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Sarah Townsend will no longer have to leave her 507 Facebook friends behind to buy the £35 ($55) baggy sweater she's been eyeing from Asos. On Jan. 27, the hip, London-based online clothing site became the first European fashion retailer to open an e-tailing outpost inside Facebook. Competitors such as Gap (GPS) and Inditex's Zara use the networking site largely to communicate with fans. Visitors to Asos's store on Facebook can shop the company's entire stock of 150,000 products without leaving the site. They also can post photos of items to their wall so friends can comment on potential purchases. "It's something I want to do more of," says Townsend, a 25-year-old marketing professional in London.
Asos and other retailers are going after consumers that marketing pros call "moppers"—as in mobile shoppers. Britain's No. 2 online retailer, whose name stands for "as seen on screen" (it has no physical stores), logged a 54 percent revenue increase, to $371 million, in the nine months ended Dec. 31. Analysts estimate pretax profit will reach $44.5 million this year. "Asos is leading the way," says Andrew Wade, a retail analyst at Numis Securities in London, who recommends clients buy Asos shares. "I'd expect to see other people do the same thing."
Moppers already use mobile devices to browse online stores, comparison shop, and get recommendations from friends. Making a purchase on their Android phones or Apple (AAPL) iPads is a natural next step. In the U.K. alone, mobile commerce is forecast to more than double by 2013, to $440 million, according to market researchers Verdict Research and Ovum.
Facebook says about 200 million of its 500 million members worldwide access the site via mobile devices. And these users are twice as active as those who use their home or work computers. The Palo Alto (Calif.)-based company is ramping up efforts in the U.S. to entice companies to sell their wares on its pages. Two that have already worked with developers to set up shop are J.C. Penney (JCP) and Delta Air Lines (DAL). In three to five years, 10 percent to 15 percent of total consumer spending in developed countries may go through social networking sites such as Facebook, says Mike Fauscette, an analyst at research firm IDC in Framingham, Mass. "There's money in this for all of the players involved," he says.
At Asos, which also caters to shoppers in the U.S., Germany, and France, purchases from mobile devices amounted to just $1.5 million in December, or about 3 percent of its sales. The company expects that figure to start ticking up with the opening of its Facebook store last month. "Our [customers] are on Facebook all day, every day," says Chief Executive Officer Nick Robertson. For now the Asos store inside Facebook can only be accessed via a PC or an iPad. The company, which has close to 465,000 "likes" on Facebook, is at work on an app that will allow smartphone users to shop its site.
The owner of the world's largest e-commerce marketplace, EBay (EBAY) forecasts global mobile sales will double this year, to $4 billion. "Fashion is the biggest category for growth, and the U.K. is the fastest-growing market in Europe," says Patrick Munden, head of seller communications at eBay UK. British grocers are also seeing a rise in mobile transactions. Ocado reported that about 6 percent of orders in the first half of last year came through its "Ocado on the Go" smartphone app. Tesco, Britain's top retailer, upgraded its app in October to include a feature that allows shoppers to add products to their virtual shopping basket simply by photographing a product's barcode. Enjoying a good bottle of Chianti at a restaurant? Scan the label and it's yours.
Not all U.K. retailers are rushing headlong into mobile commerce. Jonathon Brown, head of online at department store chain John Lewis, says the retailer uses social network sites such as Facebook and Twitter as more of a "listening and protective tool" to respond to customer complaints and comments. Launching a transactional site on Facebook is something the company would consider, he added. Smartphones and iPads already generate about 5 percent of the traffic on its online store. A smartphone application that will offer fashion advice and buying guides are due to launch sometime in the first half of 2011.
For tech-savvy shoppers such as Townsend, who admits to a $160-a-month Asos habit, the new Facebook store could make it difficult to keep addictions in check. "I look at Asos probably every fortnight," she says. "It's the first place I go."
The bottom line: U.K. fashion retailer Asos has set up shop on Facebook and will soon launch a smartphone app. The goal is to boost sales from mobile devices.