eCommerce is taking off like a rocket ship, 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.
This resistance is a barrier every eCommerce leader faces on their road to advancing digital maturity, and one that is often created by the eCommerce leader. It starts with your vocabulary. The very word “eCommerce” often creates an adversarial relationship with brick & mortar teams who view it as a competing channel, rather than as 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 do we mean by ‘digitally influenced sales’?
“Digitally influenced sales” take into account all transactions where a consumer has had a digital touchpoint along their path to purchase, regardless of where the sale ultimately happens — i.e., online or brick & mortar. 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 — many of which are 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 70% 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.
The value of reviews for driving online purchases has been well established. 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. In fact, 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 it affects in online sales.
Increasingly, retailers are connecting the omnichannel dots, deploying in-store tactics that direct consumers to digital. For example, Walmart has started to use shelf tags that show online reviews and what search term to use on Walmart.com. Similarly, U.K.-based Tesco curates customer reviews online and displays them alongside mobile devices in its stores. Many brands are starting to do the same.
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.”
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. Even more convincing a reason: Walmart cares about how digital is influencing its sales, and is reorganizing the joint business plan process, and even the way it structures its category teams, to be omnichannel. 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
For those in the C-suite, know that dangerous silos in your business exist right now that are getting in the way of your growth. Rather than coming together to serve the consumer, wherever and however they shop, teams are incentivized to take an inward view and only take action that will help their channel and own bonuses grow. Getting your organization to embrace a “digitally-influenced” view of sales is the first step to getting all teams and functions thinking holistically about your consumer and your brand.
So, just how much of your sales are digitally influenced?
Research from Forrester 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 grocery 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 that exists 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 the 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 at a much faster rate. 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.
Contact us to learn more about how Profitero can help your brand accelerate its digitally influenced sales.