Hey retailers, you’re sitting on an online goldmine

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Imagine if retailers could get their customers to add additional items to their online basket and spend 40% more just by personalising the shopping experience…

Imagine if brands and advertisers viewed retailers’ purchase data as a top media priority and wanted to access retailers’ customer information for enhanced targeting. Retailers then monetised this on their site and across the web through customised media offerings while also enhancing their customer’s journeys and tying each sale back to a brand’s media spend…

This seems like a no-brainer scenario, but unfortunately, only a few retailers are active in this space. The best example is Amazon, its ad business generated $6.9 billion in the first quarter of 2021. While Amazon is its own separate tech giant, other retailers like Asda, Co-op, Sainsbury, Walmart, Kroger and Target are investing heavily to build out their own media offering and are already seeing positive returns. Walmart was able to increase its net new advertisers by more than 40% in 2020 because of its enhanced media offering.

However, not all retailers are following this trend and many still fail to monetise and capitalise on their audience insights and online platform. Let’s dig up the facts…

There are two main topics at play here that will help us provide an even better understanding of the enormous potential retailers have: The change in online shopping behaviours post Covid-19 and the ever-evolving topic of online security, specifically around data privacy and the demise of third party cookies.

Change in online shopping behaviours post Covid-19

Retailers have observed a major shift in their online traffic in the last few years, accelerating at an even greater rate during Covid. According to The Drum, online shopping achieved between two and three years’ worth of growth in just 12 months because of Covid-19. Online sales currently make up 27.5% of total retail sales and are on track to make up a third by 2024. Customers now flock online for their every-day and speciality items including groceries, clothing, makeup, furniture, and even fine jewellery!

This is not to say that physical stores are dead, but retailers are beginning to adapt their online services and supply chains to adhere to the new normal. With this comes the opportunity for retailers to communicate with their customers in a one to one fashion online and build long-term relationships.

These personalised moments lead to better experiences, increased word-of-mouth promotion, and increased customer loyalty. Trust is built through these relationships, providing retailers with the opportunity to influence and guide customers on their purchase journey. By partnering with brands in a media capacity, retailers can suggest items best suited for their customers based on their owned insights. By matching these insights to the brands offerings, customers will be much more likely to transact. This in turn drives incremental returns for the retailer and brand, and increased customer satisfaction.

Online security and the demise of third party cookies

The second topic is an even more buzzworthy narrative online: data privacy and third party cookies. In the last few years, there have been major regulatory changes implemented globally to protect customer data online including the General Data Protection Regulation, California Consumer Privacy Act, Brazil’s Lei Geral de Proteção de Dados and South Africa’s Protection of personal information.

Given these growing pressures of data security and regulations, Google has now made the decision to block third party cookies by default on Chrome across the world in the second half of 2023, following a similar path to Apple’s Safari and Mozilla’s Firefox. This will have a major impact on how brands and advertisers reach customers across the web as they will no longer have access to users online browsing behaviours, making brands and retailers owned customer website data that much more important!

As third party cookies will become extinct within the next two years, retailers must share their rich data to brands and partners at a premium to enhance their marketing efforts while still protecting their customer information.

Why is this important to retailers?

These changes provide a huge opportunity for retailers to access their customer data and build out a media solution for brands and advertisers. This will allow them to reach the right customer at the right time while maintaining credibility in the space.

In fact, this untapped opportunity has potential to benefit all parties involved. For retailers, they can leverage their rich customer insights and media offering to expand their sales margins into new verticals. For customers, they’ll receive a more personalised shopping experience. And for brands, they can make their advertising budget work harder and gain access to valuable customer insights and unique media offerings that were previously unavailable.

What should retailers do now?

Track your customer data

This can be done in a variety of different ways such as a customer signup program, survey responses or standard online activity. A great example of a retailer using their customer signup program to benefit brands is Sainsbury’s Nectar rewards programme. Sainsbury’s created an agency, Nectar 360, with the objective to share more insights into its 18 million active Nectar collectors and 7.4 million users with brands, while offering customers more personalised rewards. By building out this offering, Nectar360 has been able to gain business from over 400+ clients and counting.

Retailers also need to build out their online media offering

This can include sponsored products on key pages, paid search and/or display functionalities on their owned site. To do this, retailers will need to spend time building out their internal organisation and tech stack to allow for this offering, or partner with a third party provider, like Criteo and PromoteIQ, to build out this functionality on their site. Finally, they will need to build out a “go to market” approach to sell to the market and drive interest.

Brands need to rethink their media strategy as well

Instead of solely focusing on traditional channels and websites, brands must consider partnering with retailers and creating a separate retail media focused approach with separate budgets and objectives. These objectives can range from awareness, down to conversion, based on the channels and insights available by the retailer. Major CPG brands like P&G and Unilever have started to rethink how they plan their e-commerce activations as part of their holistic media approach due to seeing increased e-commerce sales YoY. E-commerce now accounts for 40% of P&G’s sales and Unilever plans to invest $2.4 billion over the next two years to support high-growth business segments, including e-commerce.

It’s more important than ever for retailers and brands to start rethinking their media strategy and solutions. For retailers, it’s all about data capturing and data sharing, while also providing a platform for brands to connect with their target audience in a more organic way, such as a retailer’s website. For brands, they need to push retailers to unlock this offering and rethink their media strategy to put retailers in the mix. The end results can be tremendous. Retailers must start thinking about their own solution now or risk falling behind.

So, what are retailers waiting for! Start digging!

Anne Greenberg, consultant for brand and content at Frog, part of Capgemini Invent

#Hey #retailers #youre #sitting #online #goldmine

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