The Digital Shelf Institute (DSI) has published a new report, “The Primary Drivers of Profitability Across the Digital Shelf.” The report was authored by Kiri Masters, founder of Bobsled Marketing in collaboration with the DSI. Contributors included Molly Schonthal, founder of the Digital Shelf Executive Forum, Chris Perry, co-founder of FirstMovr, and Peter Crosby, executive director at the Digital Shelf Institute.It features insights based on qualitative interviews with leaders from multinational brands across health and beauty, electronics, grocery and home. Each company interviewed had annual revenues over $250M.
Interviews for the report were designed to uncover trends across category, company size, and channels. Respondents were required to answer the question, “What drives profitability in eCommerce and how can we improve it?” The insights were generated through anonymized data from eCommerce and digital leaders at large brands. They were sourced from members of the Digital Shelf Institute Executive Forum, an invitation-only community of digital and commerce executives from Manufacturers in the US.
Failing to make meaningful investments
A key finding from the report is that many companies state profitability as an objective. However, these companies fail to invest meaningfully in efforts to address it. Respondents cited the biggest obstacles to eCommerce profitability are internal silos, inconsistent targets, and conflict around resources and budget allocation.
As brands prepare for the highly competitive year-end shopping season. Traditionally the busiest and most lucrative time for eCommerce sales, the DSI report provides critical insights into retail. DSI says the report will empower them to gain a competitive advantage. The report summarises the key drivers for eCommerce profitability and offers more than 20 solutions for improving it.
“As the proportion of eCommerce sales dramatically increases. There is a heightened urgency for a better understanding of what drives profitability on the digital shelf. What’s holding it back? How to resolve obstacles?” said Masters. “Our findings uncovered what’s standing in the way of growth for eCommerce. Furthermore, what C-Suite needs to address in their quest to drive cross-functional conversations and transform into a digital-first omnichannel organisation.”
Important topic for brands right now
“The topic of eCommerce profitability is so important to brands right now.” Said Lina Racaniello, vice president, marketing, brand management, and D2C Sales at Dorel Home. “The customer journey used to be quite linear pre-digital media and eCommerce, and we also had fewer sales channels. Today, that journey can best be described as a network. As consumers jump from one digital channel to another as they consume content to support a purchase decision. When you couple that with offline physical stores, apps, social commerce or mobile experiences from which to buy. It makes the measurement of profitability at a product level much more complex.”
In the digital age, manufacturers have more opportunities to control their commerce destiny than ever before. The DSI brings together an ecosystem of experience to share ideas, outcomes and strategies. The DSI also hosts the Digital Shelf Executive Forum, an invitation-only community platform for digital shelf executives of leading brands.
Enterprise Times: What this means for business?
The nature of shopping is shifting from the high street to digital. Brands have to understand the unique financial profiles of their various sales channels. For most brands, their eCommerce sales were already steadily increasing well before the rocket fuel of COVID-19 in 2020. In the old world order, eCommerce generally comprised less than 15% of a company’s sales. It was seen as a useful revenue stream to supplement the other more lucrative channels such as the retail outlets. The requirement to improve the profitability of online channels was easily punted down the road. But as companies see the proportion of eCommerce sales increase dramatically, the urgency has arrived.
Ecommerce can no longer be considered ‘a side-line’. It is the future of retail. This is the focus of the Digital Shelf Institute report. What drives profitability in eCommerce? And how can we improve it? To find out, download the report.