Digital-first retailers are emerging from Covid in a greater position of strength compared to incumbent retailers. This is according to a recent survey of more than 100 retailers by CommerceNext and sponsored by Yotpo. Retailers who started in stores, catalogues or wholesale (before adding ecommerce) are expected to struggle. Even as people begin to resume their pre-pandemic ways of life.
The survey found the number one challenge for incumbent retailers was making their data actionable. Despite the digital transformation gains made by nearly every retailer in the past year. The research of marketing leaders found that digital-first retailers have already figured this out. As a result, they are much more focused on driving customer retention, acquisition and delivering superior site experience.
Not all eCommerce marketing is equal
“Not all eCommerce marketing is equal,” said Scott Silverman, Co-Founder of CommerceNext. “This report illuminates the divergent strategies that have evolved post-pandemic between digitally native retailers and incumbents. While both are focused on customer retention, the digital natives let consumer behaviours and preferences dictate their strategy. Incumbents struggle to make data actionable because of legacy marketing systems. As we continue to become a more ecommerce-driven world, these differences will have a profound impact on retailers’ bottom lines.”
The full results are now available in a new report, “The Year of Covid the Customer: Retention and Privacy Usher In A New Wave of Customer-Centric Strategies.” CommerceNext continually conducts research and fosters a community of sharing amongst marketing leaders so that all can serve customers better, both in times of crisis and out. The current survey was fielded in June, 2021 with more than 100 marketers.
Retailers split on privacy and data
Marketing budgets stayed the same as 2020. However, performance satisfaction went up in almost every marketing category. Interestingly, there’s a decisive split between digital-first retailers and incumbent retailers on 2021 strategies and tactics. The former is looking to the future of first-party data and the latter to omnichannel. However, 69% of all retailers are focusing on retention, overcoming our industry’s historical attention on acquisition.
Insights from this report highlight significant distinction between digital-first and incumbent retailer priorities:
- Given the residual effects of new privacy laws on ad costs, 43% of digital-first marketers say acquisition performance came in below expectations. Most are now more focused on retention.
- While 86% of all retailers are satisfied with their privacy compliance efforts (GDPR, etc.). More digital-first retailers are committed to solving the major Big Tech privacy changes by diversifying tactics beyond Facebook and Google.
- Digital-first retailers are more committed to a customer value exchange in the new privacy landscape. The use incentives, promotions or contests much more to encourage opt-in from customers (83% vs 53%).
- Incumbent retailers are still investing in customer data platforms, testing new channels and relying on omnichannel approaches. This includes email and loyalty programmes to accumulate first-party data.
According to Rosa Hu, Vice President Product Marketing at Yotpo, “Regulations around consumer privacy continue to tighten. As a result, acquisition without retention becomes a losing cycle of churn and decreasing profits. In this data, we’re excited to see more retailers getting creative with loyalty, segmentation, SMS, UGC and other tactics. This will deepen organic brand to customer relationships, ultimately creating much better value for the customer and long-term retention.”
In June 2021, CommerceNext conducted a survey with 104 high-level marketer participants that spanned retail and brand types and verticals. In the report, they compare several of the baseline budget and performance questions also used in their 2020 survey. The report benchmark retailers’ priorities.
Enterprise Times: What this means for business?
The survey sought to find out what the US retail industry is doing now that the country has reopened. Are retailers going back to pre-Covid budgets and strategies? No. They most certainly are not. The most interesting trend to emerge is the difference of approach between digital-first retailers and traditional retailers. The report suggests digital-first retailers are emerging from Covid in a greater position of strength compared to incumbent retailers.
This should not be surprising. Digital-first retailers have always had to make the most of their data – effective and actionable in order to compete. They didn’t have to pivot their businesses to become more competitive and relevant to customers and consumers during lockdown. They didn’t have to develop click and collect, or kerbside pickup or introduce social distancing. The supply chain is less disrupted when suppliers only have to deliver to a central warehouse instead of multiple stores. Therefore, they were in a better position. The digital transformation processes made by many retailers over the past few years, inevitably left some better able to change. Interestingly, the survey found that digital-first retailers have already figured this out. They are much more focused on driving customer retention, acquisition and delivering superior site experience. Another key ingredient to continued future success.