Continued investment and build of capability in eCommerce critical for brands, particularly when many retail brands still lack maturity in the space, even though eCommerce is now core to running a retail business. In fact, the new Arktic Fox 2024, Digital, Marketing & eComm in Focus Report revealed in Australia, 16.8% of retail sales are via eCommerce and by 2033, that is anticipated to reach 33%, as a result of the shift in buying power to Gen Y and Gen Z. That is before we consider the influence of digital on instore sales.
Despite this trend, and whilst a lot has changed since COVID, the new cost of living crisis is slowing the investment and focus on eCommerce by brands and likely at the wrong time, the report found
When we asked leaders how they would rate their current eCommerce maturity vs global leaders nearly seven in 10 leaders rated their eCommerce maturity as “satisfactory”, “low” or “very low”, demonstrating that many retailers understand there is more work to do to lead in the eCommerce space and meet consumer expectations.
On a scale of 1 - 5, how would you rate your organisations maturity in the eCommerce space vs global leaders?
RETAIL
1 = very low, we have a lot of work to do ------------------------------------------8.0%
2 = low, we have a fair bit of work to do -------------------------------------------23.5%
3 = satisfactory, but more work to do -----------------------------------------------37.0%
4 = high, we are edging towards global leaders -----------------------------------21.5%
5 = very high, we are on par with global leaders ----------------------------------10.0%
But why is it that many brands still see themselves as lagging in eCommerce market?
Whilst there are many reasons brands find themselves lacking eCommerce maturity, it often stems from the mindset and importance placed on eCommerce by the business with our study finding that;
82% of those with high and very high levels of perceived maturity stated that “our organisation views eCommerce as an integral channel to engage customers and distribute our product/s or service/s.”
VS Only 13% of those with very low and low perceived maturity stated “our organisation viewed eCommerce as “an integral channel to engage customers and distribute our product/s and service/s.”
Those without the mindset and focus, see lower levels of resourcing and investment and eCommerce is more likely to be seen as a department as opposed to the way we do business.
Key metrics impacting how brands invest in eCommerce
Still today, it is not uncommon to see eCommerce is perceived as a separate channel and the link between eCommerce performance and overall business performance is not well understood. This sees retailers investing in eCommerce based on total or projected eCommerce sales as opposed to the true value eCommerce delivers to the entire business and bottom line. In addition, retailers are investing based on the revenues banked today as opposed to investing in part to build capability for tomorrow, which equally limits their ability to build maturity over time. To shift investment conversations, retailers need to re-think measurement frameworks to demonstrate the true return and value of eCommerce to the business.
When we look at the core metrics executive retailers use today to measure the performance of their eCommerce business, it is easy to see why investment and therefore build of maturity is being stifled. Our study has found that revenue, conversion rate, margin, traffic, and average order value round out the top five performance metrics utilised by retailers. Whilst respondents were only able to choose a maximum of five, one of the most interesting insights to emerge from the metrics is the lack of utilisation of ROBIS (research online buy instore) as a measure of success. This metric was only adopted by 16% of retailers to measure performance and effectiveness. This means at present; many retailers fail to demonstrate the true value of eCommerce to the business and the bottom line beyond eCommerce tracked sales. With digital increasingly influencing the majority of instore purchases, it is vital that more brands begin to adopt metrics like ROBIS to measure the true influence and value of eCommerce.
What are the key metrics your executive team uses to assess effectiveness of eCommerce performance? (Select up to 5)
RETAIL
Total revenue----------------------------------------------------------------------------------------------------------90%
Conversion rate-------------------------------------------------------------------------------------------------------68%
Margin--------------------------------------------------------------------------------------------------------------------60%
Traffic - web & app ---------------------------------------------------------------------------------------------------52%
Contribution of channel to overall sales-------------------------------------------------------------------------36%
Average order value--------------------------------------------------------------------------------------------------46%
Online market share / share of category sales online--------------------------------------------------------18%
Average selling price -------------------------------------------------------------------------------------------------4%
ROBIS - Research online/buy instore (digitally influenced sales) ----------------------------------------16%
Overall customer value-----------------------------------------------------------------------------------------------8%
Percentage of returns ------------------------------------------------------------------------------------------------14%
Stock availability -------------------------------------------------------------------------------------------------------8%
Investing in data is the link to better understand the true value of eCommerce
Whilst the concept of ROBIS as a metric makes sense, measuring it is easier said than done. Stitching together data from various sources to be able to accurately measure online to instore influence is no easy feat and requires an ability to build a unified view of the customer which so few retailers have been able to achieve. According to the study, only 24% of retail marketing & digital leaders agreed with the statement “we have developed a unified view of the customer”. This means that three quarters are still grappling with the challenge to fuel their ability to close the loop on reporting, deliver personalisation and experience and more.
Building a unified view of the customer however does seem to be high on the agenda for many with 44% of retailers stating that investment in a CDP is a priority over the next 12 – 18 months. This alongside of investment in CRM topped the MarTech investment priorities of retailers.
However, any investment in MarTech to enable more effective measurement, personalisation, and more must be coupled with investment in skills and capability uplift if retailers are to succeed in their endeavours.
To find out more about the 2024 study, click here: