Latest / Retail Media Breakfast Club / Why 'Omnichannel' Misses the Point [New Research From The Digital Shelf Institute]
Transcript
- Why 'Omnichannel' Misses the Point [New Research] (Monday Sept 29) === [00:00:00] What are your thoughts on going omnichannel in today's world? An audience member asked the panel I recommend against it said e-commerce expert Jason Goldberg. His reasoning, which he shared later on LinkedIn, cuts to the heart [00:00:15] of why organizational debates miss the point. Here's what he said. [00:00:19] What I meant is that Omnichannel puts the focus on the wrong thing channel. Who cares where she pays? What matters is how is she discovering new [00:00:30] products? How does she choose what to buy? How does she buy it, and how does she want to receive it? I'm way more focused on who the potentially profitable customers are, exactly what they want, and then try as hard as possible to give it to them. [00:00:43] And that is kind of the [00:00:45] crux of a new research report from the Digital Shelf Institute, a commerce industry research organization. The report is called Reinventing the Organization for Omnichannel Success. Beyond where e-commerce sits. [00:00:58] And this paper was [00:01:00] released on September 17th. It surveyed over 90 brand leaders and conducted 33 interviews across functions like marketing, sales, supply chain, and e-commerce within consumer brands to understand how successful organizations are adapting to [00:01:15] digital commerce. So in this episode today, I'm going to share my. [00:01:19] Highlights from the report combined with a few anecdotes of what I'm seeing in the field, talking with brands, talking with retailers, and while the report covers everything from [00:01:30] AI integration to talent development and educational programs, i'm just gonna cover a few of these themes. [00:01:36] I do recommend you check out the full report, a link up to it in the show notes. [00:01:40] [00:01:41] So the first theme I wanna pull out is the concept of [00:01:45] digitally influenced sales. And, uh, an interesting insight from the report is that 68% of Walmart's growth last year came from digital channels. Now I wanna be clear that's [00:02:00] 68% of growth and for most retailers, e-commerce, unless you're Amazon, um, e-commerce is still a small-ish percent of your total overall sales, but it's the sector that's growing the fastest. [00:02:13] This tells us that [00:02:15] consumer behavior continues to migrate to digital channels or at least be affected by them throughout the purchase journey. And it's that part that's much more difficult to measure than a last touch attribution [00:02:30] kind of sale. Considered this scenario probably happened to you yesterday or earlier this week. [00:02:36] A consumer might discover a product on Instagram. They'd go to Amazon to read the reviews and see if it's legit. [00:02:45] They might check out, availability at a local retailer on their app, and then ultimately make the purchase in store. So traditional metrics would classify that as an in-store sale, but every step except the final transaction [00:03:00] happened digitally. [00:03:01] Organizations still measuring success through channel specific metrics are missing how consumer behavior actually works. And so the digitally influenced reality that we're seeing is why this question of where [00:03:15] should e-commerce sit in a brand organization feels. Increasingly irrelevant, and that's really the intent of the report. [00:03:24] After all, the consumer journey doesn't respect departmental boundaries, so why should your [00:03:30] organization be set up that way? [00:03:31] The Digital Shelf Institute research highlights something I've been seeing more frequently. Companies adopting chief growth officers or chief commercial officers who own both sales and marketing as the report notes. When [00:03:45] sales and marketing report to different leaders, silos and competition can occur within the organization. [00:03:50] This structure also reduces end-to-end visibility. This makes practical sense when you consider modern retail realities, retail media spending planning typically [00:04:00] happens during joint business planning sessions between a brand and a retailer. Trade marketing dollars and performance advertising budgets are increasingly fungible. [00:04:10] The old model where sales managed retail relationships, while marketing handled [00:04:15] brand building budgets breaks down a little bit when marketing includes sponsored product ads and your total retail media spend is used as a negotiation point during joint business planning. [00:04:30] Shoppers don't think in silos. They bounce between online and in-store without skipping a beat. Acosta Group's. Connected Commerce agency helps brands unify trade and [00:04:45] retail media budgets to invest where shoppers are most likely to convert, whether that's on mobile or in the store aisle. Learn more about acoa Group Connected Commerce at ACOA Group and let them know Retail Media [00:05:00] Breakfast Club sent you. [00:05:01] That's A-C-O-S-T group. Another highlight I took on the report was the Quiet Advantage that small brands have, and the report highlighted a striking statistic [00:05:15] from consulting firm Bain. Bain publishes a list each year called the Insurgent Brands List, and last year 97 small brands on that list account for less than 2% of [00:05:30] market share. [00:05:30] But they captured nearly 30% of incremental category growth. [00:05:36] And this made me think back to a brand I spoke with a couple of weeks ago, a very large CPG conglomerate. [00:05:43] They told me [00:05:45] that their small startup competitors focused entirely on e-commerce . In many cases, at least initially, they don't need to spend trade marketing dollars because they aren't distributed in store. That means they can push [00:06:00] significantly more budget into performance, retail media, advertising, sponsored products, sponsored brands on any retailer.com that they sell through. [00:06:08] And the retailers are seeing this huge bottom of funnel spend from these insurgent brands. And they're [00:06:15] going back to the traditional CPGs who. Still spend a lot on trade marketing because they have to. And um, these retailers are benchmarking big brands against these small competitors and saying, Hey, these guys over here are spending 30% [00:06:30] more on retail media than you are. [00:06:31] What are you going to do about it [00:06:33] Now, large brands. Like I said, they'll never match that percentage of revenue on performance retail media because they have other required costs to just maintain shelf visibility in store. [00:06:45] But they also have something that smaller brands don't. They have the scale and the resources for technology investments and training programs that small startups might not have. [00:06:55] So. [00:06:56] This is one of those areas where the grass is greener. On the other side, if you're a [00:07:00] small brand, lean into that nimbleness. If you're a large brand, you need to lean into your other advantages. [00:07:06] Uh, switching gears a little bit, I'm gonna come back to a finding from the report, but I wanna first point out an excellent interview from Mike [00:07:15] Shields' newsletter Next in media. He interviewed. Selena Sykes, the VP and head of Digital marketing and Social, first at Unilever Beauty and Wellbeing. And if you recall, back in March, Unilever brought [00:07:30] on a new CEO. [00:07:31] I wrote a little bit about what he said, but he had a really, really bold vision when he came into Unilever and his plan was to spend 50% of the company's media budget with creators. And work [00:07:45] with 20 times more creators than before. And the whole marketing world stopped for a day and debated hotly about whether this was incredible or ridiculous. [00:07:57] So we're starting to now see [00:08:00] that vision play out and um, this is a really good insight into how it's kind of unfolding at Unilever now six months ahead. So as you can imagine, this kind of, this huge shift in media spend requires completely different organizational [00:08:15] capabilities. As Selena explained to Mike, traditional marketing required copywriters, designers, analytics people, media buyers, drowning in meetings, taking weeks to launch anything. [00:08:26] The creator focused approach enables a single smart [00:08:30] marketer with AI agents testing tons of marketing angles in real time. But I'm a little skeptical that all this is so much easier necessarily. I don't think that it's all just vibe marketing happening over at [00:08:45] Unilever today. [00:08:46] The interview also reveals how difficult this approach is to operationalize scale and measure. It requires different team structures, budget allocation processes, and success metrics. [00:08:57] There's been skepticism from the broader retail marketing [00:09:00] community about whether Unilever's approach can work at scale and deliver results. And deliver results on a quarterly earnings drumbeat. But if a company the size of Unilever can figure out how to restructure around consumer behavior. Any brand, I [00:09:15] think, can build a more digitally minded organization. [00:09:18] And that comes back to one of my other highlights in the DSI report, which is that companies with shared goals have more cross-functional alignment, a better understanding of e-commerce across the [00:09:30] organization. And a higher percentage of online sales. And so this was one of the big takeaways from the report, is creating shared KPIs and organizational goals across the different teams so that everyone is working towards the same vision. [00:09:44] And that sounds [00:09:45] super obvious, but as we know, it's harder to operationalize than it sounds. There was a great quote from Eric Kowski, the former, uh, SVP of Connected Commerce at Ken View, who said. We used to divide and conquer when it came to sales and [00:10:00] marketing. Sales was focused on the shopper in the store and marketing on the consumer at home. [00:10:05] They were separate universes with separate teams, but that separation no longer exists. And so here's sort of the, the summary. Instead of asking where e-commerce should [00:10:15] sit, perhaps we need to start with different questions. What are our company's goals? What strategy will achieve those goals? What jobs need to be done and what teams and capabilities do we need to execute effectively? [00:10:26] The brands that are winning aren't the ones with the most elegant org charts or [00:10:30] necessarily the biggest budgets. They're the ones that have stopped forcing digital commerce into traditional retail structures and started building organizations that think digitally first. [00:10:40]