This article was originally published by Econsultancy.
Gemma Spence is CEO at OMG Transact, Omnicom Media Group’s ecommerce specialist practice.
The UK is the world’s third largest ecommerce market behind China and the US, accounting for $101bn in 2019 alone.
But Amazon holds almost 40% of the European market and more credit card details than any other company on earth which makes their data and shopper-led approach more personalized and tailored than the rest.
Therefore, to be able to compete on a level playing field, companies must use technology to enhance their logistics, seamlessly combining offline assets such as stores and supply chain with online front-ends such as apps, webstores and media. Having a well-oiled omnichannel approach to services is key and will likely result in a refreshed business model with growing sales.
So, here is your 7-point survival guide to ecommerce in 2020.
1. Align your ecommerce approach with wider business objectives
Start by defining your ecommerce goals based on your wider business objectives. If your key focus is around growing distribution and volume, then operating through retail partners or distributors will be critical for success.
If you are more focused on owning the whole end-to-end consumer experience coupled with higher margins, then a direct to consumer (DTC) approach would be more fitting.
In some cases, a combination across direct and indirect can work but, for this, a focus on category and portfolio management is key. Nike is a good example of a brand that effectively splits its portfolio across brand.com and retailers, with its higher margin lines exclusive to its own brand platform and lower margin, volume driving lines also available on retailers. Andy Campion, Nike’s CFO said in an earnings call in 2017 that fulfilling demand through Nike.com generates nearly twice the revenue and significantly higher margin on each transaction than through the wholesale model.
2. Build your combined approach through insights around your core audience
Always start with your portfolio and the core audience you want to target. Based on whether you are selling direct through your own website or indirect through retail sites, it will be important to align your audience with identified core shopper profiles.
From this, you can build out affinity categories and audiences in order to up-sell and cross-sell. For example, if you are selling high end vacuum cleaners and you know your audience is likely to be home owners, try targeting audiences that are in the market for home care products. Clear separation and guardrails around audience and media channels is key to avoid any cannibalisation or cost inflation.
3. Build a balanced investment plan to help you reach your sales potential
Depending on your routes to market and your trading channels, it’s key to develop both a top-down and bottom-up investment plan that underpins your financial and sales targets.
Using your portfolio to sell direct and indirect, you can combine your average transactional value (ATV) and historical sales data, to model out the investment and promotions required to achieve your sales and revenue targets.
4. Build a channel-wide and retailer-specific media and merchandising plan
The growth of ecommerce means brands need to develop future-facing marketing and media strategies to stay ahead. Partnering with retailers through mutually beneficial agreements is key to maximizing visibility with cost savings attached. Having a fully-integrated marketing plan will ensure that your brands’ promotions and activations are aligned and factored within the retailer calendar, including events such as Black Friday or Prime Day.
5. Get your retail hygiene in order
Are you set up for success? Before starting with any activation, it is important to audit your retail health to make sure you have operational excellence in place to fulfill the orders quickly.
It is also important to look at the elements that are important to both you and the retailer.com such as repeat out of stocks or lost buy box which are essential for maintaining sales effectiveness.
6. Optimize your content
A critical component for ecommerce success comes from the content you have in place, covering both functional and inspirational content. Retailers all have very specific algorithms that look at both commercial and relevancy factors when weighting and ranking products within their search results page.
From a product detail page perspective, it is important to make sure that all your content is feature- and benefit-led. It needs to be optimized using keywords that shoppers use to discover your products based on the algorithm in place for the retailer. It should have simple hero images and pack shots with integrated rating and reviews to provide an additional level of trust.
For higher transactional products, it is important to provide richer content to help guide the up-sell and cross-sell as well as give that additional layer of information for larger value goods. For example, video can be crucial, with research from Hubspot indicating that consumers who watch product videos are 79% more likely to purchase.
7. Layer on biddable and co-funded media to convert the shopper
Once all these fundamentals are in place, you can start running biddable media solutions to drive purchases across core and affinity categories. By developing an audience and seasonal-based approach that draws on promotions that are running both in store and online, you can improve conversion dramatically both from repeat purchase customers and attracting entirely new shoppers.
Samsung for example, effectively leveraged co-funded media to convert the shopper. The brand needed to cut through a competitive, cluttered media landscape to drive awareness of its Galaxy S8 smartphone in five EU countries. By leveraging the multiple touchpoints across Amazon, Samsung was able to reach potential customers in a holistic, cross-screen campaign with custom elements. Amazon, for example, offered the smartphone via a special midnight delivery with Prime Now. It also reached a large audience through homepage takeover, Amazon Fire Tablet and Fire TV devices, programmatic in-stream video, a campaign landing page and accompanying cross-screen media on and off Amazon. The campaign resulted in 665 million impressions across mobile, desktop, Fire TV and Fire Tablet and drove a ROAS of €6.35, more than 2.5 times higher than its EU benchmark.
In 2020, a brand’s success in ecommerce will be the consequence of getting all the little things right beforehand, be it back-end logistics, knowing your customer and your overall approach to market. It’s truly integrated, it’s your retail DNA. It’s old school, in terms of getting the basics right and new school, by staying flexible enough to adapt to changing consumer behaviors and market trends.
