it has a community and content,” Tisch said. “The barrier for a commerce brand to get adoption on an app is superhigh. The only consumers that will download an app are existing brand fanatics; you aren’t going to download an app to discover a new brand.”

MaryAnn Bekkedahl, president and cofounder of Keep Holdings, said the iOS shopping app Keep sees users, on average, open the app 13 times a month. Keep allows members to “keep” (similar to “pinning”) products from multiple brands and retailer’s Web sites in one place and then buy these products through a universal shopping cart. The company has raised $43 million and has enabled purchases for consumers through more than 3,000 stores. Bekkedahl declined to say how many users Keep has or how much in sales volume has been driven by the app, but she said the app and the corresponding Web site see two million visits per month and more than 10 million products monthly. So far, 15 percent of sales are made using Apple Pay.

This is a pretty healthy adoption rate, considering Apple’s payment system launched in October. Apple Pay is now accepted in 700,000 locations in the U.S., a number that is quickly growing.

“With Apple Pay integration, the mobile shopping experience is even easier for consumers, and even more impactful for retailers,” said Shaan Pruden, Apple’s senior director of partnership management.

PayPal, which is in the process of separating from former parent company eBay, is still the leader in the mobile payments space and driving billions of dollars in transactions a year, but the verdict is out on who will win in mobile payments.

Some speculate PayPal will keep its hold on virtual transactions while Apple Pay will evolve into more a physical retail payment solution. Others are sure Apple Pay will dominate — on and off-line.

“With platforms like Apple Pay as a potential partner, you have to make a bet on the platform, and to bet against Apple would be silly,” Tisch said.

Images courtesy of WWD and Shutterstock


For more from WWD and to subscribe, click here.