Looking at the current retail landscape for both omnichannel and pure play online retailers, there are significant trade winds occurring and this will continue to increase across the first quarter of the financial year. Data points to major declines online for multiple omnichannel retailers demonstrating a remaining dependency to in-store sales contribution. While any sales are better than no sales, comping year on year online will prove difficult without attention across both sides and developing omnichannel and online only cohorts.
"It isn’t doom and gloom. Multi-category variety stores and marketplaces are winning." - Mike Fowler
I’ve analysed traffic across a handful of retailers and there are definitely winners in the current market. In fact, data shows pure players seeing only single digit declines across the last three months. In contrast, many omnichannel retailers are experiencing double-digit decreases where some of these declines have moved in-store. Longer standing pure players are also seeing larger declines as compared to younger, more contemporary brands.
Successful retailers display a strong channel mix made up of a high combination of direct traffic from email followed by search. This is weighted at 50-55% direct and 35-40% search with search broken down to 70/30 organic to paid. You should also see social media accounting for 2-5% of user traffic with conversion strongest across direct sources such as eDMs and newsletters, influencer and affiliate traffic.
Marketing Channels Overview (Example)
If your traffic is declining, there are multiple initiatives at your disposal. It is possible that you may not have deployed new digital marketing strategies when Apple’s iOS 14+ introduced changes to third-party cookies and behaviour tracking. This would be making it much more difficult to track and attribute traffic and conversion sources. You’ll need to move your digital marketing strategy to a 1P first, first-party data model. 1P is data that you collect directly from your customers and own.
It is a perfect time to deploy a Customer data platform (CDP) such as Lexer, Segment or Blueshift to name a few. The CDP collects and unifies your first-party customer data from multiple sources to build a single and more complete view of the customer. This allows your marketing teams to create targeted and personalised marketing campaigns and make better business decisions.
Note: I'm not receiving any remuneration or commission from Lexer (or any other vendor I mention). I simply love and enjoy using their product. A CDP is game changing for an omnichannel retailer or brand. CRM is the new black and a CDP unlocks your own first party data allowing growth.
You have a ton of data. But, are you leveraging it?
Leverage what you have.
Often, retailers have unexposed inventory. Exposing additional inventory on your website or in new marketing channels is low-hanging fruit. Integrating into online marketplaces isn’t difficult. Even the largest retailers can create product listings with appropriate inventory updates across channels to avoid over selling. Orders can be easily aggregated into existing shipping platforms such as Starshipit or order management, ERP or WMS integrations.
Speaking about marketplaces, an on-site marketplace strategy is delivering in spades. Range expansion on your own site is adding multiple benefits:
- New, incremental sales and SERPs
- Wider organic and paid search opportunities
- Improved customer experience
- Meeting customer demands for expanded ranges
- Expand existing and attract new customer cohorts
Expand your range by tapping into your own endless aisle or launching an on-site marketplace offering. If you have existing traffic, then it won’t cost much to serve additional customers. To demonstrate how successful this is in traffic and user growth, take a look at a couple sites with expanded range offerings.
Catch.com.au - Traffic & Engagement Last Month & Total Visits Last 3 Months
Catch.com.au saw a 600k user increase between March and May. But they aren't alone.
Kogan.com - Traffic & Engagement Last Month & Total Visits Last 3 Months
Kogan.com month on month growth traffic saw a 10% lift and their holding nicely in a challenging retail climate as did EziBuy and the majority of Mosaic Brands. This is what I am seeing across the board with multi-category retailers. Retailers large and small are losing traffic to the variety store format as customers demonstrate their preferences with their wallets.
ezibuy.com - Traffic & Engagement Last Month & Total Visits Last 3 Months
Traffic and Engagement (compared to previous month)
- Rivers.com.au's traffic has increased by +11.23%
- Rockmans.com.au's traffic has increased by +35.34%
- Nonib.com.au's traffic has increased by +7.24%
Contrast this to vertical fashion retailers (MoM):
- Glassons.com's traffic has decreased by -1.66%
- Blueillusion.com's traffic has decreased -27.46%
- Citychic.com.au's traffic has decreased by -22.77%
As a retail strategist, my eggs are squarely in the range extension basket. As an Australian retail group or vertical brand, I would immediately double down on building a growth team that focused on user retention and new customer acquisition. I would ensure my digital marketing and CRM teams were addressing all stages of the funnel and the customer journey was optimised and served across the complete LTV of the customer. When you do that, you can predict what customers will buy and when.
It has long come the time to invest in first party content and SEO ensuring that you are well represented for every possible search that your customers are making. SEO isn't a strategy, it's BAU.
"Personalisation is you telling your customer's what you think they want." - Mike Fowler
Search is one of the times when they are telling you. Implementing an API driven site search and prioritisation of search results with tools such as Algolia are table stakes in eCommerce. Payment methods are not a key priority any more - supply chain and logistics are and optimising the customer journey is priority no. 1.
Todays eCommerce is a battle of will and if your GM or head of digital is telling you that this is in the too hard basket - call me! You need to be willing to innovate to innovate.
About Mike Fowler
Mike is an eCommerce veteran, senior leader & growth strategist for some of Australia's best retailers. Formerly at Afterpay as Director of Merchant Services APAC, General Manager and founder of the growth team at Mosaic Brands (Noni B Group) developing and launching 9 iconic multi-category online marketplaces, including: Noni B, Rockmans, Millers, and Rivers, as well as Head of Digital at Blue Illusion. Member of the Australia Post Customer Advisory Group with more than 15 years experience in helping retailers leverage eCommerce, CX, payments, & logistics opportunities to maximise growth.