Global e-commerce has grown from 15% of total retail sales in 2019 to 21% in 2021. It now stands at around 22% of all sales, according to Morgan Stanley’s 2022 Global E-commerce Forecast. reportwhich notes that “Over the long term, the e-commerce market has plenty of room for growth and could grow from $3.3 trillion today to $5.4 trillion in 2026.”
Yet despite these rosy forecasts, some brand marketers are wondering if the immense growth of the past two years was just due to a once-in-a-lifetime global pandemic.
Or to put it more directly: has e-commerce reached a plateau?
While it might seem odd to say, given the extent to which e-commerce now pervades most consumers’ daily shopping, some industry analysts currently believe that ecom growth has slowed and retail physics is on the rise. Although it is a provocative title, it is not exactly what we see on the ground.
The reality is that e-commerce will continue to grow, and while consumers still want to make physical purchases, that’s not enough to change pre-pandemic trends. Shoppers today shop for daily necessities and groceries online and in-store.
But if we dig a little deeper into what drives these questions around e-commerce, it has a lot to do with data that is siled within different departments, and therefore not woven together to form a complete picture of the customer journey. If you also consider the data that companies have but don’t understand enough to act on, you begin to scratch the surface of the challenges marketers and agencies face today.
Because the cost of retail media networks and retailer platforms have increased, while at the same time marketing or media budgets have stayed the same or decreased, brands are taking a closer look at where to spend, how much and its overall effectiveness.
Of course, the answer to where to spend, how much, who owns it, and how it’s quantified differs in every company. There is not yet a standardized organizational structure or solution in place to identify where to capture NMR spend as there is with traditional media investments.
It’s crucial for brands to understand search spend with retail media networks versus Google or Facebook. Nobody buys milk on Google; they are on kroger.com or another NMR, but the metrics for each are so different that it’s hard for any CMO to compare.
There’s another issue at play: brick-and-mortar stores have been around for centuries, and we’ve been analyzing retail data for decades. E-commerce as we understand it today has only been around for about 10 years, and the data surrounding the last peak for only about two years. We just don’t understand the buying journey the way we do for physical customers, especially when shoppers move back and forth between channels. We’re getting closer, but at this point, it’s not even an apples to oranges comparison. More like orange-seed apples.
It’s not clear from the data that mom bought this bread online this week, but last week she bought it in-store. Buying habits are not the same from week to week and since the journey is not constant, it is difficult to make predictions.
While we have tons of data from e-commerce, what the industry has yet to fully identify is how to track a shopper and connect the dots between why they buy online and sometimes in-store. . Is online more of a weekly restocking trip, and is the trip to the store more for when they forgot eggs or need a specific ingredient? Some shoppers stock up on Instacart and then head to their local supermarket for a filling trip.
But these data losses do not mean that your e-commerce program is not working. It probably is, but you’re comparing it to growing your physical business. You must use a different lens.
This target may include category sales share, volume/unit share, ad sales percentage of total sales, ecom sales percentage of total sales, total cost of ad sale (TACoS) and competitor growth/shrinkage, all of which are viable KPIs with varying levels of measurement available. The key is to find the metric most closely related to your brand goals at each specific retailer.
So how do you get retailers to share data in a way that’s digestible, insightful, and actionable? This is where partnerships with retailers are so important. But you have to know what to look for. For brand marketers looking to better understand consumer journeys online, here are some best practices:
• Take a leap of faith: As data availability will continue to vary across platforms in the coming years, brands must be prepared to take leaps of faith, buying media that may not measurably correspond to a definite growth of the company. But with larger data windows and more data sources available, over time you will be able to correlate success using a retrospective model.
• If at first you don’t succeed… try again: Sometimes certain strategies and media buys may not work. However, in an age of advertising innovation, advertisers must be prepared to fail at the top. To protect this philosophy, advertisers must start by defining their bare minimum, i.e. “with this level of investment, we must reach X”. This will help dictate how much should be generated from proven activations and what can be invested in testing and learning. Also ask your retail agency partners for their perspective, data and analysis. Do they think it worked, and why? Their point of view is important because they are in the data analysis trenches.
• Look outside the ad area: As often as we can point to lack of data availability as a pitfall, we often find ourselves drowning in data that is available, looking for an answer. This can create tunnel vision for advertisers who are always convinced the answer is a spreadsheet – when often the answer is as simple as looking up your brand on your phone versus your PC, or sending an email. -mail the entire organization for an update that hasn’t made its way to the publicity team.
• Expand your horizons: Remember that third-party scrape/API data providers that provide it in digestible data formats often exist to ladder these solutions on thousands of SKUs. Don’t let the lack of an affordable scalable solution keep you from spending 30 minutes looking for an answer outside of a spreadsheet.
Bottom Line: The biggest consumers of advertising still have only a vague idea of who is buying their product. Brands will continue to struggle to map consumer journeys as long as the market forces brands to advertise without providing information to consumers. But that doesn’t mean e-commerce has plateaued. This means that we still have a lot to learn.
Katie Giuditta, Senior Director of Strategic Planning at Unified Commerce Advantage (AUC), is an expert in marketing strategy, e-commerce and digital planning and omni-commerce optimization. She is a leader in building unified strategic plans to drive growth of brands’ end-to-end business practices with fully integrated activations.