The Top Mobile Retailers of 2013... Are Pretty Surprising

When you think of the companies that are the top dogs in the mobile commerce category, Groupon (NASDAQ: GRPN  ) , Vitacost.com (NASDAQ: VITC  ) , and W.W. Grainger (NYSE: GWW  ) , are probably not the names that leap to the front of your mind.

Yet, according to Internet Retailer's annual rankings, Groupon (a company left for dead), Vitacost.com (a tiny e-tailer up against big-name rivals), and and W.W. Grainger (an industrial distributor) are three of 2013's top 10 mobile commerce e-tailers. Even more surprising, is who is not on the list: Online retail behemoth Amazon (NASDAQ: AMZN  ) .

The mobile list is key because 35% of consumers now shop online, and the number using mobile to shop has doubled, according to the seventh annual CNBC All-American Economic Survey.

Internet Retailer notes its annual list is a qualitative guide to the most innovative e-tailers.This year the competition was even fiercer as it  opened up the list internationally.

Their top 10 mobile e-commerce list is as follows:

  1. Groupon -- deal site
  2. Skinny Ties -- neckties
  3. Vitacost.com -- online health and wellness products
  4. B&H Photo-Video-Pro Audio -- video, audio, and photo gear
  5. Coastal Contacts -- replacement contacts and eyeglasses
  6. Jackthreads -- contemporary menswear
  7. Fathead --  wall graphics
  8. Sephora USA -- beauty products
  9. W.W. Grainger -- industrial supplies
  10. One Kings Lane -- furniture and home decor

So, in a world of competing e-tailers, here is what three of the companies are doing that earned them a ranking and shout-out for leading the mobile charge.

Groupon wins twice
Groupon was No. 1 in the all-important mobile commerce category. Fully half of Groupon's transactions are mobile, and those mobile customers spend 50% more.

Groupon redesigned most of its apps in November just in time for Cyber Weekend when more than 50% of the company's transactions came from mobile. Internet Retailer was wowed,

"The beautifully designed and efficient apps are key to Groupon's success. 50 million people worldwide have downloaded Groupon apps, the third-most in retail, Arbitron says. Even Groupon's m-commerce site looks like an app. The iPad app has a clean, easy two-column layout. Touch a product image and up pops a window with HD images, specs galore, a button to go social, and more."

In fact, Cyber Monday sales hit all-time records for this deal site and several analyst upgrades followed. Groupon also bested Amazon in the Internet Retailer Top 100 Mass Merchant category earning a No.2 spot with Amazon at No. 4. This success must have been sweet indeed as rival Amazon itself offers daily deals.

Groupon Goods was what really won the day in this category. Internet Retailer explains why Groupon is a Mass Merchant Shooting Star, "Groupon Goods sticks to fairly simple merchandising, it doesn't just rely on the power of its brand. It makes shopping for its broad and constantly changing product assortment an easy affair."

The best experience buying pills on a tablet
Tiny health and wellness e-tailer Vitacost, which competes against bigger rivals GNC and Vitamin Shoppe ranked No. 3 on the mobile commerce list for best mobile tablet site. Internet Retailer gushed," [Vitacost] has the most unique and compelling tablet-optimized web site in mobile commerce. The site, specially designed for iPads, truly looks like nothing web shoppers have seen before."

The online retailer of health and wellness products in North America has 44,000 plus stock keeping units, or SKUs, and 2.1 million active customers. Its mobile commerce strength partly explains why repeat customer orders are up 80% over the last three years.

Both GNC and Vitamin Shoppe have been growing their clicks, most notably internationally for GNC. However, Vitacost has four times the amount of SKUs as GNC. It  also plans to grow its percentage of proprietary products from the current 22%. Vitacost also competes against Amazon but is standing its ground with a five year compound annual growth rate in active subscribers of 30%.

The utility in industrial ordering
The last surprising mobile commerce winner is W.W. Grainger, a business-to-business retailer/industrial distributor. Internet Retailer wrote,

"W.W. Grainger focused on mobile in 2013, adding numerous mobile developers to its 300-member e-commerce team, adding features to its iPhone and Android apps, and launching a stellar iPad app.The iPad app enables office-based managers to order products or approve purchase orders from employees in the field... "For our customers, great utility is what is sexy," says Geoffrey Robertson, vice president of e-commerce strategy and planning."

Again, Amazon competes against W.W. Grainger with its launch last April of AmazonSupply, a source for industrial supplies. But Grainger was already strong in e-commerce, comprising almost a third of 2012 revenues.

W.W. Grainger may have a further advantage as fellow Fool Mark Lin notes 95% of Grainger's sales are from big to medium companies. These are less likely to disrupt a satisfactory relationship to defect to Amazon.

What about Amazon?
With Amazon's fingers in every consumer goods pie, competition on many fronts is to be expected. However, it is surprising that Amazon didn't make the mobile commerce hot list. But Internet Retailer said Prime membership earned  Amazon its No. 4 slot on its Mass Merchants list:

"Though suspected of running Prime at a loss, Amazon takes in about $1,200 annually from its estimated 10 million Prime members, double the $600 for the average non-Prime Amazon consumer, according to Morningstar and Consumer Intelligence Research Partners."

Competing across all retail, bricks-and-mortar included, Amazon leaped from No. 15 last year to  No. 11 on Stores magazine's top retailers list released in July. Kantar Retail chief knowledge officer, Brian Gildenberg, spoke positively of Amazon's move higher, "In many ways 2013's list will be remembered as the last one without Amazon in the Top 10." 

Make money with mobile upstarts
With successful mobile initiatives Groupon, W.W. Grainger, and Vitacost look to move higher. Amazon will, of course, remain the e-gorilla. But by sticking to their niches, these three surprising names can maintain or even gain share from Amazon.



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