The Rise and Fall of Fab.com: A Cautionary Tale for Every Entrepreneur

Fab.com is dying.

fab-broken-heartThe ex-gay Yelp, ex-gay Social Network, ex-gay Amazon, ex-Design Flash Sales site struggles on its death bed. The company’s spectacular rise and fall is a lesson in how to go from rags to riches and back to rags again. It is a story on how growth can sometimes make investors, founders and management oblivious to threats.

I was never a big fan of the concept of flash sales. I covered it, I studied it but I didn’t like it. It is short-sighted way of running online retail operations. It is a great way to create market demand. It may even be a good way to develop customer base. But it will not handle growth forever.

Flash sales need three things to function: good-to-great products, relatively low prices and consumers willing to try overpriced merchandise at a discount. All of these factors come at the expense of two very “un-scalable” variables:

  1. a people based supply chain. To make products available at a discount, someone has to find great products, has to estimate demand for those products and then negotiate purchasing. This is a tricky bit because these guys have to take into account a price that is relatively small but helps the flash sale site turn a profit and and allows the manufacturer to actually ship the product. This is very, very hard work and can be done only by skilled individuals who can evaluate demand, find products, negotiate prices and make sure merchandise is delivered.
  2. a demand based on human wants, not needs. No one needs designer shoes or designer furniture. People need shoes and furniture. Sometimes they want designer shoes because we live in a shallow society that makes people feel that objects buy them happiness. And most business pray on these wants. Flash sales sites promise products that say “I am a successful individual”. They promise brands and designer items at a low(er) cost. As a novelty – it will work for a while (for Fab that meant about 2 years). But customers will eventually want new products, at lower costs.
Jason Goldberg on product curation.

Jason Goldberg on product curation.

None of these variables scale very well, because they are human-based. Fab and especially founder Jason Goldberg, the one taking most of the heat have learned this the hard way.

Of course, it easy for me and other bloggers to watch events unfold and point fingers at who done what and why the business model was wrong. It was a bit harder when Fab.com was getting millions and millions in financing and customers were anxious to find new products and buy on Fab in 2012. 

But this post is not about pointing fingers. It’s about looking beyond the failure, at what lies ahead for Fab.

Fab.com: the road so far

Fab started as a gay community service that reviewed local business. In 2011 it pivoted and went on to offer daily discounts to its users, later on connecting users in a form of social network. As the model didn’t really took off, founders Jason Goldberg and Bradford Shellhammer decided they need to pivot yet again and rethink their market.

As it seems, the duo thought the company was great at a very specific thing and decided to focus on that: design. Specifically: interior design. They re-positioned Fab.com as a source for inspiration and sales of design-related products.

The rise

One can of course notice the stereotypical positioning (being a former gay community) but it nevertheless worked. The response to this new pivot was great. The number of registered users went form 175 000 in June 2011 to 350 000 in just a month. In just 12 days the company sold more than $600k worth of merchandise.

The new Fab.com was available by invite only and when it opened more than 125 000 had already registered to receive offers. The reviews were awesome and in just a short month after the Fab relaunched, Menlo Ventures invested $8 million in the company.

Fab’s usage of social networking and social-shopping features further increased the number of users and sales for the company. In just 5 months since launch (nov. 2011) the company boasted over 1 million registered members. Then came the holiday shopping season and sales skyrocketed. As a result of fabulous sales and increasing media traction, Andreessen Horowitz invested … wait for it … $40 million.

In 2011-2012 Fab was just killing it. Sales reached $100 million

In 2011-2012 Fab was just killing it. Sales reached $100 million

After just 7 months since relaunch, on Dec. 7, legendary Andreessen Horowitz VC’s are chosen by Fab.com founders from 15 willing investors.

At the end of 2012 numbers are in and they show a spectacular growth fueled what went from a 4 people company to a 140 employee design force.

CEO Jason Goldberg then posted on its now gone blog “Betashop” a slideshow detailing the successful year his company had. It shows the brave startup growing from a small yet promising group of passionate people to a company selling in 26 countries, with 10 million members.

In 2012 Fab sold over 4.3 million products. During the holidays that meant a rate of 17 products sold per minute. While other companies still try to cope with the idea of mobile commerce, Fab’s sales in 2012 had 33% of all sales coming from mobile. During holidays, 56% of sales came from smartphones and tablets.

The customer lifetime was great and two out of three purchases came from repeat customers. In 2012 sales grew 600% over 2011 and Goldberg boasted that Fab’s 15.000 products were 33% more than IKEA’s. Fab was the largest design store.

Jason Goldberg's statement on Fab, 2012. Source.

Jason Goldberg’s statement on Fab, 2012. Source.

The fall

In hindsight, past the astonishing numbers, some statements showed something was not exactly right. There was a sense of too much pride: everything Fab was doing was absolutely great and everybody else was just the loser left behind. Jason felt like Fab was the only company with the right attitude and operations. Even Amazon and IKEA didn’t seem like a match for them.

The company was so incredibly self-assuring that it was doing everything internally. In 2012 it employed more than 600 people across the world, it built and operated its IT systems in-house, it even built its own warehouse. How ’bout renting, man?

The 2012 presentation goes on and on about the greatness of Fab, about superstar employees, about the huge vision ahead, about how Fab has to beat IKEA and Amazon at design and deliver more than $30 billion in sales. In the end Jason shows a 6 point plan on how they’ll achieve that:

  1. Have personality
  2. Sell stuff they don’t
  3. Lead on mobile
  4. Lead on social
  5. [Be] global
  6. Be the best company to work for

These 6 points up there - these are the reason Fab failed. What they leave untapped is just what matters. They are all great for rallying the troops but they lack substance. Amazon and IKEA’s steady growth happens from the ground up. The infrastructure these companies rely on to build, handle, ship and sell products – these are their secret weapons.

Marketing is just the illusory panacea startups reach for when hoping it would suffice in their struggle against the big guys. It doesn’t. That’s where they get their smaller competitors.

Retail, even if it happens online, is a logistics game. Walmart, IKEA and Amazon manage to stay on top with a lot of help from their supply chain. Everything moves smoothly behind the scenes and that’s what Fab failed to acknowledge. By spending too much time on social media, mobile and interviews, the management failed to see the large logistic wall that suddenly halted their growth.

In 2013 things got from great to bad and then to awful. The company did raise an additional $150 million in venture capital in July 2013 but as CEO Jason Goldberg these were definitely not great news:

“What a lot people don’t know is that we set out to raise $300 million. [...] And when you set out to raise $300 million, and you raise $150 million, you have to change your business plan. And that’s what we did.”

Jason Goldberg

The change of business plan meant a lot of things that hurt the company’s credibility. Layoffs throughout its offices left employees unhappy. The company had to reconsider its position. At the turning point it was burning through $14 million each month and still not reaching sales projections.

Fab.com traffic dropped abruptly. Source

Fab.com traffic dropped abruptly. Source

The job cuts took Fab from more than 750 employees to less than 380 at the end of 2013. It started in Europe and than spread through its offices. Every office was restructured to help the company reach a balance point. It didn’t. Even C-level executives had to take a hit. It’s unclear if they left willingly or have been laid off but Co-founder Bradford Shellhammer and COO Beth Ferreira left the company.

Meanwhile traffic came down abruptly and so did sales. The company was heavily relying on ad spending to reach customers. Its 2012 marketing costs were $40 million. In 2013, the figure dropped to $30 million. But as the chart on the right shows – that was not the only factor that lead to the drop in traffic and sales. People were just not interested in Fab’s products anymore. Buzzwords and social media didn’t cut it anymore.

Fab.com's traffic dropped both on the web and mobile. Source.

Fab.com’s traffic dropped both on the web and mobile. Source.

Hem.com – The rebirth?

hemAll these bad news took the company by storm. A lot of people took shots directly at Goldberg for shifting focus, delaying layoffs and generally the could-be death of Fab.com. It was not surprising: he was the one taking the spotlight when Fab was growing, he would be the one taking the heat for the fall.

The media took turns at hitting Fab.com whenever it could and it was obviously an easy task. There were plenty of laid-off employees out there to leak inside info about how bad the company was being ran. They were jobless, pissed-off and needed someone to take the blame.

How could a company with $336 million in funding fail so bad? Where did the company on everyone’s lips go? What happened with all that value investors just …  lost?

All these questions left out some seemingly uninteresting investments Fab was running in Europe. While dealing with layoffs, decreased sales, management layoffs and media hits, Fab acquired custom furniture companies MassivKonzept and One Nordic Furniture Co..

By doing so the company combined the MassivKonzept’s mass customization tools and One Nordic Furniture Co.’s talent and technology. The new company took over Fab’s sales in Europe and now leverages Fab’s customer base, experience and of course – cash.

jason-goldberg-techFab’s European venture received the name Hem (Swedish for “Home”) and now employs 150 employees in Berlin, Helsinki, Warsaw and Stockholm. Some of them are previous Fab employees, some are new hires.

Hem is a designer, manufacturer and retailer and it is an integrated company. It is the technology company that Jason Goldberg wanted to build for a long time.

But most importantly, Hem is something Fab never was: its own company. An unique organization that goes beyond comparing itself to others. It is not the Amazon of Europe or the IKEA of online. It is Hem. It allows its customers to build custom, beautiful furniture and products for the home and it can now deliver on this promise. It seems to be a company that may lack sales and the buzz Fab had but it has something more important: purpose and substance.

It seems that a more mature Jason Goldberg has finally decided to leave marketing and PR aside and focus on building a real company. An unique company that goes beyond buzzwords and solves real problems, in a real environment, where the team is not made of superstars but rather a group of passionate people that put the product ahead of their own egos. And it started with its leader.

I believe Hem has a bright future, unlike Fab. It is built to last, just like its products. I must say that when I set out to write this post, it was going to be yet another bashful take on Fab’s fall. But the more I read about it, the more I found about Jason and his company and the more personal it felt. And a lot of it resonated through this interview he gave at TC Disrupt. A sense of grit and humility echoed through this talk. As an entrepreneur I know what it feels to fail. I too made mistakes and I too delayed laying off people. I too mistook marketing for product and company development. I too believed sky was no limit and failed. So there is a lot of Jason’s actions that I get from being in a similar, yet smaller scale, place.

Yes, Fab is dying and it’s a great thing. Hem now takes its place and it has the potential to be a far better company. In the end this might be not a cautionary tale of entrepreneurship gone bad but a lesson in resilience and willingness to adapt.

Jason Goldberg took some courageous steps into transforming the company he’s built and it will probably pay off in the future. After all, he runs a company that is pretty close to break even, with $120 million in the bank and a large customer base. And now it has a real business model. How hard can it be?

Tesco profits drop 92% yet online sales increase

Tesco-LogoIn what is probably the biggest financial error in commerce this year, Tesco announced that it overstated its profits. By a lot. The problem was caused by the company booking payments from suppliers as income. In fact, payments were used by the company to run promotions on the suppliers’ behalf.

Tesco is now under fire as forensic accounting investigators from Deloitte reported the company overstated profits expectations by £263m in the first half of 2014.

Not only that but profits overall are 92% down after a previous write down of £527m caused by the above mentioned error in registering income in previous years.

Nevertheless, Tesco is still the largest supermarket in the UK, leading the pack with a large market share:

tesco

Although its market shares have taken a hit, it seems that online sales are growing at 11% and I believe this is just the beginning. Following the unfortunate news eight executives were forced to leave the company, including chairman Sir Richard Broadbent.

Now the company is ready for a fresh start. Ok, scratch that “fresh”. It’s more like it’s forced to improve its omnichannel approach as customers demand better service and improved shopping experience. The company had previously employed several experienced directors to help it become a competitor to Amazon in global retailing. How well this would fare is hard to tell but they should get some award for trying. After all Tesco was the first to ship an online order.

 

 

The Fascinating World of Amazon Logistics

Jeff Bezos

Jeff Bezos

Word’s out that Amazon is planning on opening its first brick and mortar shop. With such news the retail world is now buzzing with questions:

Is Amazon really going head to head with mainly brick-and-mortar retailers? Should the likes of Walmart be paying attention to such tactics? Could this mean a new way of doing business for Amazon?

The answer is no.

First of all Amazon is not opening actual stores. It’s opening pop-up stores. The big difference is pop-up stores are available for just a limited amount of time. They pop-up and then they pop-off. For example the two stores Amazon is now opening will be in San Francisco and Sacramento and will be open just for the holidays.

Amazon will use these stores to showcase its proprietary mobile devices (tablets, ebook readers, the smartphone). Once the holidays are over – puff – they disappear.

There is, however, one report from the Wall Street Journal, not yet confirmed by Amazon, saying the company would actually be looking for more. This report points to a New York location in Midtown Manhattan that would serve as a permanent physical presence. Again, this won’t be your typical store but rather a location designed to respond to specific Amazon needs.

Such needs would include testing Amazon products, order pick-up, returns and local delivery. Maybe even a drone helipad. Who knows?

Seriously now – with the store working as a mini-warehouse, the company could easily offer same-day delivery to near-by customers. That’s a great way to compete with Google’s same day delivery. These type of operations (pop-up shops and drop-shops) could become mainstream in the future as retailers need to bridge the gap in omnichannel retail AND provide faster shipping.

However, Amazon’s offline presence should be scanned from a different perspective:

Amazon is not moving offline. It is already there.

There are no Amazon stores just yet. Except for a few Amazon lockers and the occasional pop-up stores, the largest online retailer remains a pretty digital presence.

Except for its logistics.

Beneath the magic of Amazon’s online retail presence lays an well-oiled logistics machine. Amazon combines advanced IT systems, human operations, robots, huge warehouses and a complex shipping operation to fulfill its daily orders. And some underpaid workers but that’s another thing.

Inside one of Amazon's Warehouses. Source: Wired

Inside one of Amazon’s Warehouses. Source: Wired

How many products does Amazon ship? Billions.

In 2012 Amazon sold and shipped more than 10 million products each day. The total number of products shipped in the last quarter of 2012 was 1.05 billion. Yes, that is a Billion with a B and it is reportedly the first time in the company’s history when it sold more than 1 billion products in just one quarter.

The number of listed products is also huge. Its top 5 markets all list more than 100 million products, with the US totaling a whooping 253 millions, as reported by Export-X:

The total number of products listed on Amazon's top markets. See more here.

The total number of products listed on Amazon’s top markets. See more here.

Amazon Fulfillment: 83 million square feet of storage and fulfillment centers

You’ve probably guessed that shipping 1 billion products per quarter to more than 200 million customers worldwide requires a bit of work. What you probably don’t know is that such a large-scale operation uses 50 million square feet of storage in the US and 33 million square feet of storage outside US (source).

There is no other ecommerce competitor with such storage and fulfillment potential. Its dominant position allowed for two interesting business models to evolve: The Amazon Marketplace and Fulfillment by Amazon.

To reach sales as those shown above, Amazon lists and sells both its own products and those from 3P (Third Party) merchants. Merchants can join its Fulfillment By Amazon program, ship the product to Amazon’s Fulfillment centers and than leverage Amazon’s Logistics.

This means the company can count on its sales AND influence to shape the future of retail. Its logistics are probably the most useful and under rated tool in expanding globally. While everyone wonders if Amazon will set foot in the offline world, the company has already laid the foundations to what will probably be the future of retail.

Of course, the numbers listed above can only show a small bit of what is required to keep Amazon moving and growing. The operational tools Amazon employs and the processes behind this amazing machine will be uncovered in an upcoming ebook. Until then – check out “Understanding Omnichannel Retail” – a comprehensive report on how online and offline sales are now connecting.

Ebay and PayPal Splitting. Why is This a Good Thing?

Ebay and PayPal have been together since 2002, when Ebay decided to acquire PayPal for $1.5 billion. At that moment both companies were heavy weights in their respective fields and growth was booming. Ebay struggled with a previous solution, called Billpoint, until deciding to give in and purchase PayPal.

eBay-and-PayPalSince then, both gained a lot from the other. Ebay benefited from PayPal’s ease of use and helped its customers send money to one another. This helped streamline and secure the purchase process, thus increasing transactions. PayPal, one the other hand, piggy backed on Ebay’s massive user base and international exposure. Its revenue increased by the year and in the second quarter of 2014, it amounted to 45% of Ebay Inc’s total revenue.

The fast growth of PayPal, as well the whole “payments revolution” potential lead Carl Icahn to propose a split between Ebay and PayPal this year. Icahn’s proposal / attack was then fended off by Ebay CEO John Donahoe and PayPal ex-leader David Marcus. Since february 2014, a lot of things happened. David Marcus left the company to join Facebook and biggest of the biggest, tech mammoth Apple launched the Apple Pay. What seemed like a closed case soon turned into a huge split between the companies.

Now – John Donahoe will still run Ebay Inc until the split is official. As of that moment he will step down as CEO and Ebay will be lead by Devin Wenig, now president of eBay Marketplaces. PayPal will split into a new company, directed by Dan Schulman, now president at American Express, Enterprise Growth Group.

PayPal benefits from Ebay Inc. spliting. The split means that PayPal will be able to roam free, grow and develop independently. On the other hand Ebay will be able to … well … do everything it was doing before. The marketplace division is not gaining much from the split. It loses a revenue stream, its shares will drop and it will have to find a new way to keep up with its growth in the future.

However PayPal needs independence to keep up with increasing competition in the omnichannel payments landscape. It needs to innovate, it has to connect online and offline and it has to do a bit better on mobile devices. The split will help the company evolve and here are three reasons why:

1. PayPal can mean more than just payments

Banking as we know is shifting from an old, rigid system to a new way of doing business. That means more than wiring money. It means deposits, it means financing, it means Peer 2 Peer Lending and more. Under Ebay, PayPal was bound to stick to payments and money transfers. Now that Ebay is no longer the umbrella that fosters PayPal innovation, we may soon see more financial goodies from PayPal.

2. PayPal should be more than an accessory to Ebay

Elon Musk explained best why Ebay should not hold PayPal back: “It doesn’t make sense that a global payment system is a subsidiary of an auction website… It’s as if Target owned Visa or something”.

The fact is PayPal outgrows Ebay. It can and should be a global financial company, a field that’s obviously larger than Ebay’s marketplaces can ever be.

3. PayPal could grow even faster as a separately traded company

It’s no secret that Ebay has already done what it could to help PayPal. Now it’s just living off PayPal’s growth. As a separately traded company PayPal can become a larger company, more attractive to investors, which in turn can help the company finance its expansion, growth and fight against Apple, Google, Amazon and even AliBaba.

But …

Carl Icahn is known as a corporate raider and maybe there’s more to this story than meets the eye. There is a possibility that he and others are just splitting the company to later organize a take over from companies such as Visa, MasterCard or one of the larger banks. What could be a profitable short-term strategy could hurt PayPal in the long run and kill one of the most promising financial companies in the world.

World’s Top 7 Best Auto Sellers and the Strategy they follow

Currently, we find many competitors in the motor-vehicle manufacturing industry. The industry is however dominated by just a handful of companies. What separates this handful from the rest? Well, let’s take a look at the top seven auto companies by sales and the strategies they employ to increase sales.

Toyota

toyota-logoJapan’s Toyota Motors was the world’s best-selling brand in 2012 and 2013. In 2013, Toyota sold over 9.98 million new cars and trucks alone. The company’s bestselling model was the Toyota Corolla.

Toyota has continued to target specific market segments using innovative specific products ranging from two-seater cars to luxury SUV’s. Their current emphasis is on increasing their presence in North America, while maintaining existing markets.

General Motors

  • gm-logoAmerica’s General Motors sold 9.71 million units in 2013, with its popular Chevrolet brand selling just over five million units.
  • General Motors aims to target emerging markets as the new frontier for sales.

Volkswagen Group

  • volkswagen-groupSales of 9.7 million units in 2013 places the German corporation at third position.
  • It has been touted to surpass GM and Toyota as the world’s number one car-maker by 2018.
  • The firm has continued with its focus on the traditional European market while not forgetting emerging markets like Brazil, India and China (which is its largest market). Volkswagen sold over 3.2 million units to China in 2013.
  • The firm also hopes to introduce new products. It markets the products on the platform of quality.

Renault-Nissan Group

nissan-renaultThis alliance between Renault from France and Nissan from Japan sold more than 8.2 million units in 2013. The alliance between Nissan and Renault is strategic given their geographical locations and key markets they each control.

Renault hopes to ride on Nissan’s hold of markets in Asia, China and Africa while Nissan hopes to penetrate the European market by benefiting from Renault’s existing structures.

Hyundai-KIA

  • hyundai-kia-logo1The Korean auto company sold more than 7.5 million units in 2013. Their top selling model was the compact Electra/Avanti which sold 866,000 units, making it the fourth most sold unit worldwide last year.
  • The firm is trying to avoid a situation where the Hyundai and Kia brands, which are mostly mechanically similar, compete for the same markets.
  • The firm also aims to focus on the European market, where its sales have doubled over the last five years.

Ford Motor Company

  • Ford-Motor-Company-logoThe American car-maker sold over 6.3 million units in 2013, an 11% increase compared to the previous year.
  • Ford has continued with its focus on the North American market, which is its biggest market. The F-series pickup was Ford’s best-selling vehicle in Canada last year.
  • It has also announced a plan to expand into the Middle-East, Latin America and other emerging economies in Africa.
  • Ford also aims to continue making popular models, given that its compact focus was the world’s bestselling vehicle in 2013.

Fiat-Chrysler

  • fiat-chryslerThe merger between Italy’s Fiat and America’s Chrysler resulted in the sale of more than 4.3 million new units in 3013. Much of the firm’s growth came from Chrysler’s 14% increase in US sales.
  • The car-maker plans to improve existing brands while also introducing new ones. The company also aims to boost sales by 60% over five years, mainly by expanding into emerging markets, with particular focus on India and China.

Author Bio:

Stacy Eva lives in Birmingham, UK and is an avid reader and blogger. Since her early years she had a passion for writing. Her articles have been published in leading UK newspapers. Her areas of interest are Culture and Tradition, Food and Travel, Fashion and Lifestyle. As of now she is working as a freelance content manager for dsa practical test.

Home Depot discloses 56 million Credit Card Numbers lost in Security Breach

Home Depot, the largest home improvement retailer, has announced that 56 million credit card numbers have been compromised. In what is now known to be the biggest security breach in corporate history, Home Depot has been the target of an attack that lasted from April to September 2014.20140916_homedepot

Home Depot managed to beat the previous record, held by Target with 40 million compromised credit cards. As a result of Target’s security breach, the company laid off its CIO. Chairman, President and CEO Gregg Steinhafel then announced his resignation as a result of the security breach and previous unfortunate events, like losing $941 millions in a failed Canadian expansion.

Background

September 2nd: the same man that announced Target’s breach, Brian Krebs, announces a new security breach. This time on Home Depot. The same day, Home Depot starts digging through its POS systems and on the September 8th announces that indeed, a breach has happened.

Krebs reports that the same group of Russian and Ukrainian hackers that managed to steal Target’s data were responsible for the hack. The same day a new batch of credit cards shows up online. The batch’s code name: European Sanctions.

Implications

16 days later, Home Depot announced that it managed to clear all infected systems and has “has completed a major payment security project that provides enhanced encryption of payment data at point of sale”.

The company worked with security firms, banking partners and the Secret Service to find out as much as possible about the breach. Results show that hackers used custom built, never before seen malware. This was not the work of some isolated hackers group, acting on its own. A very well organized attack has been put in motion.

Home Depot has worked with banks to provide customer support to those in need. A small local bank, Dollar Bank, as well as larger banks such as JP Morgan Chase and Capital One, have started replacing credit cards.

Although Home Depot has not been hit by the market just as heavily as Target, one can still feel the tension looming over the retailer’s security actions. Consumers are more careful in how they use their credit cards and banks have jumped on board the Apple Pay system, which promises better security.

Is there a cyber war out there?

The fact that the same group of hackers seem to have been involved in attacking Target, as well as Home Depot points to a maybe. But then you have the Secret Service involved. You have an ex-Homeland Security contractor acting as CIO with Target. You have the FBI investigating whether Russia is behind the recent JP Morgan Chase cyber attack.

But most of all – you have Edward Snowden, defected to Russia with a few gigs of classified information on US cyber intelligence actions. Some of those actions may have included packing backdoors and security flaws into US digital infrastructure. Too bad.

Yes, there there probably is a cyber war going on and the US and Europe are extremely exposed. Retailers should pay a lot more attention to their security backbones and check each potential backdoor, should they not want to suffer the same unfortunate events Home Depot, Target and others have faced.

 

 

 

 

Using the Mobile Revolution for Marketing

We’re reaching that point in the world where technology has evolved to a micro-level. Computers that used to be the size of large walls are now as sleek and light as a stack of papers, and what was once a brick-sized mobile phone has become the size of a small child’s palm. By now, computers are practically mobile phones.

US teens mobile usage. Source: Nielsen

US teens mobile usage. Source: Nielsen

More people in America use and own mobile phones than toothbrushes. Fifty-four percent of these phones are smartphones, and by 2017, there will be over 10 billion mobile devices. As mobile traffic rises, so too does the need for mobile apps. With 90% of Tweets and 40% of Google searches coming from mobile phones, the way to get and spread day is becoming handheld. While two years ago most of this traffic was coming from teens with cell phones (teens increased mobile consumption in 2012 by 256%, with the standard teen sending an average of 3339 texts per month), mobile usage has extended far beyond teens. Most recently, with the continual creation of mobile apps reaching out to various targeted consumers, many companies have begun a new form of marketing for the mobile online shopper.

In fact, four out of five consumers use their smartphones to shop, and the majority claim that shopping from their phones is more enjoyable than shopping in person. No more long lines, parking tickets, unnecessary purchases, or exhausting traffic jams – consumers can buy what they want, when they want, how they want. And it gets shipped straight to their homes. 56% of consumers use their smartphones to search for a store’s location and directions, 51% to look up product information, 59% to do price comparisons on products, 45% to write up product reviews, and 41% to search for coupons. Smartphones make shopping easy and reliable, even more so than shopping in person. With many stores creating apps or green “Buy Now” buttons, shopping no longer requires physical salesmen.

Not only do mobile apps make shopping easy, but it also allows for information about products to be spread more reliably. 78 – 84% of consumers rely on social networks when researching new products. By 2015, it’s predicted that the amount of goods and services consumers purchase through their mobile phones will total roughly $119 billion. Mobile coupon usage is expected to rise to 53.2 million, and retailers say that 67% see a greater value in having their customers use mobile apps to shop rather than shopping in person. Overall, mobile apps bring five times more engagement – both in the product being sold and in the dialogue between targeted consumers.

Ivan Serrano is a web journalist and infographic extraordinaire from Northwest California. He particularly likes to write about the technology world, social media and global business.