DealBook: Privacy Concerns a Challenge for Retailers

Retailers Seek Partners in Social Networks

Just a few years ago, the retail industry was deeply shaken by a growing trend in store browsing — shoppers wandering around the aisles with their cellphones, surveying the merchandise while looking online for somewhere else to buy it for less.

Some retailers explored blocking Internet service in stores. Others swapped out bar codes to make them incompatible with their competitors’. But ultimately, most major retailers decided that many customers would be on their phones regardless of what stores did — so they decided to get on their customers’ screens.

With online retail competition increasing, nowhere is that frantic embrace more evident this year than in the parade of partnerships and projects traditional retailers have formed with digital companies, many of them for the holidays.

“We want to be where the consumer is,” said Gregg W. Steinhafel, chief executive of Target, in an interview.

“I think it’s like anything that hits you with a ton of bricks, it requires you to step back and say, ‘O.K., it’s very sobering, now what does this mean for us?’ ” he said. “We ultimately concluded that if that’s the way the guest is going to live and shop, then we want to be a showroom. And we love showrooming — provided we can capture that sale.”

For Target and many other retailers, among this season’s favorites is Pinterest, which Casey Carl, president of multichannel at Target, described as “one of the social platforms where it’s actually not only about sharing.”

“It’s not just about, ‘Hey, look what I had for dinner!’ It’s about products,” he said.

There are holiday-party-planning boards for Target Red Card holders. Nordstrom, which already released its holiday catalog on Pinterest, says it will station signs in its 117 full-line stores that highlight some of its popularly pinned wares.

Pinterest itself is starting a new feature on Wednesday, a “Holiday Gift” category that will not only offer shoppers gift ideas but will give retailers yet another display window — this one online — for their items.

“Pinterest is a service about connecting with things, things you have, things you like, things you want,” said Steve Patrizi, head of partner marketing for the nearly four-year-old company. “So for retailers, it’s a no-brainer. Go where people are already looking for things.”

But as the title “multichannel” or “omni-channel” coordinator might suggest, most major retailers are not linking themselves to just one social media site.

Walmart is leveraging Facebook and Google. Toys “R” Us is pushing hard on YouTube. Sears is on Instagram and hosting holiday parties on Twitter.

According to comScore, a company that collects and analyzes online data, Pinterest has plenty of competition. Compared to its more than 43 million unique visitors in October, Twitter had 64 million, and Facebook towered over its neighbors with more than 178 million unique visitors.

And while shoppers referred from Pinterest to retailers spent more, according to IBM Digital Analytics Benchmark, those referred from Facebook were buying more frequently. During a four-week period in October and November, customers referred from Facebook spent an average of $54.64 per order, compared to an average of $123.50 per order from Pinterest, IBM found. Referrals from Facebook converted to sales at nearly four times the rate of Pinterest referrals.

“Last year we would’ve used three or four social platforms,” said Jeffrey J. Jones II, chief marketing officer at Target. “This year we’ll use seven or eight.”

Nicolas Franchet, head of retail and e-commerce for Facebook, said that while the company did not disclose what portion of their advertisements came from retailers, it was an important area for Facebook, which worked with retailers big and small.

“If you find somebody” we aren’t working with, Mr. Franchet said, “let me know.”

Walmart, for example, will use Facebook to announce its local store manager’s special on Black Friday. Those deals will vary by location, and will be posted on each store’s individual Facebook page, like Walmart South Boston, Va.

Bits Blog: With Price Cuts, Retailers Anticipate New iPad

12:38 p.m. | Updated with Wal-Mart Comment

Apple has been pumping out new versions of its flagship devices for so long now that it’s a question of which month, not whether, it will introduce new iPads and iPhones.

The electronics retailer Best Buy on Wednesday took its best guess that the latest iPads are coming soon from Apple by slashing prices on one line of the Apple tablets by 30 percent.

The price cut applies only to third-generation versions of the devices, not the latest vintage, otherwise known as fourth generation iPads. Best Buy is now selling the least expensive third-generation iPad, with 16 gigabytes of storage, for $314.99, down from its previous price of $449.99. A third-generation iPad with 64 gigabytes of storage and support for LTE cellular networks now sells for $545.99, down from $779.99.

Jonathan Sandler, a Best Buy spokesman, said the steep price cuts are not unusual, “especially when looking ahead to potential new product launches by our vendors.” Mr. Sandler stressed that Best Buy has no privileged insight into when Apple might introduce new iPads, beyond the seasonal product introductions most people expect from the company.

The third-generation iPad is a bit of an oddity so it’s not surprising to see a retailer try to clear out its inventory of the devices. Apple introduced the product in March of last year and then, in an unusual move, released a fourth-generation iPad in the fall. The newer version has Apple’s new lightning connector and a faster processor, raising the question of why any customer would bother buying a third-generation device without a significantly lower price.

Walmart, meanwhile, has begun offering a more modest discount on iPad minis. Normally selling it for $329, the retailer is now offering the device for $299.

Sarah Spencer, a spokeswoman for Wal-Mart, said the retailer did not lower the price of the iPad mini in anticipation of a new model from Apple, but rather to sell even more of the product during periods of gift-giving like Mother’s Day, Father’s Day and graduation season. Ms. Spencer said the iPad mini is one of the best-selling electronics products at Wal-Mart.

The iPad is facing a lot of tough competition from the likes of Amazon, Samsung, Google and Microsoft and has been losing share. But some analysts believe the company enjoys advantages over rivals that will give it a significantly bigger position in the years to come than it has in smartphones, where the iPhone accounts for a bit over 20 percent of worldwide shipments.

In a research note published on Wednesday, Toni Sacconaghi, an analyst at Bernstein Research, estimated that Apple will account for 40 percent of the worldwide tablet market in its next fiscal year, down from 57 percent during its last fiscal year. Mr. Sacconaghi thinks Apple will sustain higher market share in tablets than in smartphones in part because it has been more aggressive in courting more price sensitive consumers with the iPad mini, the iPad has better global distribution than the iPhone and there are more apps optimized for the iPad than there are for competing tablets.

As Shoppers Hop From Tablet to PC to Phone, Retailers Try to Adapt

“I do use the iPad to browse sites,” Mr. O’Neil said, but when it comes time to close the deal, he finds it easier to do on a computer.

Many online retailers had visions of holiday shoppers lounging beneath the Christmas tree with their mobile devices in hand, making purchases. The size of the average order on tablets, particularly iPads, tends to be bigger than on PCs. So retailers poured money and marketing into mobile Web sites and apps with rich images and, they thought, easy checkout.

But while visits to e-commerce sites and apps on tablets and phones have nearly doubled since last year, consumers like Mr. O’Neil are more frequently using multiple devices to shop. In many cases, they are more comfortable making the final purchase on a computer, with its bigger screen and keyboard. So retailers are trying to figure out how to appeal to a shopper who may use a cellphone to research products, a tablet to browse the options and a computer to buy.

“I’ve been yelling at customers for two years, saying, ‘Mobile, mobile, mobile,’ ” said Jason Spero, director of mobile sales and strategy at Google. “But the funny thing is, now we’re going to say: ‘Don’t put mobile in a silo. It’s also about the desktop.’ ”

The challenges are daunting, though. It is technically difficult to track consumers as they hop from phone to computer to tablet and back again. This means customers who, say, fill shopping carts on their tablets have to do all the work again on their PCs or other devices. The biggest obstacle, retailers say, is that the tools used to track shoppers on computers — cookies, or bundles of data stored in Web browsers — don’t transfer across devices.

Instead, retailers are figuring out how to sync the experience in other ways, like prompting shoppers to log in on each device. And being able to track people across devices gives retailers more insight into how they shop.

The retailers’ efforts are backed by research. While one-quarter of the visits to e-commerce sites occur on mobile devices, only around 15 percent of purchases do, according to data from I.B.M. According to Google, 85 percent of online shoppers start searching on one device — most often a mobile phone — and make a purchase on another.

At eBags, customers are shopping on their tablets in the evening and returning on their work computers the next day. But eBags has not yet synced the shoppers across devices, so customers must build their shopping carts from scratch if they switch devices.

“That is a blind spot with a lot of sites,” said Peter Cobb, co-founder of eBags. “It is a requirement moving forward.”

At eBay, one-third of the purchases involve mobile devices at some point, even if the final purchase is made on a computer.

At eBay, once shoppers log in on a device, they do not need to log in again. Their information, like shipping and credit card details and saved items, syncs across all their devices. If an eBay shopper is interested in a certain handbag, and saves that search on a computer, eBay will send alerts to her cellphone when a new handbag arrives or an auction is about to end.

“They might discover an item on a phone or tablet, do a saved-search push alert later on some other screen and eventually close on the Web site,” said Steve Yankovich, who runs eBay Mobile. “People are buying and shopping and consuming potentially every waking moment of the day.”

ModCloth, an e-commerce site for women’s clothes, said that while a quarter of its visits come from mobile devices, people are not yet buying there in the same proportion, though they are becoming more comfortable with checking out on those devices.

“She’s visiting us more on the phone, but she’s actually transacting somewhere else,” said Sarah Rose, vice president of product at ModCloth.

For example, a shopper will skim through new arrivals on her phone while on the bus and add items to her wish list, then visit that evening on her tablet to make a purchase, Ms. Rose said.

Online Retailers Rush to Adjust Prices in Real Time

Then the holiday pricing shuffle began.

Amazon dropped its price on the game, Dance Central 3, to $24.99 on Thanksgiving Day, matching Best Buy’s “doorbuster” special, and went to $15 once Walmart stores offered the game at that lower price. Amazon then brought the price up, down, down again, up and up again — in all, seven price changes in seven days.

The unluckiest buyer paid more than triple the price that the luckiest buyer paid.

Retail price wars online have entered a new era of speed and precision, creating a confusing landscape for shoppers in which prices leap and plummet on short notice. In the old days, merchants sent employees into competitors’ stores to check on pricing, and days later “sale” signs reflected new markdowns. Now, sophisticated computer programs accomplish the same goal online within hours, and even minutes.

The battle was fierce over the holiday weekend. At the request of The New York Times, the pricing firm Dynamite Data tracked prices at three major online retailers — Walmart.com, Amazon.com and Target.com — starting the week before Thanksgiving and going through Tuesday, after most heavy promotions ended.

The data shows that retailers paid close attention to competitors’ online prices and in-store specials, battling to undercut one another by as little as 2 cents and forcing each other into out-of-stock positions as they pushed prices down. Retailers fight to have the lowest prices to increase sales volume, aid in search-result prominence and help burnish a thrifty reputation.

“There was definitely some gamesmanship going on,” said Diana Schulz, chief executive of Dynamite Data, which tracks online retail pricing, stock status, ratings and other information for clients like Samsung and Abt Electronics.

While Amazon has long tinkered with prices, its competitors are now fighting back. In the last year, Walmart invested heavily in pricing tools, a Walmart eCommerce spokesman, Dan Toporek, said. Dynamite Data said there had been a marked increase in how much Walmart played with prices, and smaller retailers, including GameStop, Best Buy and Toys “R” Us, were now also adjusting some prices at least daily.

The goal is to attract shoppers with competitively priced products that show up on Web searches, but there is risk, too: some consumers tire of price whiplash.

“People are starting to realize, ‘I can’t trust the price I’m getting, because it might change,’ ” a pricing consultant, Rafi Mohammed, said. Shoppers have few ways to gain an advantage — ordering the same product at different prices requires expensive return shipments — but Mr. Mohammed said retailers had an opportunity to soothe consumers by offering refunds for price adjustments.

The parrying could be seen with a Nintendo game, Mario Kart DS.

A week before Thanksgiving, the retailers’ prices varied, with Amazon selling it at $29.17, Walmart at $40.88, and Target at $33.99, according to Dynamite Data. Through Thanksgiving, as Target kept the price stable, Walmart changed prices six times, and Amazon five. On Thanksgiving itself, Walmart marked down the price to its advertised $29.96, which Amazon matched.

Ms. Schulz said sophisticated retailers set algorithms to change prices in response to competitors. “Retailers pipe a bunch of information in electronically, like internal information — cost, availability of inventory, sales goals,” along with competitors’ prices, she said.

The software also lets retailers establish rules on the pricing of certain products: always price Furbys 5 percent below Kmart, for example, or make sure some goods are priced at an average of Amazon’s and Walmart’s prices. Generally, pricing managers also manually adjust prices.

Mr. Toporek said Walmart.com used a combination of computer tools and human adjustments. On popular items, like Walmart’s best sellers, the site tries to “maintain low prices on the items people want the most,” meaning it usually responds to competitors’ price changes.

Mr. Toporek said, however, that the site also tried not to jostle shoppers.

Shopping Sites Pay Contributors Who Drive Traffic to Retailers

Ms. Medeiros is not a style pro; her day job is at a talent agency in Manhattan. But in a little-known practice, social media shopping sites are offering payments to shoppers who post product links that drive Web traffic and sales to retailers.

In the case of Ms. Medeiros, it is the sneakers and lipstick she added to Pinterest and the night life collection she posted on the shopping site Beso.

Favorable mentions on blogs have been for sale for years. Product reviews can also be bought. Now social media sites are taking citizen marketing to a new extreme, turning anyone’s Twitter message, Facebook post, Pinterest image or e-mail into a possible paid promotion.

The shopping sites are open about the moneymaking mechanics and argue that readers no longer expect everything online to be commercial-free. But the Federal Trade Commission says the practice blurs the line between a recommendation and a paid endorsement and needs to be flagged to readers.

“It’s turning word of mouth into a revenue opportunity,” said Mary Engle, who directs the commission’s division of advertising practices. “Since they’re getting compensated, in a sense, for their endorsement, then they should disclose that.”

Social media shopping sites let users select items from across the Web and share and comment on other users’ selections. They don’t sell anything themselves but make money by taking a cut from retailers on their sites.

Beso formally introduced a program on Tuesday that Ms. Medeiros has been trying, which pays users to send clicks to hundreds of major retailers, like Target and Gap.

“If they drop a link onto Twitter about a pair of shoes that they’re dying for, or a new handbag they’re coveting, and they refer users to Neiman’s or whoever sells that item,” said David Weinrot, the chief marketing officer for Shopzilla, the parent company of Beso, “they could actually be rewarded.”

Other large social shopping sites and apps, including the Fancy and Pose, recently introduced similar programs, and Referly, a site introduced in May, is entirely based on people referring products to friends and receiving money in return. Referly says 10,000 people have already signed up. The programs are too new to evaluate their financial success, but Web marketers say consumers should expect more similar programs, in part because visitors are no longer offended by the idea.

“The economic maturity of consumers is, businesses need to make money somehow if they’re going to survive — it’s so ubiquitous now that it’s expected,” said Alicia Navarro, co-founder and chief executive of Skimlinks, which automates referral links for publishers.

The sites determine who gets paid through unique links created for each participant. When someone uses a link to visit a retailer’s site, or buys a product, a payment is deposited into the referring user’s account. The practice is known as affiliate marketing. Bloggers already use the system and almost all major online retailers are willing to pay for traffic or purchases, Ms. Navarro said.

Links can be tracked no matter where a post occurs, meaning a Twitter message, a photo on Pinterest or a Facebook entry can all generate revenue. The social media shopping sites act as a middle man, collecting fees from the retailers and depositing payments into the users’ online accounts — after taking a cut. (Sometimes, sites cut out consumers, too. Earlier this year, Pinterest got into hot water when it quietly adjusted some users’ links to become affiliate-marketing links, and seemed to be collecting all the revenue for itself. It says it has ceased using affiliate links and declined to comment on whether it would offer users fees from such links in the future.)

Beso pays users an average of 14 cents for each click they send to participating retailers, while other companies, like Pose, pay only when a purchase is associated with a link. Payments for purchases average about 5 percent of the price, Ms. Navarro said. The sites and the retailers monitor for spamlike behavior, like tons of clicks from a single I.P. address, and do not pay in those cases.

Lynsey Eaton, a Pose user who runs the blog Law of Fashion, said switching to the paid model for Pose images had made her more likely to post Pose links, and had made the service more useful. “Instead of just making it an Instagram for fashion, it’s now shoppable as well,” she said.

The Federal Trade Commission issued guidelines in 2009 saying bloggers must disclose any paid endorsements, and recently updated them. The guidelines apply to these commission-based links, Ms. Engle of the commission’s advertising division said, whether they are in a post or a 140-character Twitter post. “They can use a hashtag and then ‘ad,’ and that’s only three characters,” Ms. Engle said.

But there is some disagreement about whether a Twitter post should be treated like a blogger’s recommendation and about the changing expectations of financial disclosure on the Web.

Linda Goldstein, a lawyer specializing in advertising, said when the F.T.C. issued its blogger guidelines, “consumers were much less sophisticated” than they are today. “Consumers are now being used to generate leads — I don’t know if that raises the same concerns as an endorsement,” said Ms. Goldstein of Manatt, Phelps & Phillips. “You’re not expressing an opinion about the product, you’re sending it to someone you think might be interested.”

Twitter and Facebook policies allow individuals to post referral-based links, but both companies say users should disclose that they are getting paid.

So far, the social media companies and their users seem to be largely unaware of how the guidelines apply to them.

Dustin Rosen, chief executive of Pose, said he was not clear on whether the guidelines would apply. Beso says its users should add hashtags like #spon, for sponsored, or #paid to links, but stops short of requiring it. Ms. Eaton, the Pose user, says she follows disclosure guidelines on her blog but has not yet done so on Pose. “I think this is so new that I haven’t really honestly thought about how users perceive the fact that people are making money,” she said.

Ms. Medeiros, who signed up for the Beso pilot program about a month ago, says she doubts that her friends will mind that she makes money from her links.

“It’s extra cash for something that I like doing,” she said. “It’s sort of rewarding to be able to make a few cents from sharing your personal life.”

This article has been revised to reflect the following correction:

Correction: October 2, 2012

An earlier version of a picture caption with this article misstated the name of a social media shopping site that is offering payments to users who drive Web traffic to some retailers. It is Beso, not Bezos.

Major Retailers Plan Mobile Payments Effort

Sorry, I could not read the content fromt this page.Sorry, I could not read the content fromt this page.

Retailers Encourage Shoppers to Buy Online and Pick Up In-Store

Now some big retailers are taking a new approach to the dreaded showrooming by transforming their stores into extensions of their own online operations. Walmart, Macy’s, Best Buy, Sears, the Container Store and other retailers are stepping up efforts to add Web return centers, pickup locations, free shipping outlets, payment booths and even drive-through customer service centers for online sales to their brick-and-mortar buildings.

“We are living in the age of the customer, and you can either fight these trends that are happening — showrooming is one — or you can embrace them,” said Joel Anderson, the chief executive of Walmart.com for the United States. “We have a lot of assets, but they’re only assets if you embrace the trends of the customers.”

In making the changes, the big retailers are betting the future on shoppers like Sue Sheffer.

Ms. Sheffer, an information technology specialist in Bunker Hill, W.Va., shops for items like clothes, electronics and even coffee online. But she also likes to receive her purchases as soon as possible. When buying shelving from the Container Store, she ordered it on the Web in the morning and picked it up during her 30-minute lunch break that day. And there were no expensive shipping fees.

Fiona Dias, the chief strategy officer at ShopRunner, which coordinates shipping for retailers, called the trend “really an offensive strategy against Amazon and pure-play online retailers.”

“Unfortunately, stores have been portrayed as the ugly stepsister here,” she said. “They do have disadvantages, but the advantages of having a physical footprint are many.”

One advantage is the ability to reach customers who pay with cash.

In April, Walmart began allowing shoppers to order merchandise online and pay for it with cash at a store when they picked it up.

Even without the cash option, in the six years since Walmart has allowed online items to be picked up in stores, customer demand has been high. More than half of the sales from Walmart.com are now picked up at Walmart stores, Mr. Anderson said.

With the cash option, Walmart was trying to appeal to customers who did not have bank accounts or credit cards. Walmart says the majority of in-store purchases are made with cash or debit cards, and that about 15 percent are made with credit cards.

In the first weeks of the cash option, Walmart noticed that a different set of customers also found the service appealing. About 40 percent of the customers who paid with cash when ordering online ended up using noncash options, like a credit card or check, when they arrived at the store. They simply had not wanted to provide that financial information online. “There’s still a large segment of people out there afraid of identity theft or just plain putting their credit card online,” Mr. Anderson said. The service already accounts for 2 percent of Walmart.com’s sales.

Another advantage traditional retailers hold over their online-only counterparts is same-day delivery and returns. Sears, which has long offered store pickup for items bought on the Web, added a drive-through service a few months ago that allows customers to return or exchange purchases without leaving their cars.

Customers meet a clerk waiting outside the Sears, provide a mobile phone receipt or printout, and the merchandise is swapped. “People have a certain need for immediacy — they want something that same day,” said Tom Aiello, a company spokesman. “They want to have their hands on it; they don’t want to wait.”

The Container Store has also been pushing a drive-through service, a reflection of its altered approach to online shopping. Initially, executives viewed the pick-up-in-store feature as a way to draw consumers into stores and encourage customers to buy more. Now, they would rather close the deal on an online order as soon as possible so shoppers do not go elsewhere or forgo the merchandise altogether.

“Especially for that mom that’s got kids in the car and is trying to run five errands today, this allows her to put us on her list with no additional pressure,” said John Thrailkill, a vice president of stores for the Container Store.

He said that the online orders for in-store pickup also tended to be much larger than typical in-store purchases, and that customers who picked up orders in the store visited about 50 percent more often than customers who shopped only in the stores.

Many major stores, including Apple, Nordstrom and Best Buy, let people place orders online and pick up items within a day at a selected location, forgoing shipping charges. The retailers say this option is especially popular with bulky items that do not qualify for free shipping, and for people in a rush. Other places, like Cabela’s and J. C. Penney, offer in-store pickup for online orders, though with a delay of several days.

Macy’s and Nordstrom are going even further by integrating the physical and online merchandise selections.

Nordstrom last year added a feature allowing customers to search an individual store’s inventory via the Web. That follows the company’s decision three years ago to combine its online and offline inventories, so that if nordstrom.com was sold out of a size 8 Nicole Miller shift but a store in Los Angeles had the item in stock, the store would ship the item to the e-commerce customer. Macy’s recently integrated inventory, too. It has 202 branches that can send items to online customers, and will expand that to 292 by the end of the year.

Of course, online-only retailers are also shifting strategies. E-commerce companies that are part of the ShopRunner service, like Blue Nile and eBags, are now shipping to physical locations that are also part of the ShopRunner network, like Toys “R” Us, so that their customers can pick up items in stores, too.

Amazon continues to promote its Prime two-day shipping program so that its shoppers can get speedy deliveries. Alison Jatlow Levy, a retail consultant at Kurt Salmon, said she expected physical stores to go further toward the “showroom” model — carrying lots of products for shoppers to see and test, but asking customers to buy the merchandise via the stores’ Web sites or apps.

She also said there was a straightforward way for e-commerce retailers to respond to the latest moves. “You will definitely start to see online-only players open stores,” she said.