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How Could Change Retail, and Rival Amazon for Priceless Buyer Data

Brick-and-mortar retailers are thinking hard about how to get customers to use their mobile phones inside the store. But what about getting them in the door?

Milo, a Palo Alto startup, has been trying to solve this problem by becoming what CEO Jack Abraham calls the " of local." Milo broadcasts the inventory of brick-and-mortar stores near you, making it easier for you to find products you can buy today, instead of having to order online. "It seems crazy that in the information age, you have to call a store to ask if they have something in stock," he says. And indeed it is -- which is why Milo has been doing well for itself since it received its first round of funding last fall.

Now Abraham says he's taking his operation mobile. Users can expect an iOS app in Apple's (AAPL) iTunes Store by autumn -- but taking Milo mobile has all kinds of interesting repercussions for mobile commerce. "A lot of retailers are wondering about mobile, and they don't know what's coming," says Abraham. "They don't have data driven cultures, and they know that has to change."

When Abraham talks about "data," he's talking about purchase data -- some of the most valuable consumer data that's ever been collected. Big names like Amazon (AMZN), Facebook and Mint (INTU) are vying for this data, as are smaller statups like Swipely and Blippy. The idea is pretty simple: if you know what people are buying (or, what they'd like to buy) then you can sell that data to advertisers and merchandisers. They, in turn, can provide you with targeted campaigns that result in actual purchases, which are far more valuable than mere impressions or click-throughs.

As Abraham was quick to mention to me, only about 5-6% of retail sales in the U.S. occur online, which means that for the forseeable future, converting purchase data into actual future purchases means using real-life retail initiatives -- not online stuff. Like Usablenet, a mobile developer I spoke to last week, Milo's primary mission is to merge e-commerce activity with real-life retail shopping -- much the way Foursquare has merged social networking with real-life socializing. The Web has been useful for this, but the mobile Web is a much more aggressive vector.

Once mobile, Milo will be in the position to collect incredibly valuable data from users. "We can learn what people are buying, and what parts of the country people are buying certain things," says Abraham. "We also know how selection compares to a store's competitors, and what people are searching for." On the merchant side, Milo also has access to all its partner stores' inventories, which for chain stores like Best Buy (BBY), Macy's (M), and Home Depot (HD) reaches nationwide. Add the benefits of mobile use -- exact chronology, exact location, and proximity to other buyers or stores -- and you have a formula that can describe exactly how people perform retail purchases, from search to comparison to completion.

Abraham says that he sees "a huge amount of opportunity to use this data," but that Milo is moving carefully. "We have a whole analytics backend which has barely been tapped" for all its complexity, he says, and right now, those analytics are available for free to partner stores. More nuanced tools might eventually be provided for pay.

For Abraham, Milo's future is almost Manifest Destiny, as the Web merges with real-life behavior. "Social networking has brought the Internet into all parts of social life," he says, "and eventually that will happen with everything," he believes, including retail commerce.

Like any good Web idea (Twitter, Facebook, et al) Milo may eventually work best as a platform where developers can build their own tools using Milo's data and backend. Abraham wouldn't say for sure whether a platform was in the works, but he did hint that Milo may realease an API to select, pre-screened partners. He is fully aware how disruptive such tools will be to a brick-and-mortar tradition, which still operates largely on antiquated, hit-or-miss techniques like fliers and TV ads. "Transparency and instant-information," he says, "is coming." And with, an avalanche of information about how we buy.