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Integrating Online Retail a New Frontier for Brands

18 Jan 2021

2021 demands an integrated approach to online retail

In November 2020, online retail accounted for 31.4% of total UK retail sales according to ONS (Office of National Statistics). This may be unsurprising given current circumstances, but for context online retail has grown 74.7% YoY, while total retail sales grew a modest 2.4%.

All companies, including large traditional retailers and DTC (Direct to Consumer) challenger brands have had to adapt, and fast. Mostly, the speed of change has forced attention on mitigating losses or adjusting to address uncontrollable influences from product development and supply chain disruption through to customer engagement and servicing. The shift to digital is presenting challenges but with these also come opportunities – one of which is the digitisation of retail meaning faster and nearer real-time measurement and more accessible data, lots of data.

Marketplaces, most often Amazon, and turnkey eCommerce website solutions such as Shopify have been major beneficiaries of the shift to digital commerce. Shopify market cap’ has more than doubled in 12 months to >$142bn while Amazon has surpassed >$1.5tn. Where brand owned webstores accounted for a nominal percentage contribution to total sales for many companies 12 months ago, those that have been able to pivot quickly, often using turnkey applications, have seen owned webstores generate significant revenues.

The consolidation of shopper touchpoints and sales to digital channels has presented questions and opportunities. Some of the most pressing and frequently asked are as follows:

Channel Economics

Online retail becoming 30%, or often more, of total revenues commands attention. Investment and resource allocation increases significantly, as does scrutiny and expectation. The importance in understanding channel economics is heightened – aggregating data across digital retail channels, logistics, sales, marketing contribution, finance and consumer profiles is hard but now critically important in ensuring a company makes the right decisions.

Often, companies operate siloed teams tasked and incentivised with delivering success via direct channels, or partner re-sellers, or via marketplaces. Each ‘channel’ has dedicated marketing spend, KPI’s and sales goals. Breaking down these siloes, combining data sets and incentivising omnichannel growth may be disruptive to current operations but 2021 is the year to change and adopt a cohesive strategy.

At Acorn-i, we work with clients to develop mechanisms to answer question such as ‘is Amazon cannibalising direct sales?’, ‘which channel drives most new-to-brand customers?’. By analysing multi-channel datasets together, retailers can measure holistically KPI’s such as customer life-time value, paid and organic sales, consumer path to purchase and make better informed decisions on where to allocate resource to deliver long-term success.

Shopper Marketing & Paid Media

Amazon as a media owner and advertising property is in a relatively unique position in wanting to tap into marketing budgets while many traditional media owners only wish they could unlock some of the shopper marketing Amazon captures. CPG brands alone spend more than $100bn per annum in shopper marketing. As digital retail sales increase, budgets set for shopper marketing will follow online.

There is an element of legacy in paid media measurement and attribution – success determined by click rate, last advert served – although this will be further challenged in 2021 by the forced policy changes from Apple, Google and browsers on identities and cookie tracking. Media owners and social platforms are investing heavily in enabling users to make purchases vs linking to external domains.

Evaluating combined data sets across shopper marketing and paid media, and having these in-synch, enables brands to develop more insightful metrics and measures of success. Has a TV marketing campaign driven organic search lift on Amazon? Are sales promotions more effective in conjunction with social or simply eroding margin? What is the most likely path to purchase across all customer touch points?

With increased online retail and richer consumer data sets brands can develop more meaningful metrics of success, beyond clicks and last touch. Also, combining shopper marketing and paid media investments can generate leverage for improved retail and marketing terms. To continue to cut through noise and reach consumers with the right message, brands that develop omnichannel strategies will improve efficiencies, measurement, attribution and terms of business as well as consumer experience and ultimately sales.

Customer Experience & Brand Equity

Some brands meticulously scrutinise every aspect of owned digital real estate, ensuring that colour pallets, fonts, imagery, logo design are all on-point while their online presence on third party stores and marketplaces is inconsistent. Brands need to treat 3P channel content and user experience as an extension of their own DTC properties.

Consumers like buying from Amazon, it’s easy, they are protected, fulfilment is fast and consistent, and there is a sense of community via reviews and ratings. Many brands portray a far inferior brand experience to customers on Amazon vs their own website.

Via programs such as Brand Registry, Amazon enables branded content, shoppable images, video, online stores, interactive mobile shopping that enable a brand to develop and enhanced consumer experience when engaging with the brand. Many of your customers will discover and make their first purchase of a product on Amazon. Brands can help make that experience a positive one, and subsequently increase shopper loyalty.

Ever more so now, brands need to develop a cohesive shopper experience across owned and 3P properties. Those that do will see consideration and conversion rates grow significantly across all channels.

Data & Algorithms 

The use of more applications, increase in the number of trackable consumer touch points and exponential growth in data as online retail continues to grow requires brands to review internal and external technology capabilities. There is massive opportunity in building consumer cohorts, shopper insights, scaling 1P data and leveraging for targeted media and turning new customers into loyal brand advocates.

In a lot of cases, brands have siloed enablers that are somewhat black-box and have been onboarded over a number of years. We would encourage a review and reset in 2021 to ensure a clean and effective infrastructure to support building longer-term omnichannel success. Once in place, machine learning can be applied to accelerate automated performance algorithms, data analysis and decision making having an exponential impact on business success.

If the above points resonate with you and for your business we’d love to connect to hear more and support on building capabilities to deliver long-term success. Acorn-i have built omnichannel reporting, measurement, activation and performance capabilities as well as provide strategic advice on how to get the most out of online retail channels.


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