eCommerce has taken off like a rocket over the past several years and continues to accelerate. In fact, 55% consumers are expected to increase their online shopping in the next 5 years, according to a recent multi-national consumer report by Profitero.
Despite this incredible growth, the industry still suffers from an underinvestment in the digital retail experience relative to the physical retail experience. Why are brands underinvested? In large part, it’s because they haven’t given credit to the omnichannel influence of the digital shelf. This challenge is a barrier every eCommerce leader faces on their road to advancing digital maturity.
Breaking down that barrier 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 leading to a 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 still 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: Profitero’s latest research shows that 8 in 10 US shoppers are influenced by digital touchpoints during their path to purchase. 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 moving past the misconception 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.”
What does 'digital influence' 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 Circana 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.
Profitero found that 68% of consumers report content & reviews on a retailer's website as more influential than in-store signage and displays, and nearly 1 in 2 consumers who typically shop in-store prefer to research products online. Bazaarvoice finds the ROBO (research online, buy offline) multiplier effect could be as high as 3.91X — meaning that online reviews and other content are generating nearly $4 of in-store revenue for every $1 they drive in online sales.
Increasingly, retailers are connecting the omnichannel dots, deploying in-store tactics to direct consumers to digital touchpoints. For example, Tesco curates customer reviews online and displays them alongside mobile devices in its stores. Walmart will be adding demo stations that feature QR codes linking to online shopping options, and many brands are following suit:
L’Oreal has added QR codes to Garnier and La Roche-Posay products to help consumers learn more about the products and build brand engagement. The brand is also using codes in-store on foundation products to help shoppers to virtually try on different shades.
Henkel is using custom QR codes to reassure customers worried about the authenticity of their Loctite adhesives.
This past summer, Pepsi added QR codes to its beverage cans to drive consumers to its online brand store and purchase brand merchandise, offering perks such as a free trial for Apple Music.
What is a digitally influenced purchase?
So, what are digitally influenced sales? When a consumer engages with a digital touchpoint (whether it’s an ad, a social media post, search results, or a product detail page on a retailer’s website or mobile app) that compels them to purchase the displayed product, it’s considered a digitally influenced purchase.
Hear how leaders from Colgate and Beam Suntory explain digitally influenced sales to their orgs:
What percent of in-store purchases are influenced by digital behaviors?
In 2022, $2.43 trillion in retail sales had some digital influence. This number has increased steadily since 2014 and will continue to grow: Forrester predicts that by 2027, digital-influenced retail sales in the US will reach an impressive $3.8 trillion. The digital factors influencing those purchases include:
Social media advertising
PPC (pay-per-click) ads
Search engine results
This digital influence extends to the in-store experience, as well: 1 in 4 US consumers regularly consult a retailer’s website or app while shopping in-store.
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.
Consumers also rely on the digital shelf to discover new products – nearly 6 in 10 say they are more likely to discover new products while browsing online than shopping in a store.
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 a 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, retailers like Walmart have 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.
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.
Key trends driving the rise in digitally influenced sales
There has never been a more relevant or applicable time to discuss digitally influenced sales.
US eCommerce sales jumped $109 billion in 2022, continuing the upward trend following the pandemic-driven explosion in 2020-2021. Add to that the historic inflation and supply chain issues over the last several years, and we’ve been rapidly propelled into a future that calls for extensive, thoughtful, strategic, and data-driven decision-making.
The DNA of today’s shopper has changed. New trends are emerging and altering the online marketplace. Below are just a few of the trends in eCommerce and consumer behavior that brands need to consider:
Retail media: Digital ad spend on retailer sites has skyrocketed, and it’s easy to see why: shoppers pay attention to it. Almost half of surveyed consumers said they were influenced by sponsored products appearing in search, 30% regularly click on advertising banners while shopping online, and 45% say they are more likely to be influenced by a product ad on a retailer website vs TV.
Decreased brand loyalty: Competition in the online marketplace is high, and people are less loyal to brands. Profitero found that nearly 60% of shoppers have switched brands due to their typical purchase being out of stock, and more than 1 in 3 have been persuaded to switch by online reviews, better prices, or because they found another brand more easily in search.
Social commerce: This is an accelerating trend all brands should plan for. People have taken their online shopping habits to social media: In 2022, social commerce made up 5.1% of total eCommerce sales in the US, up from 3.3% in 2020, and that number is expected to grow to 7.2% by 2025 – a whopping $107 billion in social commerce sales alone. According to Profitero research, 1 in 3 consumers say they will buy a product they have never tried before after seeing it advertised on social media.
Measuring digitally influenced sales
One of the core challenges brands face is how to measure and attribute digitally influenced sales. 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. 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: Make a case for digitally influenced sales by running your own attribution experiments, piggybacking on the research studies I mentioned earlier. Or you can partner with Profitero to help.
These test and learns will help convince marketing why more budget should be shifted online, and brick & mortar teams why investments in digital 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., assigning commerce KPIs to personal and team goals.
Learn how Profitero can accelerate your digitally influenced sales
Creating a robust digitally influenced sales strategy can place your brand at the forefront of eCommerce innovation. Profitero can help you cut through the noise to discover which metrics to track and prioritize the actions that will help you maximize omnichannel growth. If you’re ready to learn how we can help your brand build and optimize a digital strategy, contact our advisory team today.