New (Old) Realities Shaping Ecommerce: Online Shopping Trends
The future of ecommerce has arrived. And yet, many of the “new” realities are anything but. Old problems stalk the halls — where to sell, balancing acquisition with profitability, how to build an audience, and Amazon. Staying ahead of the curve is critical, but separating fact from fad isn’t easy.
As a guide, we spent the last few months sifting through new and old entrants alike to isolate the online shopping trends shaping today’s landscape.
Don’t Be Everywhere: Data Over “Ego”
The proliferation of channels — social, marketplaces, brick-and-mortar, etc. — is daunting, demanding, and deceptive. Instead of everywhere, ruthlessly select where (1) your customers already are, (2) you can add real value, and (3) return on ad spend (ROAS) is strongest. With each, data holds the key.
“Retail is filled with a very natural ego,” says Nate Checketts, co-founder of Rhone. “People love to tell you, ‘Oh, we’ve got a store in Tokyo, and Paris, and New York, and London, and LA.’ When you think about how DTC [direct-to-consumer] brands are now approaching retail, it’s much more data-driven. Every store that we open is not only building that customer in an offline channel, but it’s also building that customer in an online channel.”
Online, this means understanding where your visitors come from and what they do once they arrive: i.e., attribution. Prioritize profitability using a tool like Google Analytics — coupled with Google Data Studio — for ecommerce conversions, assisted conversions, and “Multi-Channel Funnels” or leverage “Sales by traffic referrer” reports.
Offline, it’s about tracking fulfillment patterns to identify regions, cities, and even neighborhoods where orders are being sent. Those represent the most fertile ground. Monitoring online sales during and after physical events (as well as for owned storefronts) is equally important to gauge their impact on local revenue.
In other words, rather than thinking of multi-channel, omni-channel, and online-to-offline as separate strategies — each demanding to be mastered at once — set your sights on the channels that provide the best customer experience as evidenced by the numbers.
Multi-channel ecommerce (left) brings native buying options to where your customers spend their time; omni-channel retailing (right) harmonizes those touchpoints
As a pure-play ecommerce example, Pura Vida Bracelets chose to focus on micro-influencers and referrals, using email and Instagram as its primary channels. After revamping its referral program, the brand amassed an army of over 110,000 “reps.” This increased sales from referrals by ~300% year-over-year and lifted average order value by 11%. “It’s not about ‘all,’” wrote Steve Dennis in Forbes. “It’s about relevant and remarkable where it truly matters.”
Start at the End: Retention Comes First
The fight for customers isn’t new, but it is intensifying. David Perell and Nik Sharma summarize the impasse: “DNVBs [digitally native vertical brands] go to war for the same customers on the same platforms (such as Facebook and Google). Customer acquisition costs soar as they fight for limited advertising space. As companies grow, so do costs of acquiring each additional customer.”
While other causes may be at play, this war touches all paths to purchase. Chamath Palihapitiya — an early senior executive at Facebook and now CEO of Social Capital — estimates “40 cents of every VC [venture capital] dollar” is spent on acquisition. Over the last five years, Facebook’s average CPC has increased 612.5%. And, Facebook CPM for “product catalog sales” ads are now 645% more expensive than “store visits.” Simply put, buying a visitor who wants to buy from you is exponentially more expensive than buying a visitor.
Data via Statista and Merkle
As backward as it sounds, retention must precede acquisition. The only way to survive higher new-customer spend is through higher customer lifetime value.
Tactically, this means front-loading loyalty programs that are easy to use and offer meaningful rewards from the jump. Such programs cannot be merely transactional but also community-building by incentivizing engagement. Cater to ardent fans and equip them with opportunities to sell you — rather than sell yourself — through user-generated content (UGC), reviews, and referrals.
Subscriptions are another avenue of attack. Last year, Hubble grew its contact-lens service to over $30 million in sales and, in 2017, Native — a DTC natural deodorant built largely on subscriptions — was acquired by P&G for $100 million. As Wilson Hung explains, “Brands with products suitable for a recurring subscription, with high average order values and margins are the ones that are best suited to scale a paid media first strategy.” Subscriptions give companies the “luxury” of high acquisition costs.
Amidst the tactics, never ignore the centrality of every brand’s most valuable asset. Increasing lifetime value and lowering acquisition costs come from placing people (not products) at the heart of growth.
Then, Acquisition: Seek & They Shall Find Ye
Fully 85% of product searches begin either on Amazon or Google. No surprise there. What is surprising is how few online retailers — even large or enterprise organizations — have mastered acquisition via search. Setting aside Bezos’ beast, the cardinal sin of search engine marketing is casting the net too wide. ROAS comes alive in granularity; wastefulness, in breadth.
First, match search queries, ads, and landing pages as closely as possible to eliminate friction: shoppers should be given ad copy and landing pages with the exact keywords — or glaringly obvious synonyms — they first entered into the engine. Whether you use single keyword ad groups (one keyword that triggers one campaign or ad), or tightly knit groups of 5-15 keywords isn’t as important as the principle: customers should experience a throughline from start to finish.
Rothy’s delivers separate ads and landing pages to match shoppers’ searches
Second, separate campaigns for more effective budgets and bidding: (1) high-purchase intent — “buy women’s purple flats” — from (2) informational intent — “most comfortable women’s flats for standing” — from (3) unknown intent — “women’s flats.” Separation is also important for branded (your company’s name and exact product titles) versus non-branded keywords.
Third, keep a close watch on negative keywords — words that prevent an ad from being triggered by terms associated with your keywords but not your product. For casual or dress flats, this would include athletic terms or dance terms so that someone looking for “ballet shoes” doesn’t get served an ad for “everyday flats.”
Failure to monitor negative keywords drags down ROAS, especially on Google Channel where triggering is dependant on product feeds (the product title and descriptions from which Google draws normally linked directly to an ecommerce site’s backend). Lastly, experiment with competitive campaigns by targeting other company’s names or products, and — in everything — test, iterate, and follow the data.
Organic search remains the holy grail. Master SEO, giving particular care to how you format product descriptions. ThirdLove’s paid and organic efforts tie together these methods beautifully. For the phrase “try bras at home,” ThirdLove occupies the first ad result along with positions two and three organically:
“Try Before Buying” reached conversion rates three times higher than ThirdLove’s normal offers and the campaign’s retention rate is ~70%
Content Then Commerce: “It’s the [Audience], Stupid”
Nobody likes to be sold to. Everybody likes to be entertained. More than that, we all love to belong. Humans are irreducibly relational and self-centered. That’s the genius of storytelling. Great content connects us simultaneously to something bigger than ourselves and a vision of who we can be. Great sales copy — particular copywriting formulas built on human emotions — does the same thing. Brands that deliver this sew themselves into the lives of their customers in a way that commerce can’t.
“We’ve noticed that if we have content that has real meaning,” says Chris Pfaff, founder of Young & Reckless, “People are more likely to click and go look at the actual product, as opposed to saying, ‘Hey, look how cool this photo is.’ If you get across your brand message and make people feel inspired or motivated, then they’ll go and buy your product.”
Originally a wholesale brand, four years ago Y&R turned its sights online. Today, digital isn’t just a marketing channel, it’s a factory for audience creation. Social accounts for half of all Y&R’s traffic and the company is “tripling down” on YouTube because “people go there to be engaged, whereas it’s more passive on Instagram and Facebook.”
Or, consider The Hundreds: media first, products second. “We’re not a T-shirt brand,” Bobby Hundreds has said. “This is content and culture and community. The T-shirt is just merch.” Alina Nguyen, Editor-in-Chief of The Hundreds, puts it like this: “At the core of The Hundreds’ ethos is storytelling on a personal level. The story that exists on the undertow lays the foundation for everything our brand stands for, and every collaboration and project we do in the clothing sector.”
Other models exist. Morphe Brushes (though influencers) and Glossier (through micro-influencers) curate UGC onsite and off, layering videos, images, and reviews by customers into their site and social media. Temporary tattoo makers Inkbox invest in trend reports — promoted via Facebook Messenger — and regularly answer FAQs on YouTube. Chubbies and Purple have forgone influencers and centered themselves on videos, events, and written content that’s permeated by a unique voice.
Whatever form content takes, certainly optimize to drive product interest and sales, but never at the expense of serving, entertaining, and embodying your audience.
Beware of “Rented” Land (For the Right Reasons)
First, the facts: revenue from Amazon Marketplace is now double the company’s retail sales; half of all product searches start on Amazon; advertising is its fastest-growing arm; and Amazon is aggressively courting DTC brands. Conclusion: no business can ignore it. Except, maybe you should.
When it comes to Amazon, more valuable than following the money is intentionality — weighing carefully the choice to list or not to list; to partner with Amazon or not — mixed with a healthy dose of fear. Just not the fear most sellers have:
The real danger is a disconnect between business goals and how to get there — namely, selling products versus building a brand. Think carefully about any intermediary between you and your customers. Covet that connection and that data: email addresses, social profiles, buying preferences, and demographics (like age and location), all of which Amazon withholds from Marketplace sellers.
For some, the answer lies in symbiosis. “There’s a symbiotic relationship where Amazon advertising works great — more the manual stuff than the automatic,” says Nolan Walsh, co-founder of Thursday Boots Company. “We don’t put all of our products up on Amazon. It’s really more the best sellers where we’re not strapped for scarcity.” UNTUCKit uses Amazon to “offload older styles” and Buzzfeed mixes standalone sites featuring core products with an Amazon storefront for “merch.”
For intrepid sellers, Amazon can be a mix of distribution and acquisition. Fulfillment by merchant offers the most flexibility in creating a branded unboxing experience, but inserts driving customers onsite are against Amazon’s terms of service. “Our biggest driver,” says a Fulfillment by Amazon seller who asked to remain anonymous, “is chatbots.”
Because Amazon allows contacting for “order fulfillment and related customer service,” the seller — a high seven-figure brand that has operated on Amazon for three years — creates custom Facebook audiences using shipping information. “We are interpreting the rule liberally,” says the seller, “but many times people who have ignored our ‘how was your order’ email through Amazon end up having an issue that we can solve once we connect on Messenger, and they’re super happy about it.” It’s a murky line, but from those positive interactions, the move to direct customer is natural.
For others, like Paul Munford — CEO of Lean Luxe — the line is far more clear. “If you give up control of customer experience and that direct relationship with the customer, then what do you really have?” says Munford. “That’s the lifeblood of today’s best brands and it’s the future: healthy little fiefdoms with their own moats. Frankly, if I’m a brand on this path, I’m not even remotely worried about being on Amazon. It commodifies the brand. Nor am I really even looking to stock my stuff in non-Amazon third-party marketplaces either, because again that creates just another barrier between me and my customer. It depends on what your outcomes are as a company.”
And, as for many of the DTC brands Amazon is courting, it’s not a line, but a barricade. “Selling on Amazon doesn’t work for a customer-centric brand,” Melanie Travis, founder of Andie Swim, told Digiday. “They basically want to reduce us from a brand to a product. They’re all nice people, but they’re a monster platform.”
Online Shopping Trends That Matter
Naturally, much could be added. Personalized product recommendations and onsite search are increasingly powerful. For marketing, email reigns supreme, but chatbots are on the rise. Ecommerce automation is giving companies their time back while improving the bottom line. And the specter of global ecommerce looms large.
Amidst the noise and excitement, what matters is investing in the online shopping trends shaping ecommerce — new or old — and ignoring the rest.Editorial note: this article was last updated Feb. 7, 2019
as per our monitoring this Story originally appeared
New (Old) Realities Shaping Ecommerce: Online Shopping Trends