Retailers Turn to Own Apps to Counter Amazon's Dominance

CHICAGO – Major retailers know what they are up against with Amazon, an e-commerce retailer pulling in 183 million visits per month on its site.

But that isn’t stopping them from developing their own applications, trying to pull in consumers and increase sales through features that make shopping and payment easier, while encouraging both in-store and online purchases.

That’s how Kohl’s Department Stores views it, having launched its Kohl’s Pay service last week as part of its mobile app that shoppers already used to store Kohl’s coupons and loyalty rewards known as Kohl’s Cash.

“We created Kohl’s Pay to enhance the payments experience, by taking that mobile app and letting the customer apply all of the offers from Kohl’s at the same time,” said Ratnakar Lavu, chief technology officer and chief information officer for Kohl’s Department Stores.

“It is a fairly unique service and one that comes from innovation after we looked at how our customers were using their wallets and making payments,” Lavu added this week during a presentation at the OnRamp Retail conference.

Even with mobile app advancements, retailers have a high e-commerce hill to climb against Amazon.

According to statistics from comScore Inc., with Amazon pulling in its 183 million site visits a month, eBay comes in a distant second with 107 million. Walmart hovers around 101 million and Apple is at 84 million. Target draws about 61 million visits per month online, while Kohl’s is at 33 million, seeking to advance its omnichannel presence through Kohl’s Pay.

Walmart introduced Walmart Pay to its customers five months ago, adding a payment feature to other shopping tools. It was part of a strategy to combat Amazon, as Walmart is also competing at the shipping level with two-day service.

“Most companies have to constantly innovate, but it can’t be innovation for the sake of innovation,” Lavu said. “You have to constantly innovate and test to improve your APIs, and that’s what we are thinking about.”

Milwaukee-based Kohl’s opened an office in California’s Silicon Valley “to stay connected to the companies innovating” in retail and e-commerce, Lavu said. “But innovation occurs both in the Silicon Valley and in Milwaukee," Lavu added.

Retailers will have to develop shopping and payment applications that can take advantage of the fact that two-thirds of consumer spending was affected by digital shopping in 2015, said Gian Fulgoni, CEO and co-founder of comScore Inc.

"Growth across all mobile platforms is beginning to slow after a big surge in 2013," Fulgoni said. Still, half of all consumer time on the internet is spent on mobile app, he added.

It's a difficult task for retailers, Fulgoni said, because 20% of consumers cite lack of security as a reason for not providing their payment information to a mobile application, while another 18% simply find it too difficult to input payment information on a mobile device.

More than ever, the retailer's app has to provide consumer tools that make the payment aspect a side feature. CVS Pharmacy's CVS Pay offers a mobile payments option in an app that allows customers to refill and manage multiple prescriptions.