Commerce Weekly: Goodbye traditional retail, hello ecommerce

Marc Andreessen predicts the end of retail; expansion plans at Starbucks, Intuit; and Newegg takes down a patent troll.

Here are a few stories that caught my attention in the commerce space this week.

Death bells toll for brick-and-mortar retail

A recent report from mobile analytics startup Flurry looked at the growth in consumer use of shopping apps and concluded the “App & Mortar economy has arrived.” Flurry president and CEO Simon Khalaf reviewed their research results in a blog post on the company website, noting that “consumer time spent in Retailer Apps has skyrocketed by 525% from December 2011 to December 2012,” exceeding the shopping app growth of 274% as well as overall app growth of 132%.

Khalaf points out that it’s “mission critical” for retailers to start extending their reach to consumers beyond the brick-and-mortar walls and into connected devices such as smartphones and tablets. “In the App & Mortar economy, the battle for deeper consumer relationships is beginning,” he writes, “and there are already thousands of apps for that.”

Flurry’s research may be coming up short of the long-term big picture if well-known entrepreneur and investor Marc Andreessen is correct. Andreessen told PandoDaily’s Sarah Lacy that traditional retail is on its death bed:

“Retail guys are going to go out of business and ecommerce will become the place everyone buys. You are not going to have a choice. We’re still pre-death of retail, and we’re already seeing a huge wave of growth. … Retail chains are a fundamentally implausible economic structure if there’s a viable alternative. … Malls are going under, and there’s more to come. These chains are much closer to going under than you think.”

Andreessen noted to Lacy that it’s not only the implausible economic structure of physical stores that will bring down traditional retail, but that online retailers like ShoeDazzle and Fab are finally starting to compete on the shopping experience front, providing the entertainment and social aspects of shopping that have been keeping traditional retail afloat.

On his Launch.co platform, entrepreneur and blogger Jason Calacanis agreed with Andreessen’s assessments, with the exception of “considered purchases and ‘social shopping.” “I mean, I could order Disney toys online, but visiting the store is a blast with my daughter,” he writes. “Clearly we don’t need to visit a store for toothpaste, underwear or even shoes when you have Zappos, Everlane and Amazon in the mix.”

Starbucks hints at CPG customer rewards, Intuit buys Payvment

In an earnings call with analysts this week, Starbucks CEO Howard Schultz discussed the company’s fiscal first quarter success in its digital and mobile platforms and touched on plans for expansion. Mobile Commerce Daily’s Chantal Tode quotes Schultz’s comments during the call:

“Over the next few months or so, we’ll be coming back to you and sharing with you the plans that we have to take advantage of Starbucks products within CPG, and specifically grocery, and leveraging the technology and the advancement of providing value to our customers that are buying Starbucks products in grocery, and leveraging the card.”

You can find a full transcript of the earnings call at Seeking Alpha.

In other expansion news, financial software company Intuit purchased ecommerce platform Payvment this week and revealed further expansion plans. Ingrid Lunden reports at TechCrunch that the company plans to roll out more than 20 new products this year in such areas as “payments technologies using NFC and Apple’s Passbook, consumer-focused big data apps, and new products for its Mint financial-management range.”

Lunden provides a rundown of several of the planned products, along with product comments from Intuit CEO Brad Smith, in her report at TechCrunch.

Newegg defeats “shopping cart” patent troll

The courts have put one patent troll in its place. Joe Mullin reports at ArsTechnica that Soverain Software’s long-running “shopping cart” patent lawsuits were brought to an end January 22 when Newegg “won an appeal ruling [PDF] that invalidates the three patents Soverain used to spark a vast patent war.”

The ruling not only affects Newegg’s lawsuit, but also shuts down Soverain’s lawsuits against many other companies, including Nordstrom’s, Macy’s, Home Depot, RadioShack, and Kohl’s. Mullin reports that Soverain also will lose the $18 million verdict it had won against Victoria’s Secret and Avon. “The ruling in the Newegg case is a total wipeout for a patent troll that had squeezed many millions from online retailers, was backed by big-firm lawyers, and was determined to collect hundreds of millions more,” writes Mullin.

Newegg’s Chief Legal Officer Lee Cheng told Mullin, “We basically took a look at this situation and said, ‘This is bullshit’ … now, nobody has to pay Soverain jack squat for these patents.”

You can read Mullin’s in-depth report on the ruling and the history of the long-running case at ArsTechnica.

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  • grc

    The end of retail has been an ongoing story for decades now. Technology is going to make it easier to do your shopping online or over the phone or whatever. What the technologist fail to realise is that shopping is inherent;ly a social application of our time–even for groceries. We see friends, neighbours and occasionally even colleagues.
    I fail to see what they believe will replace it? More work? Leisure time? As North Americans we have a tendency to make all our spare time into work time. Show me a good social replacement for shopping and I will take a look at it.
    In the meantime, what we are seeing, I believe, is a move into a new venue for shopping. One that will complement not conquer the physical act of shopping.