January 18, 2011

Multichannel Wednesday: E-Commerce and Retail

One of the least understood relationships in the world of "multi-channel" is the relationship between e-commerce and retail.

In most cases, here's what happens to a newly acquired online buyer.
  • Acquisition = 100% e-commerce, 0% retail.
  • First Year = 50% e-commerce, 50% retail.
  • Second Year = 30% e-commerce, 70% retail.
  • Third Year = 25% e-commerce, 75% retail.
In other words, retail folks should adore the e-commerce channel, because e-commerce is part of a two-step process in generating retail sales ... not to mention the research that happens when the customer uses the website to shop a store.
In most cases, here's what happens to a newly acquired retail buyer.
  • Acquisition = 0% e-commerce, 100% retail.
  • First Year = 5% e-commerce, 95% retail.
  • Second Year = 8% e-commerce, 92% retail.
  • Third Year = 9% e-commerce, 91% retail.
Most of the time, the e-commerce customer is "multi-channel".

Most of the time, the retail customer is "single-channel".

Anybody who has truly measured the impact of direct marketing activities on retail-only customers knows this ... the majority of direct marketing activities don't work to the level that they work on e-commerce customers ... and direct marketing activities don't work on e-commerce customers like they work on the phone-based 55+ rural direct marketing customer.

This means that your "multi-channel" marketing strategies require an adjustment.  Communicating to a retail customer is very different than communicating to a traditional direct marketing customer.  In fact, mass-based communications tend to work to traditional direct marketing customers, while one-to-one style communications (i.e. a store employee actually calling a retail-only customer) tend to work well among retail-only customers.

And then there's mobile ... more on that later ... let's just say that what I mentioned in this post is not likely to hold for mobile ... mobile and e-commerce will act differently, mobile and retail will act differently.