In this guest post, Partnerize sales director Will Wilson (pictured below) says things may be grim in Australia’s bricks and mortar retail but that just makes the shift to online all the more exciting…
There is no shortage of opinion when it comes to the current state of the Australian economy. House prices have experienced a significant decline, wage growth has become stagnant, and interest rates are at historically low levels. In turn, this has contributed to a “negative wealth effect” — a theory that suggests people spend less when they perceive their assets to be worth less. Put simply, people are feeling less wealthy, which means they’re spending less.
Retail is one of the first victims when consumer spending is curbed, and this is somewhat apparent in today’s Australian retail landscape. We’ve seen established local brands like Big W close multiple stores and global brands like Esprit pulling out of the Australian offline retail landscape altogether.
Yet in the midst of this, it’s exciting to see one area of retail continue to exceed expectations: online. Online retail currently accounts for 8.9 percent of total retail spend, which represents only the beginning of what is broadly referred to as the Fourth Industrial Revolution. It’s imperative that retailers continue to understand ways to capitalise on this growth.
It’s All About Perceived Value
With the negative wealth effect in play, it takes more convincing to get customers to part with their dollars. The best way to achieve this is to create a higher perceived value, and there are multiple strategies you can use:
- Incentivise for a Higher Spend: One of the benefits of targeting online consumers is that you can tailor your discounting approach to influence their basket changes. For example, presenting voucher codes that encourage your customer to hit a certain spend (e.g., $20 off if you spend $150) means the customer’s perceived value is higher, and they’re more likely to increase their basket to get that deal. Another simple, yet effective approach is to introduce free shipping if customers attain a certain basket size.
- Make It Count: Throughout the year, we now have core shopping days where customers are ready and waiting to spend their money. Black Friday and Cyber Monday now represent the biggest week for e-commerce purchases in Australia. So be there front and center to capitalise on the purchases your customers are likely to be making, with or without you.
- Incentivise Online Exclusively: One of the biggest challenges in online retail is basket abandonment. It’s far too easy to add items in and then simply close the browser. So be one step ahead. Incentivise your customers with exclusive online offers that they can’t get elsewhere, and increase their perceived value when they shop with you online.
Incentivise Online Through Offline Tactics
Offline tactics can also help you drive online sales. Here are two key activities that have been proven to work well:
- Customer Loyalty: When a customer shops in-store, it’s often difficult to know how much of their total purchases you are capturing. However, signing up a customer to your loyalty program gives you both visibility on future purchases as well as the opportunity to further promote and encourage sales. By signing up a customer in-store, you can continue to target that customer after they leave your walls with personalised offers based on their purchases and exclusive discounts that drive them to continuously purchase with you — back in-store or on your website.
- Look for Your Customers in Offline Spaces: When you’re trying to drive growth, new customer acquisition is everything. But how wide is your net? By taking the time to understand your potential customers, and their profiles, you can begin to identify offline spaces they’re spending time in. For example, if you’re a fashion retailer, why not have a presence at an upcoming festival, where you can offer new customers incentives to shop with you online?
Expand Your Digital Scope
The media ecosystem has evolved dramatically in the last few years, and it’s no secret that Google and Facebook dominate the acquisition landscape, driving great results. However, the lack of diversity in media has lead to dramatically rising costs, meaning brands are now looking at ROIs that are sometimes only 2:1. It’s imperative for marketers to look at new acquisition channels to drive more online customers and accelerate the growth they’re seeing. One of the strongest ways to do this is through digital partnerships, and there are multiple partner types you can work with:
- Brand Partners: When you’re looking to acquire new customers, take a look at other places they’re spending time. Forming a partnership with a synergistic brand improves your brand perception with target customers and enables you to attract the right customers for you.
- Loyalty and Rewards Partners: Loyalty programs have now become so popular that we’re seeing more and more brands getting on-board. Working with loyalty partners is a great way to incentivise new customers to shop with you by giving them something that is perceived as high value — points! Your options here are endless. You can target customers everywhere from airline reward schemes to loyalty programs run by existing brands they use, such as insurance reward programs.
- Traditional Affiliate Partners: Affiliate partners have come a long way since their inception. Traditional partners like cashback and coupons have immense customer bases and an extremely loyal following. Many also offer advanced targeting capabilities so you can pinpoint the shoppers you need to reach and persuade. By working directly with these partners, you can devise strong growth strategies that will boost your results.
Ultimately, the way we’re spending has changed and will continue to change over the years to come. Brands that are digital-first and understand their customers’ movements both online and offline are the ones seeing true success. Whilst online retail spend may only account for 8.9 percent of sales today, this number of accelerating. Soon it won’t only be important for retailers to focus online — it will be imperative. Long live the Fourth Industrial Revolution!