eCommerce is taking off like a rocket, but many brick & mortar teams are still skeptical about the need for digital investment. It’s easy to understand why: Change is scary, resources are limited, and incentives are often not yet in place to make brick & mortar teams care.
By 2023, 58% of retail sales will have digital influence. This resistance is a barrier every eCommerce leader faces on their road to advancing digital maturity.
It starts with your vocabulary.
How do we change our vocabulary when it comes to digital influence in retail?
The very word “eCommerce” often creates an adversarial relationship with brick & mortar teams who view it as a competing channel, rather than an enabler of the entire shopping path to purchase. And pointing to “eCommerce sales” and “eCommerce penetration” as success metrics only fuels the problem by leaving the brick & mortar teams out of the picture.
We are in an era where teams are saying, “but eCommerce is only X percent of our business and it’s cannibalizing my brick & mortar sales,” and questioning more digital investment. This is one of the biggest myths being busted.
The truth is: It’s not easy to separate the impact of eCommerce and brick & mortar retail sales. The lines are getting too blurry. So, we need language and metrics that recognize this blur.
It starts by breaking down the idea that digital investments only benefit eCommerce sales, and showing brick & mortar teams that all sales are in fact “digitally influenced” — a term called “digitally influenced sales.”
Making this subtle vocabulary shift moves eCommerce from being thought of as a competitor to an enabler and money-maker for all.
What does 'digital' mean in retail?
The term "digitally influenced sales” considers all transactions where a consumer has had a digital touchpoint along their path to purchase, regardless of where the sale ultimately happens. It gives brands credit where credit is due for all the digital shopper marketing that engages consumers during their shopping journey.
As visualized by IRI below, there is an enormous amount of interconnectedness between digital and physical retail — much of which is unaccounted for if you look at eCommerce-only sales.
How digital and physical touchpoints interconnect throughout the shopper journey
- Advertising on retailer websites has a halo effect on brick & mortar sales. A study by Analytic Partners found that up to "90% of the impact of Amazon display ads" (DSP) drives sales in channels other than Amazon. A study by The Digital Shelf Institute found that for every dollar consumers spend online as a result of retail media campaigns, another $7 to $11 was spent offline in stores.
- It’s well-established that reviews add value and drive online purchases. At Profitero, we found going from 1 review to 2-50 reviews on Amazon.com increases a product’s sales by 108%, on average. But reviews also impact brick & mortar sales.
A study by PowerReviews found that 39% of shoppers will not buy in-store without reading online reviews first. While shopping in-store, 69% of consumers prefer to look up product reviews on their smartphones instead of speaking to a store associate, according to RetailMeNot. Bazaarvoice finds the ROBO (research online, buy offline) multiplier effect could be as high as 5X in some categories — meaning that brands are generating in-store revenue of $5 influenced by online reviews and other content for every $1 that online content affects in online sales.
- Increasingly, retailers are connecting the omnichannel dots, deploying in-store tactics to direct consumers to digital. 82% of Walmart customers use the retailer’s site or app while shopping for food & beverages in a Walmart store, according to insights Walmart Connect shared with Profitero. Walmart has started to use shelf tags that show online reviews and keywords to find the product on Walmart.com. Tesco curates customer reviews online and displays them alongside mobile devices in its stores. Many brands are following suit.
- Outdoor lifestyle brand YETI prints online product reviews on product inserts surrounding its coolers
- Technology accessories brand Scosche puts QR codes on its product packaging, which when scanned, brings up informational and educational videos on a shopper’s smartphone
- Mattress brand Casper has started publishing online reviews on its packaging. Quoting from a Linkedin post by Colgate-Palmolive’s Global Head of Digital Commerce Surabhi Pokhriyal: “The fun part is how the product packaging speaks to the ‘40,000 reviews on Google, Amazon, etc.’... while sitting on a Costco aisle! Now that is an ultimate example of truly omni, digitally influenced sale happening in brick & mortar with ‘social proof’ coming from frenemy Amazon.”
What is a digitally influenced purchase?
So, what are web-influenced sales? When a consumer engages with a digital touch point (whether it’s an ad, a social media post, search results, or a product detail page on a retailer’s website) that compels them to purchase the displayed product, that is considered a digitally influenced purchase.
What percent of in-store purchases are influenced beforehand by digital behaviors?
In 2022, $2.43 trillion in retail sales had some digital influence. This number has increased steadily since 2014, leading to the belief that it will continue to grow. The digital factors influencing those purchases included:
- Online marketplaces
- Social media advertising
- PPC (pay-per-click) ads
- Search engine results
To take it even further, 31% of all US retail sales (about $1.1 trillion) in 2018 were influenced by a smartphone. In 2018, experts projected that in 2022, 90% of all digitally influenced sales would be due to smartphones—quite an accurate prediction.
What is the impact of online selling?
The impact of online selling cannot be understated. Because these dispersed ads can directly link to an online store, it shortens the sales cycle and encourages customers to act faster.
Through online selling channels and marketplaces, brands can reach their customers faster than ever before. Brands are also more accessible and can reach their targeted audience easier by leveraging the right metrics.
What is the influence of increased retail store distribution openings on eCommerce sales?
The consumer’s journey doesn’t begin and end with a brick & mortar store anymore. The online world is vast. To meet demands, brands simply must leverage both channels.
Traditional stores still account for the majority of most retailers’ sales. Still, it’s clear that eCommerce trends continue to grow rapidly. If a brand increases its share of distribution in physical retail stores, the impact on its eCommerce sales depends on a variety of factors:
- How close are the retail store locations to the area observed in their eCommerce metrics?
- What is the target market? What are their preferences?
- Is there a difference between the eCommerce target market and the brick & mortar audience?
Ultimately, embracing an omnichannel model can positively influence sales.
Why is it important to think in terms of ‘digitally influenced sales’?
Fair warning, there is potential for territorial battles regarding which team gets credit for in-store vs. online sales, and who owns what (e.g., omnichannel responsibilities). At the end of the day, though, it’s in the best interest of both the brick & mortar sales teams and eCommerce teams to want to grow digitally influenced sales overall. Why?
- For brick & mortar sales leads, understand that online and digital initiatives — like optimizing product content and search, and leveraging ratings & reviews — impacts your retailer’s omni and in-store sales too. Ultimately, this impacts commissions and bonuses
To be omnichannel, Walmart has reorganized the joint business plan process, and how it structures its category teams. If brick & mortar sales teams don’t embrace the importance of digital, they will lose a seat at the table. Not just at Walmart, but across all their customers that look up to Walmart as an example and are quick to copy.
- For eComm leaders, know that your digital initiatives are not just affecting eCommerce; they’re affecting all online AND offline sales. The narrow eCommerce view doesn’t give you the appropriate credit or resources and budget needed to get the job done. But going forward, taking into account all digitally influenced sales could be instrumental in:
- Allocating budget and future investments
- Making headcount and hiring decisions
- Evaluating staff and distributing bonuses
- Identifying the technology, capabilities, processes, and analytics needed to grow your brands
- Embrace the "digitally influenced" view of sales to get all teams and functions to think holistically. Rather than coming together to serve the consumer wherever they shop, teams are incentivized to take an inward view and help their channel and bonuses grow. Those in the C-suite know that dangerous silos in your business exist right now and are getting in the way of your growth.
What are web-influenced sales, and what is a reasonable estimate of total web-influenced sales?
Web-influenced sales are the same as digitally influenced purchases, meaning they’re impacted by digital features found throughout the web. Those might include:
- Ads on YouTube videos, podcasts, or blogs
- Search engine results
- Amazon ads
- SEO campaigns
Research from Forrester, cited by Publitas, suggests that nearly two-thirds (62%) of all sales are now digitally influenced (taking into account both online + offline sales, which had a digital influence element). This is up from 49% pre-pandemic.
On a category basis, data from Invespcro.com suggests digitally influenced sales range anywhere from 46% for groceries to 69% for electronics.
Specific to your own brands, however, digitally influenced sales are hard to measure and attribute sales to appropriately. A key reason for this is the ambiguity around how “eCommerce” and “digital” are defined. There are no set industry standards; different retailers and brands apply different definitions.
Take for example, the surge in click & collect or BOPIS (buy online pickup in store) sales in recent years, which especially skyrocketed during COVID. The vast majority of BOPIS/click & collect orders are fulfilled at the store level.
So the question is: How can I get my organization to buy into this idea of “digitally influenced sales?” Here are three things we see our clients doing:
- Educate through examples: Earlier, I shared a handful of examples and proof points of digitally influenced sales in action. Share them across your organization and especially with brick & mortar teams — and constantly be on the lookout for new examples. Eventually through repetition, it will start to sink in. When doing eCommerce 101 training internally, make a point to highlight the ways digital affects the physical retail journey.
- Run experiments: To make a case for digitally influenced sales, a few of our clients are running their own attribution experiments, piggybacking on the research studies I mentioned earlier.
For example, two of our clients are currently measuring the impact of Amazon advertising on Walmart store sales. This way they can convince marketing why more budget should be shifted there, and brick & mortar teams why investments there may yield better ROI than spending trade dollars.
- Broaden your goals: Rather than just defining your 5-year strat plan goals in terms of eCommerce-centric metrics, set goals using total market share growth. While brick & mortar sales represent the bulk of sales for brands, eCommerce sales are growing much faster.
If you don’t outpace the category for growth in eCommerce and only keep pace in brick & mortar, then it stands to reason your brand will lose market share when you consider the total market. Everyone must care about this outcome. So, think about how to make digital commerce a shared accountability goal, i.e., make eCommerce a team sport — beyond just the specialists and eComm evangelists in your organization.
The impact of the COVID-19 pandemic on digitally influenced sales
There has never been a more relevant or applicable time to discuss digitally influenced sales.
US eCommerce sales jumped $219 billion in 2020 and 2021, due to the coronavirus pandemic. Online shoppers spent $32 billion more online for the same quantity of goods over the past two years. This acceleration of eCommerce growth has rapidly propelled us into the future, not to mention the longer-term impacts of the pandemic on eCommerce sales, such as inflation.
We’re living in unprecedented circumstances, which call for extensive, thoughtful, strategic, and data-driven decision-making.
In terms of digitally influenced purchases, the pandemic has changed core aspects of how people shop. New trends are emerging and altering the online marketplace. These are important for brands to consider regarding how digital features influence sales:
- Trending product categories: McKinsey analysts found that, “in a matter of months, the grocery eCommerce landscape in North America accelerated by three to five years.” 20-30% of business moved to the online space at the height of the pandemic.
Categorizing products on the digital shelf is a way to optimize trending searches. This is an effective way to achieve higher rankings strategically and feature products online. The key is conducting thorough research on the most valuable categories and how certain products fit naturally within them.
- Decreased brand loyalty: Moving to the online marketplace is a risky transition. The competition is high, and people are less loyal to brands. In mid-2021, over 80% of shoppers said they bought a different brand than usual. The reasoning included lower prices and items being out of stock.
Online shopping is one of the most popular internet activities, and the space has never been more populated. Shoppers can find almost everything online from thousands of brands.
- Social media shopping: This is a rising trend all brands should watch. People are now taking their online shopping habits to social media. In 2020, social eCommerce made up 3.4% of total eCommerce sales. This number continues to grow, so now is a good time to consider how social media digitally influences sales.
Learn how Profitero can accelerate your digitally influenced sales
Creating digitally influenced sales and leveraging the online world can place your brand at the forefront of eCommerce innovation. Gone are the days when only one sales channel mattered. Today, leveraging both eCommerce and brick & mortar sales is vital.
Profitero can help you cut through the noise to discover which metrics to track and prioritize the actions that will help you gain the most growth. If you want more insight into your business model's digital implications, we can provide that as well.
If you’re ready to learn how Profitero can help your brand accelerate its digitally influenced sales, reach out and schedule a demo today.