Zappos Meddles in Mobile as Opportunities Increase for Apps

As we’ve written before, 2011 is the year that mobile begins to become a big opportunity in e-commerce.

To be sure, a lot of brands are getting on the bandwagon. Big retailers represented on the iPad with applications include eBay, Target, JCPenny, Gilt Groupe and Pottery Barn Kids. Some are even experiencing good results.

EBay has been one of the more aggressive in revealing how its mobile business is faring.

The auctions and e-commerce company said last year that mobile sales more than tripled in 2010, generating nearly $2 billion in gross merchandise volume. (That’s the value of all stuff sold on eBay, regardless of whether the buyer and seller finalized the deal.)

While that’s a big number, it represents only 3.7 percent of overall earnings.

But that could change quickly.

From what we are hearing, various retailers are expecting mobile revenues to hit about 10 percent of overall sales by the end of this quarter, and that later this year, it could inch even higher as more tablets and smartphones get into the hands of consumers.

To get a taste for how shoppers interact with applications on tablets and mobile phones, we caught up with the folks at Amazon-owned Zappos.

Zappos, which was founded in 1999 as a shoe seller and has since branched out to more categories, is a relative newbie to mobile. It started developing apps only six months ago, and launched an iPad app in October followed by an iPhone app in December.

Now it’s on a roll and expects to launch an Android version in early March, with a mobile Web site remodel also in the works. Jaimee Newberry, a product manager on the Zappos Mobile team, said, “We are pleasantly surprised. We think they seem to be doing well, although it’s really early.”

Zappos declined to share specific revenue or download figures, but so far the Zappos Mobile iPad and iPhone apps are  No. 5 and No. 32, respectively, in the Lifestyle category. Overall, Zappos ranks 80th for iPad downloads and has received four stars in a five-star rating system.

Zappos Program Manager Ian Klassen said what’s interesting is how behavior differs between mobile devices and the PC. “The results we are getting back on the iPad show that people absolutely love to browse,” he said.

In addition, he said that the iPad provides a big sales lift on Sunday evenings between 6 and 9 pm PT, whereas the PC version is stronger on weekdays– in particular on Mondays and Tuesdays. Behavior on the iPhone differs, too. “We say the iPhone is for shopping on your lunch break, whereas the iPad is where you do shopping on the weekend, like going out to have coffee and enjoying the experience,” Klassen said.

The mobile devices are also selling more apparel than the regular site, although shoes  remain dominant on both.

Sure enough, the iPad can offer a much more luxurious experience than the smaller screen on the iPhone, and can do a fairly good job of replicating a window-shopping experience.

Stealing a play from the iPad’s photo app,  Newberry said consumers can use the same pinch-burst technique to dive into a whole category, such as women’s shoes. Instead of having to click to enter the category, a number of photos displaying sandals and sneakers will pop up. While the feature may not be practical for finding the exact pair of shoes you want, it’s a whimsical way to be entertained while browsing.

Zappos plans a number of updates for the applications soon, including more filters to help with browsing and free shipping for everyone. On the regular PC site, users have to sign in to VIP accounts in order to be guaranteed free shipping, but on the mobile devices the differentiation wasn’t possible before. Soon, if you buy on a mobile device, you will automatically be upgraded.

An aspect of the app experience that is completely arbitrary is the products that are featured–in nearly full size–on the homepage. “We feature what looks nice and what is the most colorful,” Newberry said.