Investors may be feeling justified, as Amazon’s revenue did come in light for the holiday quarter. (In after-hours trading, though, the stock is up nearly nine percent on strong operating income.)

Amazon said its revenue totaled $21.27 billion in the fourth quarter, falling short of analysts expectations, which were projecting revenue of $22.3 billion.

Amazon’s number, however, was in line with its own guidance. The e-commerce giant was forecasting net sales between $20.25 billion and $22.75 billion, representing a jump of 16 percent to 31 percent.

Historically, Amazon has been able to grow at twice the rate of the overall e-commerce market during the fourth quarter, and since eBay filed strong results, it was expected to do the same. But with sales growing only 22 percent year over year, the company missed that typically reliable benchmark.

According to comScore, online spending in the U.S. totaled $42.3 billion, representing a 14 percent increase over 2011. (Excluding unfavorable impact from foreign exchange rates in the quarter, Amazon net sales grew 23 percent compared with fourth quarter 2011.)

For Amazon, the story is all about its revenue, since it often invests all of its profits back into the business.

In terms of the company’s bottom line, results were also in line with Amazon’s guidance, but then again, it left itself a lot of room for error.

It had projected that results could be anywhere from an operating loss of $490 million to an operating profit of $310 million. In the fourth quarter, it reported operating income in the upper end of that range, increasing 56 percent year over year to $405 million.

Investors liked those results, and in after-hours trading, pushed the stock up $22.44, or 8.6 percent, to $282.79. That’s much closer to its recent 52-week high of $284 a share.

Its net income, however, decreased 45 percent to $97 million, or 21 cents a share. That, too, fell short of analyst expectations, which wanted Amazon to generate a profit of 29 cents a share.

Clearly, rather than making money, Amazon has continued its emphasis on investments by continuing to sink money into building more warehouses and developing new technology and services, like streaming video deals, cloud computing and its Kindle hardware division.

Investors want to know if that will continue this quarter.

For the first quarter, the company is projecting net sales to fall between $15 billion and $16.6 billion, representing growth of 14 percent to 26 percent. But again, there’s a wide range of expectations for its operating results, which are being projected to fall between a loss of $285 million and a profit of $65 million.

For the full year, net sales totaled $61.1 billion, up 27 percent year over year. The company also reported a net loss of $39 million, or nine cents a share.

But Flurry, a mobile analytics company, is introducing the term “app & mortar” in a new report published today that explores the rise in smartphone shopping.

Clearly, the term is a play on the term “bricks and clicks,” which emerged in the late ’90s and became popular as e-commerce started to challenge physical retailers.

In some respects, this report confirms what we already knew about mobile commerce, but takes it a step further by figuring out who is benefiting the most right now from the trend. Surprisingly, it’s physical retailers.

In the report, Flurry analyzed the amount of time spent by consumers across more than 1,800 iOS and Android shopping apps in December 2012, compared to the same month a year earlier.

The biggest growth category by far was apps developed by retailers, such as Walmart, Macy’s and Gap.

Flurry said time spent in retail apps skyrocketed by 525 percent year over year. In contrast, online marketplaces, such as eBay and Amazon, increased by only 178 percent.

In terms of the share of shoppers’ time being spent inside the different apps, retailers also saw the biggest gains. In December 2012, shoppers spent 27 percent of their time inside of retail apps, up by 12 percentage points over the same month a year earlier.

The gain in share by retail apps came at the expense of online marketplace and daily deal apps, which declined year over year. The share of time being spent with online marketplaces decreased from 25 percent in December 2011 to 20 percent in December 2012. Daily deal providers, like Groupon and LivingSocial, fell to 13 percent from 20 percent.

Flurry did not offer a lot of analysis as to why this was occurring, but suggested that retailers were beginning to better respond to the move toward “online meeting offline shopping through mobile apps.” In general, 2012 was the first year that many online or physical retailers took mobile shopping seriously, so it was likely that the distribution of time spent would change with a huge surge in consumer interest and better options.

Interestingly, even though Flurry noted a decrease in time spent in online marketplace apps, eBay still easily beat its mobile revenue forecast (so it’s not clear if there’s a direct correlation between time spent and dollars spent). Last week, eBay said it recorded $13 billion in mobile revenue in 2012, exceeding its forecast of $10 billion. This year, the online retailer expects mobile revenue to hit $20 billion.

EBay is the most transparent of the larger e-commerce players when it comes to mobile’s contribution.

In contrast, an analyst’s best guess for Amazon is that about $3 billion to $5 billion of its annual sales are coming from mobile devices.

While the move was controversial — and still ruffles some merchants’ feathers — the fact is, it seems to be working.

In the company’s earnings call on Tuesday, Chief Business Officer Nikesh Arora said, “Our core business is strong and investments in mobile and shopping this holiday season passed with flying colors. … Search performed well during Cyber Monday and Black Friday. We saw a greater proportion of queries with commercial intent.

Google offered some anecdotal evidence on how well the new business is performing, but clearly holiday shoppers did some good in boosting one of the company’s key metrics.

Arora reported that Front End Audio, which sells recording and live-sound equipment, said that sales resulting from their ads quickly made up 15 percent of the company’s revenue within weeks of launching. Further, the company reported that its click-through rates tripled and product conversions increased by 75 percent to 80 percent.

If only a portion of Google Shopping retailers are seeing those kinds of results, that could translate into meaningful ad revenue for the search giant, especially during peak times like the holidays.

During the fourth quarter, Google said its cost-per-click business increased 2 percent compared to the prior quarter, reversing a long period of declines. (The business was still down from the previous year, however.)

In a note to investors, Citi analyst Neil Doshi said he was expecting some improvements due to policy changes that Google made in regards to click arbitrage from its partner sites. He also believed that some uptick came from improvements in mobile rates.

But based on third-party research, the official October launch of Google Shopping clearly played a role.

Seattle-based Mercent, which provides retailers with tools to help them compete on Amazon and Google, said CPC rates increased to 70 cents per click on Google Shopping in December, up from roughly 55 cents in November. In June, it was less than half as much, or closer to 30 cents.

Mercent’s data is based on its customer base, which consists of 70 retailers using Google Shopping, including 1-800-Flowers, REI and Office Depot.

Indeed, Google’s efforts in the space are still in their infancy.

By its own count, it has tens of thousands of merchants participating in the platform and more than one billion products listed. Even Amazon is participating, despite it being one of the big holdouts. It buys product ads for the Kindle.

During the earnings call, analysts peppered Google’s Larry Page with questions about Google Shopping, but he mostly dodged them, especially when they were related to future product launches.

“I think that we are at the early stages of that. We just rolled out Google Shopping and we’ve seen tremendous uptake from merchants and users,” he said.

In response to a question about whether Google will enable consumers to pay or check-out within Google Shopping, Page said: “I’d expect the ease of buying things will improve over time, but I won’t comment on details. We are always focused on making our user experience better.”

Last month in an interview with AllThingsD, Sameer Samat, Google Shopping’s VP of product management, did clarify that the company has no aspirations to compete with merchants directly, even though the experience is starting to look more like a traditional e-commerce site.

“We aren’t planning on being a retailer,” he said. “We don’t view being a retailer right now as the right decision.”

Google justifies charging for Google Shopping because of the investments it has made over the past several months. It has completely overhauled the shopping experience, stressing product images over text and allowing consumers to easily conduct price comparisons across numerous sites.

The purpose of the efforts is to close the gap between it and Amazon as a starting point on the Web for shopping. Analysts estimate that 30 percent of consumers start their research on Amazon, whereas 13 percent of consumers start on Google.

Image via mtkang

And while many retailers, especially smaller privately held companies, were bullish on the number of transactions coming from mobile, other larger companies — especially Amazon — have remained mum on the subject.

But in a report today, Citi Analyst Neil Doshi estimates that Amazon is generating $3 billion to $5 billion in annual sales from mobile devices.

If this is the case, the question that has to be answered is, is this significant?

It’s really not.

Take a look at the facts. Based on Amazon’s 2012 revenue forecast, the company’s net sales will total somewhere around $60 billion in 2012, which means that mobile sales will equate to 5 percent to 8 percent of total dollars spent on Amazon.

When asked about his estimate, Doshi called it “conservative,” noting that in 2012, Amazon’s percentage of mobile transactions could be as high as 10 percent. The estimate also takes into account only purchases made on Amazon.com from mobile, and not digital downloads from Kindle devices, for example.

Granted, moving the needle at a company the size of Amazon is extremely difficult, but that’s still comparatively low when looking at others in the space.

Take a look at eBay. It’s anticipating mobile sales to hit $10 billion in 2012, which is at least twice as much as Doshi’s conservative estimate for Amazon. That could equate to nearly 16 percent of eBay’s 2012 revenue — which is double what it was in 2011, and double Amazon’s estimated percentage in 2012.

Doshi provided other comparison points for some of the leading online players: About 15 percent to 25 percent of Google’s search queries are coming from mobile, as are 15 percent to 20 percent of page views on LinkedIn and 40 percent of Walgreens’ online prescription refills.

Amazon is trailing here, but given the Seattle company’s huge investment in mobile, that’s hard to believe.

If Doshi’s estimate took into account digital downloads, the numbers would be a lot higher. Take e-books, for example. It would be logical if a majority of the e-books being purchased are occurring on Amazon’s own Kindle e-readers and tablets.

Additionally, it has invested heavily in building its own app store on Android devices, which sells digital content, such as games. Amazon also has a dozen or more mobile applications available across several platforms, including iOS, Android and its own Kindle devices, which helps consumers shop its homepage in a streamlined fashion.

During the 2011 Christmas season, Amazon launched a mobile promotion that encouraged consumers to compare prices in a retailer’s store by using its bar-code scanning technology on its phone app. Anyone who used the app to scan a bar code received up to $5 off on any purchases made. The purpose was to increase usage of its mobile apps, but it seriously backfired when local retailers accused Amazon of encouraging “showrooming,” in which consumers test products out in the store, but end up buying them online.

Since the PR blunder, Amazon has been especially quiet about its mobile successes, so it’s really hard to tell if the 5 percent to 8 percent range is even close to accurate.

But beyond just knowing the percentage of revenue coming from mobile, it’s equally difficult to define success. As Doshi points out, it’s hard to know whether mobile results in incremental revenue, or if it is cannibalizing purchases that would have otherwise occurred online.

He writes:

[T]here has been a relatively healthy debate around the extent of Mobile Internet usage that’s really incremental, and accordingly the extent of monetization opportunities that are completely incremental (and do not cannibalize traditional desktop / PC Internet usage).

Doshi adds that people tend to use phones while they are out during the day and tablet usage spikes from 7 to 10 pm when they are on the couch — in other words, mobile usage is occurring when they aren’t in front of a PC and therefore could be incremental.

In all, Doshi believes Amazon and eBay are “likely to benefit from increased sales activity from mobile devices.”

That’s obvious. After all, purchases made on the PC and mobile monetize the same. However, that’s not the case for content companies, which find it much harder to generate revenue from advertising on the smaller screens.

Nicolas Raymond / Freestock

According to comScore’s final tally for the November-December shopping season, spending for the two-month period totaled $42.3 billion, a 14 percent increase over 2011.

“This year’s growth rate is essentially on a par with last year’s,” said comScore Chairman Gian Fulgoni. “But despite many positives for the online sector, this year’s season did not quite perform up to our initial expectation for growth rates in excess of 16 percent as we fell a billion dollars short of our expected total of $43.4 billion.”

The research firm, which tracks online shopping habits over broadband connections in the U.S., said a slowdown occurred after Thanksgiving due to low consumer confidence.

“As it turns out, this December swoon coincided closely with a significant decline in the University of Michigan consumer sentiment index that was attributed in large part to consumers’ fiscal cliff concerns. You might say that had it not been for Congress, every other indicator suggested it would have been an even merrier Christmas for online retailers,” Fulgoni said.

This season’s high points included some particularly outstanding days for online retailers, including Cyber Monday, Nov. 26 ($1.5 billion); Monday, Dec. 17 (up 76 percent to $1.013 billion); and Christmas Day (up 36 percent to $288 million). But those good days could not make up for three solid weeks in which the growth rates failed to surpass 12 percent.

Here’s a week-by-week breakdown of spending this season. A noticeable lull is present during the middle weeks:

This softness may have been expected based on preliminary results that some retailers released this morning. The figures indicate that sales may have been soft for many in December, not just online retailers.

For instance, Target said sales in December were flat; and Wet Seal, Macy’s and Kohl’s either cut their fourth-quarter outlooks or said quarterly results will be at or near the low end of their previous guidance range, according to MarketWatch.

Online sales are still growing at a much faster clip than retail as a whole. For instance, overall, December same-store sales, excluding drug stores, rose 4.8 percent, according to data from Retail Metrics.

While comScore’s report may be disappointing to some, it won’t affect all online retailers evenly.

For one thing, comScore’s results don’t include purchases made over mobile phones. Mobile commerce, which includes orders placed on tablets and phones through mobile browsers or applications, were a highlight for many retailers this holiday season. Second, there will be some retailers that overperformed and others that lost share.

As an example, Baird Equity Research’s Colin Sebastian raised eBay’s price target earlier today to $60, up by $2, based on evidence that eBay and PayPal excelled during the holiday season. The company’s full results will be out on Jan. 16.

And the one to watch closely will be Amazon.

Many brick-and-mortar companies resolved to fight the giant e-tailer by guaranteeing to match online prices. Whether that had any impact is still not known. Additionally, there was some question earlier this holiday season if Amazon was performing as well as expected.

Wells Fargo Analyst Matt Nemer said that for the first time in years, Amazon was giving some customers coupons for 10 percent off their orders. But it was unclear whether Amazon was only trying to reactivate old customers or if it was doing it because sales were short. Another plausible reason was that customers were procrastinating. Amazon allowed some customers to order as late as Dec. 21 with the promise of delivery by Dec. 24, which may have delayed some purchases.

“I’m not intimidated by going on eBay, but I don’t know how to sell, and PayPal is another deterrent,” she said.

But the San Jose resident lucked out after hearing about eBay’s new pilot program on the radio.

The program offered to send an eBay employee to her home to pick up the items and deliver them to an expert, who would attempt to sell them — for a cut of the proceeds.

“I can’t tell you how fabulous this is. You never know what’s going to sell, but you might as well try,” said Weber, who was visited by two eBay employees in December.

The program is one of several pilots that eBay is experimenting with as it tries to figure out ways to connect with consumers locally by having a physical presence, rather than conducting everything anonymously over the Internet.

Last month, I got a close look at the pick-up service as well as a similar pilot that allowed people to drop off clothing and small consumer electronics at a mall. The two trials are being conducted in a small number of markets for a limited period of time, but could be expanded if successful.

A third pilot that falls into the local category is something called eBay Now, a same-day delivery service that is being tested in San Francisco and parts of New York City. The program allows users to place orders at major stores, like Macy’s or Toys “R” Us, from a mobile phone and have them delivered to their door within a couple of hours.

Last month, I met briefly with Vikram Singh, director of eBay’s consumer business, who is heading up the pick-up program, and with Amanda Thomas, the director of new business pilots at eBay, who is leading the drop-off centers, to get the scoop on both programs.

Both Singh and Thomas said the trials have been great for introducing eBay to new customers. But what stood out about both programs was how little risk eBay was taking on their end for conducting them. While it must pay for some infrastructure, like the drivers, vans and mall kiosks, there’s no fear that eBay will end up with inventory it doesn’t want. For both trials, eBay is tapping into its network of selling assistants, who are registered with eBay to sell items for a fee.

In Weber’s case, her items were picked up by two eBay employees, who took careful inventory of every plate and serving dish before delivering the items off to a selling assistant.

Once the item is logged by eBay, it is then up to the seller to come up with a fair price to get the item sold, keeping in mind that the pick-up program takes a 25 percent cut. In the future, Singh expected to experiment with charging a fee for the pick-up service, as well, to see if consumers would still be interested.

Singh said of the 70 pick-ups conducted by mid-December, no one had questioned the cut. He said he has also been happy with the quality of items being picked up, except that there have been too many books.

If the items don’t sell, the owner can either choose to donate them or have them returned to their home. The owners receive payment in the form of a printed check or via Paypal within three weeks of the items being picked up.

The mall pilot worked a little differently.

During the trial, consumers were invited to drop off a bag of used clothing or small electronics for evaluation while they shopped. When they returned, a registered seller would offer a set price for the entire bag. The consumer could either accept the offer and receive payment via PayPal, or choose to list the items on eBay using their own account.

If they opted to sell the items themselves, the registered sellers on site would provide advice on how to price the items and how to list them to get the most attention.

For instance, a seller told me the best way to sell something was to use every character allowed in the headline to describe an object. For instance, some of the keywords to describe the navy blazer in the photo on the left included navy, peacoat, blazer, new and buttons. Within just a few minutes, she draped the blazer over a mannequin, snapped a photo of it using an iPad and had it listed for sale.

Thomas said during the first week, of the 2,000 people who stopped by the booth, 30 to 40 percent were new to eBay. The pilot operated out of a mall in San Jose between Nov. 26 and Dec. 25.

In a separate interview, Devin Wenig, eBay’s president of global marketplaces, said the experiments are focused on keeping eBay competitive — against large commerce companies like Amazon, as well as against start-ups that are constantly entering the space.

By being proactive about getting new sources of inventory, it ensures that eBay has a good selection of items for sale, not just the items from people who have sold on eBay before. A key component of eBay’s success is to list both used and new items side by side to give consumers the most choices, he said.

“We have 350 million items for sale, which is nine times larger than Amazon,” Wenig said. “That wouldn’t be the case if we separated out the two businesses.”

Wenig said he plans to use the pick-up service to sell a number of lawn ornaments that came with his home, which he doesn’t personally care for. Listing them on eBay and being responsible for shipping, however, seemed like a burden. Getting them out of his garage, however, is something he’s definitely interested in.

“People make their living on eBay and that feels good, but to be the belle of the ball, we have to step it up. We can’t get complacent,” he said. “We have to move faster and innovate at a quicker pace.”

If so, you’re in luck. There are a handful of options for getting packages delivered in time for Christmas, especially if you live in one of the markets where retailers are testing same-day delivery services.

In case you didn’t already know, today was pretty much the deadline for consumers to place orders online and to reasonably expect their packages to arrive on time. For example, Sears, Nordstrom, Macy’s, Walmart and even Amazon stopped offering rush shipping this afternoon on most orders.

As I previously reported, last week was the peak for e-commerce spending, and this year that shouldn’t be any different. But there are a number of ways to still get deliveries sent to your home if you don’t feel like fighting the crowds at the mall.

Amazon is promising on-time deliveries for some orders placed on Saturday and Sunday for some items in select cities. But it won’t be free. For those with Amazon Prime, it will cost $4 and up — on top of the $79 you pay every year to be a member.

Then there’s same-day delivery. Though the services are being characterized as tests, these merchants are trying to see if it can be economical to deliver items that are kept locally at stores (and not at distant warehouses) to homes within a few hours. It’s clearly another strategy for brick-and-mortar retailers to try to compete with e-tailers that offer the convenience of delivery.

Two of the major trials are being conducted by eBay and Walmart.

EBay’s service is called eBay Now. Consumers can place orders from a mobile app that will deliver goods to you at your home, in a park, even at a bar, within about an hour. The company is working with a number of local retailers on the service, including Target, Best Buy, Nordstrom, Toys “R” Us and Bloomingdales.

According to an eBay spokeswoman, eBay Now will be available from 9 am to 6 pm (local time) on Christmas Eve, but closed on Christmas Day. The service is currently being tested in San Francisco and parts of New York City.

Walmart is another retailer that is testing same-day delivery. The “Walmart to Go” service allows customers in a handful of markets to buy and receive items on the same day for $10. Inventory is limited to popular items, including toys, electronics, sporting goods and other gifts. The service is in Northern Virginia, Philadelphia, Minneapolis, the San Jose-San Francisco Bay Area and Denver.

Walmart will be offering same-day delivery until Dec. 23, but will be closed on Dec. 24 and 25. It will resume on Dec. 26.

There are smaller alternatives, too.

For example, TaskRabbit is a marketplace where you can find people who are willing to complete small projects or services for a fee. The service operates in a number of major markets around the country, and due to its independent nature, a spokesman claims, “The Web site and iPhone app are never closed.”

In fact, once a “rabbit” has received a background check and activated, “they can work when they want, and not when they don’t.” Popular tasks this month include holiday shopping, which is averaging $57; gift wrapping, $38; and hanging lights, $85. If that sounds exorbitant, remember that consumers should expect to pay a premium on holidays.

Finally, another service in San Francisco is Postmates, which is offering same-day delivery by dispatching a nearby courier to run an errand. A spokeswoman confirmed that it is operating on Christmas Eve from 8 am to 6 pm, and on Christmas Day from 11 am to midnight.

Additionally, as part of the iPhone app, Postmates is creating a shopping guide that lists major retailers where last-minute purchases can be made, including the likes of Apple, Tiffany, Uniqlo and Nordstrom.

While there seem to be a lot of last-minute options, Forrester Research analyst Sucharita Mulpuru said that this year is no different from other years in at least one sense. Retailers, and especially e-commerce companies, are always trying to push the limits when it comes to how late orders can be placed.

“It does drive a spike in sales as you approach the shipping deadline. I’d estimate a 20 percent lift on that day over an average holiday day, but by no means would it eclipse the Thanksgiving weekend or Cyber Monday,” she said.

Of course, if you miss all of these options, there are always gift cards. And there’s still the local mall.

Image by Paul Hohmann

“Online is clearly taking share from brick and mortar. … [T]his is likely to continue”
—International Council of Shopping Centers, last week

America has too many malls.

I’ve recently blogged that many traditional brick-and-mortar retailers are being threatened with “economic destruction” by their advantaged online competition. In an interview with Bloomberg TV, anchorwoman Nicole Lapin asked about the implications of this dynamic on retail real estate. I said I hadn’t studied it, but I thought the ramifications would be very big and very negative (I believe the phrase “apocalyptic” was used).

I’ve since had the opportunity to spend some time looking at this issue, and I believe we’re seeing clear signs that the e-commerce revolution is seriously impacting commercial real estate. Online retailers are relentlessly gaining share in many retail categories, and offline players are fighting for progressively smaller pieces of the retail pie. A number of physical retailers have already succumbed to online competition, including Circuit City, Borders, CompUSA, Tower Records and Blockbuster, and many others are showing signs of serious economic distress. These mall and shopping center stalwarts are closing stores by the thousands, and there are few large physical chains opening stores to take their place. Yet the quantity of commercial real estate targeting retail continues to grow, albeit slowly. Rapidly declining demand for real estate amid growing supply is a recipe for financial disaster.

There are very few thriving physical retailers these days outside of the daily consumables markets. I did a quick analysis on the high-level health of the National Retail Federation’s list of the Top 100 retailers in 2012, focusing on merchandise retailers that would likely be located in malls (removing grocery, drug, restaurant and online retailers). I looked at three measures of retailer health: total sales growth, comp store sales growth and number of stores.

The analysis doesn’t paint a very pretty picture regarding the health of the leading physical retailers in the United States. Total sales growth is mixed and is negative for 20 percent of the sample. Comp store sales growth — arguably the key measure of retailer health — is also mixed, and a quarter of the sample is negative. And note that many of these sales results include the retailers’ online segments, so the picture for their physical stores is even worse. Lastly, store counts are simply stagnant — about as many top retailers shrank their store count as expanded it, and precious few are expanding aggressively. The largest retailers in the U.S. do not look very healthy. And if they’re struggling, it’s likely that their more marginal physical competitors are struggling even more.

I went back to the Top 100 retailers in 2007 to see how that crop had fared five years later and found that four of these top retailers had already gone away through Chapter 11. Interestingly, the picture of these four doesn’t look that different than the 2012 list.

Source: Stores.org Top 100 Retailers

This declining retailer health is directly impacting malls and shopping centers in the form of very high vacancy rates and sluggish rents — exactly what you’d expect to see where supply exceeds demand. Both factors deteriorated quickly during the economic crisis of 2008-09, but they’ve shown virtually no improvement since in spite of improved economic conditions. The recession was the catalyst, but competition from online retailers can only be the continued driver. The mall business isn’t very healthy, either.

These trends are hitting the market capitalizations of most of the largest owners of retail real estate. Simon, General Growth, DDR and Kimco among them own over 600 MILLION square feet of U.S. retail real estate, according to nreionline. Simon’s stock has performed strongly, but the other three stocks have created virtually no value over the past decade.

Source: Yahoo! Finance

Most real estate professionals understand that profound changes are afoot. Don Wood, CEO of Federal Realty Investment Trust, says, “There is too much retail supply in this country.” The Wall Street Journal reports, “Green Street Advisor, an analysis firm that tracks REITs, has forecast that 10 percent of the roughly 1,000 large malls in the U.S. will fail within the next 10 years and be converted into something with far less retail. That’s a conservative estimate; many mall CEOs predict the attrition rate will be higher.” And Daniel Hurwitz, president and CEO of DDR, observes, “I don’t think we’re overbuilt, I think we’re under-demolished.”

I agree with the above perspectives, although I believe they likely understate the eventual impact on malls. A report from Co-Star observes that there are more than 200 malls with over 250,000 square feet that have vacancy rates of 35 percent or higher, a “clear marker for shopping center distress.” These malls are becoming ghost towns. They are not viable now, and will only get less so as online continues to steal retail sales from brick-and-mortar stores. Continued bankruptcies among historic mall anchors will increase the pressure on these marginal malls, as will store closures from retailers working to optimize their business. Hundreds of malls will soon need to be repurposed or demolished. Strong malls will stay strong for a while as retailers are willing to pay for traffic and customers from failed malls seek offline alternatives, but even they stand in the path of the shift of retail spending from offline to online.

This in turn creates further opportunity for online commerce. If I were thinking of starting a new retail brand right now, I would unquestionably start it online. And many very talented entrepreneurs are doing just this! I personally shop at Bonobos for pants, J.Hilburn for sweaters, Ledbury for shirts and Warby Parker for eyeglasses. All of these brands design and source their own goods. They historically would have started in the mall but they now are starting online, a trend that will undoubtedly continue. There clearly will be fewer new offline retailers to take the space vacated by the disappearing brick-and-mortar chains, further pressuring malls.

And in an ironic turn, many of these online brands are experimenting with offline stores — but typically with some important twists. Bonobos and Warby Parker have built showrooms in their New York offices where consumers can come in and try on samples. But if the consumer wants to purchase items, then the companies fulfill the product from their warehouses — they don’t stock inventory in their “stores.” Bonobos has expanded this concept into a few additional locations, but not mall locations. Instead, they are selecting lower cost, non-mall locations and using emails to their online customers to drive folks to these locations. They do this because a consumer’s purchasing typically expands after a visit to their physical store, and the costs are not high given the lack of inventory and lower rents and staffing costs. If this trend expands, it will provide further challenges to malls.

In researching this post, I came across a fascinating (and slightly morbid) Web site called deadmalls.com, a site that chronicles the tales of hundreds of already or soon-to-be dead malls. Co-founder Brian Florence writes, “I started deadmalls.com with my friend Peter Blackbird in 2000 when we both realized that Pete had mountains of data about dead and dying malls stuck up in his head. Why keep this information to yourself? And, realizing the burgeoning power of the Internet and its ability to draw in more information, the site was created to harness stories of woe and merriment from others. It’s been a great success.”

Unfortunately for mall owners, the content on deadmalls.com is about to expand substantially. There are just too many malls in America, and this will only get worse.

Jeff Jordan is a partner at Andreessen Horowitz and is on the boards of AirBnB, Belly, Fab, Circle, Lookout and Pinterest, as well as OpenTable, Wealthfront and Zoosk. Previously, Jeff was president and CEO of OpenTable, which he took public in 2009. Before OpenTable, Jeff was president of PayPal, and he was previously the SVP and general manager of eBay North America. He blogs at http://jeff.a16z.com/.

Previously, the product was in a limited invite-only mode, slowly spreading across the site user by user. When one person sent a gift to another, the recipient would then be able to start sending gifts to others (much in the way Google rolled out invites to Gmail and Google+ in the early days).

Currently, most of Facebook’s gifting options are food and lifestyle related, including cookies and cupcakes, stuffed animals and other relatively low-cost items.

But Tuesday’s wide Gifts rollout also comes with another gifting option: Wine. And lots of it. Facebook has partnered with 16 different wine makers, letting folks send each other bottles of red and white over the network.

Not so fast, eager teenagers. Facebook has put into place a number of age-verification safeguards to keep minors from sending booze to one another. Users under 21 can’t send or receive alcohol via Gifts. And even if the kids somehow get around those barriers, the delivery service will still card you at the door to make sure you’re as old as you say you are.

As the biggest shopping days of the year approach, Facebook has made it clear it wants to be a player in e-commerce. After rolling out physical Gifts in the fall, the company upped its game with the addition of some digital subscription options as gifts, including music and video services Rdio, Pandora and Hulu. And just last month, Facebook announced an agreement with Apple, letting users send one another iTunes credit to download music and movies.

To be sure, Facebook is no Amazon or eBay at this point. The gift offerings are minor, and the company has a relatively small number of retail partners offering gifts on the service.

But the idea that Facebook can eventually convince users that it’s more than a social network — that it’s a place to spend money with your stored credit card information — is far more valuable than any incidental revenue made up by customers’ Gift purchases.

Perhaps come the time the company’s next quarterly earnings details are filed with the S.E.C., we’ll see just how many users Facebook wins over with Gifts.

But Mine, a new start-up focused on exactly this sort of thing, operates on a different premise: Embarrassing or no, we are what we buy.

In other words, it’s another stab at mapping our online identities. But instead of relying on our ever-expanding web of social connections — such as Facebook — or the myriad topics of interest that catch our fancies on a moment-by-moment basis — like Twitter — Mine goes after our e-paper trail, piecing together a picture of a user from a history of their e-commerce activities.

“Over the next few years, purchase history is going to become perhaps the biggest component of your online identity,” co-founder Pierre Legrain said in an interview. “Right now, it’s spread out all over the place. Mine should be the repository that you control — it’s the master copy of your purchases.”

The idea is fairly simple. Log into Mine with Twitter or Facebook and grant the app access to your Gmail or Yahoo email account. From there, Mine combs through your purchase history of receipts from Amazon, Etsy, iTunes and Zappos, retrieving a master list of your purchases. After that, you’re able to choose which purchases you want showing up in your Mine identity (thank god), and publish them to your account.

From here, it’s much like other social platforms — you’re headed into the stream. Based on a follow/follower model like Twitter (a company Legrain once worked for), you’re able to scroll through the stream to see your friends’ recent purchases, complete with annotated comments sections and the ability to “heart” things. There are links tacked on to each purchase entry, so if you like something one of your friends bought, you can click through and get one yourself.

So, a question: Is this little more than a collection of items you’d otherwise be “liking” on your Facebook page? Or, say, a Pinterest board of items you own or want to own? It seems like the territory is already rife with potential competition.

Legrain refutes this (obviously). He believes the verbs themselves — “like” for Facebook, “pin” or want for Pinterest, and “own” for Mine — are on separate trajectories. “Liking and wanting things creates tons of volume, but in terms of ownership, it is a completely different bucket in people’s minds,” Legrain said.

In other words, there’s room for his start-up not to get big-footed upon by a giant competitor (hopefully).

That may be true, but the more difficult part is making room for another social networking app in consumers’ minds. Keeping people engaged and in the feed is an uphill battle. And with existing competition from players like Instagram, Facebook and Twitter (to say little of Path and Pinterest), Mine has its work cut out for it, no matter how active our spending habits.

Mine is available in the App Store for the iPhone and iPod touch, as well as on the Web.

Good taste not included.

His note went to the dealership—but it also went, without his knowledge, to a company that tracks car shoppers online. In a flash, an analysis of the auto websites Mr. Morar had anonymously visited could be paired with his real name and studied by his local car dealer.

Read the rest of this post on the original site »

Bing zings: “Don’t get Scroogled this holiday season.”

But as it turns out, Bing does the same thing.

“It’s a classic case of engineers not connecting with their ad center counterparts,” said Jorie Waterman, the SVP of performance channels and optimization at True Action, an eBay-owned company that helps online retailers with their search marketing strategies.

Waterman added that Bing has a partnership with Shopping.com, which offers higher visibility through paid listings. “The paid listings have always gotten better placement,” she said.

In general, the issue Bing is raising has to do with a change that Google made this summer, which has stayed fairly under the radar. While Microsoft is hoping to shine some light on the subject now through the splashy campaign, it likely has less to do with the holiday shopping season and more to do with Google’s political situation in Washington, D.C.

In a Bing blog post, and a separate Web site found at Scroogled.com, Microsoft summarizes its argument:

In the beginning, Google preached, “Don’t be evil”—but that changed on May 31, 2012. That’s when Google Shopping announced a new initiative. Simply put, all of their shopping results are now paid ads.

It’s true that Google has changed the way it displays products, and this is the first holiday season in which retailers will have to pay to be included in the Google Shopping results. Before, merchants were allowed to upload their entire product feed into the search engine for free.

In a statement, Google would not comment directly on Bing’s attack, but defended why it made the changes:

Google Shopping makes it easier for shoppers to quickly find what they’re looking for, compare different products and connect with merchants to make a purchase. With new 360-degree, interactive product images, social shopping lists and a fast growing inventory of more than a billion products worldwide, Google is a great resource for shoppers to find what they need, at great prices for their loved ones this holiday season.

Along with the paid requirement, Google completely overhauled the shopping experience, stressing product images over text and allowing consumers to easily conduct price comparisons across numerous sites. It is a radical change for retailers, who are still grappling with how much to spend on the paid listings to see a positive return. However, Waterman said the new product images that appear in Google’s search results are resulting in a tremendous lift in sales for True Action’s retailers, which include Toys “R” Us and Levi’s. “It’s blowing our minds,” she said.

But as you might imagine, not all retailers can afford to pay, which means being excluded from Google Shopping results. Other retailers, like Amazon, are choosing not to participate. (That does not mean that Amazon’s results would not show up in organic listings when a consumer searches for a product from the main search bar. However, Amazon does not appear in the “Shopping” tab.)

Bing tried clarifying its position on the matter in a statement, saying that while yes, merchants can pay to have their products listed in Bing, there’s no requirement. Bing’s senior director Stefan Weitz said:

Bing includes millions of free listings from merchants and rankings are determined entirely by which products are most relevant to your query. While merchants can pay fees for inclusion on our third party shopping sites and subsequently may appear in Bing Shopping through partnerships we have, we do not rank merchants higher based on who pays us, nor do we let merchants pay to have their product offers placed higher in Bing Shopping’s search results.

Danny Sullivan of SearchEngineLand.com, who has been covering this subject closely for the past few months, wrote today that Bing’s campaign would be great, “if it were true.” In several screenshots taken of both Bing and Google search, he compares each search engine’s results, concluding that, “Bing is hardly in a position to be lecturing Google about poor disclosure and charging for listings, when it has the same issues.”

An important question, however, is which method is better for the consumer — paid or free listings?

“It’s a question mark,” Waterman said. “When it was free on Google and on Bing, I don’t think companies paid enough attention to the data — because it was free, so the quality of the data and accuracy wasn’t as good to give consumers the best information possible. Now you are paying for it, there’s much more diligence being paid to the data and the accuracy.”

Clearly, Microsoft’s timing with the campaign is a little fishy. While it lines up with the holiday shopping season, it also probably has a lot to do with the 18-month-long investigation of Google’s search business, which is coming to an end. As a source told my colleague, Liz Gannes, it’s now a good time to try and land something on Google: “All these people who have wanted to kill Google, this is their chance. They will never have a better opportunity than the next 30 days.”

Better get your lumps in quick, Microsoft — time is running out.

Venture capitalists often tell entrepreneurs that, beyond investing, a VC can provide a lot of value by giving advice or making valuable introductions.

Here’s one I hadn’t seen before: VCs promoting their portfolio companies to friends, families and associates as places to do their holiday shopping.

First Round Capital is launching a special site today, where more than two dozen of their investments are listing holiday deals for Cyber Monday. Companies participating include One Kings Lane, Kiwi Crate, Birchbox, Dog Vacay, Warby Parker, Fab.com, Threadflip and Hotel Tonight. The offers range from free shipping to $50 or 15 percent off, depending on the kind of products and services for sale.

First Round Capital is heavily invested in e-commerce, so it knows all too well what the holidays can mean to a young company trying to grow its revenue.

This year is promising to be a monster online shopping event, with record-setting days already taking place. The day after Thanksgiving, called Black Friday, turned into an online feeding frenzy, with consumers spending $1.04 billion, an increase of 26 percent over last year. Amazon saw the most action, as was expected, followed by Walmart, Best Buy, Target and Apple.

If First Round Capital’s companies can capture just a slice of that discretionary spending, it could mean a couple of good months to top off the year (which leads to higher valuations and happy investors). First Round Partner Josh Kopelman wrote a brief blog post directing people to visit the site, adding that the companies “will be shipping hundreds of thousands of products this holiday season to customers all over the world.” You can bet we’ll see other partners tweeting it, Facebooking it and sending it out via email, as well (not to mention tipping off the media).

According to yet another online shopping survey for the holiday shopping season, this one from comScore, people are buying a lot more online than last year.

I know this people-buying-stuff-online thing must come as a shock to those who have been living in a cave for several years now.

For those with an Internet connection, though, sales rose to $1.04 billion on Black Friday, an increase of 26 percent over last year. It is the first time that Web purchasing for the important retailing day was over $1 billion, with 57.3 million consumers visiting online stores.

The entire amount of 2012 online holiday spending from the beginning of November until now, according to comScore, has been $13.7 billion. It is a 16 percent rise, but still a drop in the bucket compared to bricks-and-mortar retailing.

But, according to a statement from a comScore guy, “We continue to see this shopping day become more and more prominent in the e-commerce channel — particularly among those who prefer to avoid crowds at the stores.”

People don’t like being jostled at a mall when they can sit at home and buy more things on a couch. Imagine that!

Amazon was where the most action was among online retailing, followed by Walmart, Best Buy, Target and Apple. Auction site eBay was excluded from this group.

And, if you can bear any more stats, here is a chart from ChannelAdvisor on online sales:

With all the hyped hullabaloo around just how mobile-icious we are this holiday season — yes, it’s up, but it is also a retailer-cooked trend that reporters grab onto amid the news drought of the Thanksgiving weekend — one of the many statistics spewed out by a variety of sources was rather interesting.

According to IBM, in a report titled “The iPad Factor”:

“The [Apple] iPad generated more traffic than any other tablet or smartphone, reaching nearly 10 percent of online shopping. This was followed by iPhone at 8.7 percent and [Google] Android 5.5 percent. The iPad dominated tablet traffic at 88.3 percent followed by the Barnes & Noble Nook at 3.1 percent, Amazon Kindle at 2.4 percent and the Samsung Galaxy at 1.8 percent.”

And, over at eBay and its PayPal unit — which spewed out all kinds of data on mobile transactions that showed volume was between two and three times greater, mostly on Apple devices — the company noted that one of its bestselling items on Black Friday was the iPad 2, selling 250 per hour from 12 am to 8 am PT.

That tracks on an earlier survey by Nielsen with 48 percent of U.S. children 6 to 12 years old asking for the iPad, followed by iPod touch (36 percent), iPad mini (36 percent) and iPhone (33 percent).

Presumably, which will be used to order more.

Here’s a lovely IBM chart explaining it all:

IBM Holiday Benchmark Infographic BF2012

Some analysts said yes. (For the record, we at AllThingsD are dubious. But, for the moment, we’re going to pretend that not spending dough on stuff is just like spending dough on stuff.)

Andrew Lipsman, an analyst at comScore, insisted there’s little distinction between whether consumers make the transaction on the phone or whether they later go home and make a purchase on a computer.

“It’s just the introduction of mobile devices into the brick-and-mortar environment that’s affecting consumer behavior,” Lipsman said.

According to recent comScore data, 37 percent of shoppers this past quarter displayed “showrooming” behavior — the act of price-checking using a mobile device while shopping in a traditional brick-and mortar-store. That’s compared with 32 percent of showrooming shoppers in the second quarter of the year. (Note to the math-challenged: This is a small increase, given the explosive growth of smartphones over the last year.)

But Forrester analyst Sucharita Mulpuru echoed Lipsman’s statement in a recent blog post, noting: “Most of the showrooming shoppers told us that they usually find cheaper prices online when they research them … A lot of people switch retailers when they find cheaper prices online.”

It’s apparently not all bad news for brick-and-mortar, though. As Forrester’s Mulpuru pointed out, some research leads not only to Amazon.com, but to another store. About 18 percent of mobile shoppers surveyed opted to head to another store to make a purchase, while just 15 percent said they went online instead.

Key takeaway: We’ll buy lots of stuff in lots more ways.

Apparently, this is now a officially a thing, so here are some stats taken from the latest snapshot as of 3 pm ET, because we just know you’re not shopping on a tablet, you’re on the edge of your seat waiting to hear about how many others are:

• Online sales are up 20 percent for this same time period over Black Friday 2011.

• The number of consumers using a mobile device to visit a retailer’s site is at 28 percent, up from 18.1 percent in 2011.
• The number of consumers using their mobile device to make a purchase is 14.3 percent, up from 10.3 percent in 2011.
• Shoppers using the iPad led to more retail purchases more often per visit than other mobile devices, with conversion rates reaching 4.2 percent, higher than all other mobile devices.
• Shoppers referred from social networks like Facebook and Twitter generated 0.18 percent of all online sales on Black Friday.

So, you might be wondering how IBM gets all this info. It’s all part of its strategic play in the world of big data, essentially helping companies make more sense of the huge troves of data they’ve gathered that were previously being ignored. Smarter Commerce is the area of IBM devoted to helping retailers better understand that data so they can come up with improved ideas concerning how to sell more stuff.

Where they gather that data is the IBM Benchmark. It’s a cloud-based digital analytics platform that soaks up digital information about how consumers respond to different ways of selling things online, 24 hours a day, seven days a week, all year long, from 500 different online retailers. IBM won’t name them — they joined the network under condition of anonymity — but Big Blue says the companies that participate include about half of the companies named on the Internet Retailer Top 100 list. A lot of the technology comes from Coremetrics and Unica, acquisitions IBM made in 2010.

Last year, I talked about all this with Craig Hayman, IBM’s VP of the WebSphere, Application and Integration Middleware Software Division of the IBM Software Group. One quote from that conversation sticks out in my memory; it bears repeating here:

“If you think about consumers, and you think about the amount of technology that they have at their hands, to reach out to read reviews and talk to friends and families, they’re incredibly empowered. There’s not one purchase decision that they make that is not impacted by some element of social networks. What does that do to the companies that have to deal with that by offering the best products and services, and you see companies are struggling to do that: To make the right offer at the right time with the right price. When they do it well, we all talk about how it went well; and when they do it badly, we talk about how annoying it was.”

Now you know. Not only are retailers and your credit card companies watching you shop, so is IBM.

In what has become an annual holiday tradition, those who keep track of these things have started in on touting just how digital the holiday shopper has become, whipping out all manner of buzzwords to do so.

Last year, it was Cyber Monday — this year, it’s turned out to be Mobile Thursday. What’s next? Social Network Saturday? Self-Driving Car Sunday? (We still have Black Friday, by the way, which is today.)

And, indeed, the Mobile Thursday phrase got some big laps around the track, with numerous online shopping surveys — coming out faster than you can buy that new tablet — using it in their flash reports yesterday and today.

This year’s anecdotal meme: Apple iPads go well with pumpkin pie.

What isn’t said so much is that it is still a very small number — though fast-growing — over the last few years, with overall sales reaching $500 million for Thursday, compared to about $1.2 billion on Monday, according to comScore.

Still, for now, no one seems to break out actual mobile sales figures, which are clearly still a fraction of the totals. But they are more than happy to tell you that people are certainly browsing on their mobile devices, which should come as a surprise to exactly no one who is tired of talking to the relatives about three hours into the day.

According to IBM’s Benchmark report, for example, online sales were up 17.4 percent over 2011 on Thanksgiving Day, noting that “big winners were retailers who connected customers with personalized deals across multiple screens including PCs, smartphones and tablets.”

Some stats from IBM about Thursday:

Mobile Traffic: The number of consumers using a mobile device to visit a retailer’s site reached 25.3 percent, up from 66.2 percent over 2011.

Mobile Shopping: The number of consumers using their mobile device to make a purchase increased to 18.3 percent, up 65.3 percent from 2011.

Mobile Email: Smartphone and tablet shoppers responded to email deals from retailers, with emails opened on mobile devices jumping 23 percent on Thanksgiving Day over 2011.

Couch Commerce: In the evening hours, consumers shifted from shopping through their smartphones at the dinner table to buying through their iPad on the couch. At the end of the day the iPad drove more retail traffic than any other device with traffic reaching 10.7 percent versus the iPhone at 9.1 percent and Android at 5.8 percent.

Social Shopping: Shoppers referred from Social Networks such as Facebook and Twitter increased in evening hours generating .63 percent of all online sales on Thanksgiving.

And today, Black Friday, IBM slightly upped those figures, noting that the iPhone was the preferred device to bring into a store to shop with — presumably irritating sales clerks everywhere.

Over at Fab, CEO Jason Goldberg was touting in a Betashop blog post that his mobile app sales were 40 percent of the retail site’s total for the day. It’s usually 33 percent, so it’s a small jump, which Goldberg attributed to a tweet by Apple promoting it. But how much did he sell? He’s not saying.

And eBay said it launched 20 mobile-only e-commerce promotions over its app, as did many other retailers.

Also, no surprise, the New York Times weighed in with the classic trend piece: “The Shrewd Shopper Carries a Smartphone.” Um, everyone carries a smartphone now, but it apparently gets more magical when you take it to Macy’s.

We’ll see if Mobile Thursday becomes Mobile Holiday Season, which would be a big deal — but it’s winning so far in the pundit stakes.

Until we get actual numbers, here’s a chart about the whole thing from eBay: