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An online retailer’s e-commerce predictions for 2017

January 3, 2017 02:33 PM
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2016 appears to have been another banner year for online marketing as the world is approaching a collective record $15 billion dollars of digital ad spend. E-commerce teams invested heavily in social media, mobile and video marketing while also allocating ad dollars toward mature channels such as paid and organic search.

With more explosive growth forecasted for 2017, I look forward to the following e-commerce trends for the next year as customer behavior and marketing technology continues to evolve at warp speed.

Trend 1: Individual Consumer Marketing

One of the fundamental advantages that brick-and-mortar retail holds is the ability to sell to the consumer on a personal level. It’s difficult to replicate the efficacy of walking into a store and having a salesperson cater to an individual’s specific wants and needs. However, speaking to customers on a 1:1 basis will be easier than ever in 2017.

Marketing channels such as Facebook and Google AdWords are now allowing e-commerce marketers to upload lists of customers to their respective channels (via the Custom Audiences and Customer Match tools) so marketers can speak specifically to a group of customers with more granularity than ever before. For example, if data shows that customers tend to buy blue scarves after they purchase black boots, companies can now craft ad creative that speak to this specific merchandising experience. The ability to systematically show messaging that resonates with a specific group of consumers will cause response rates to skyrocket and acquisition/retention costs to drop.

Cohort-specific targeting tools will continue to spread in 2017. Should marketers require more reach, prospecting technologies built around finding similar cohorts based on seed lists already exist and continue to show encouraging promise.

Trend 2: Mobile Media Consumption

Mobile data costs are in a freefall as 2017 approaches. When one factors in cheap data costs with rapid mobile speed increases, one can see a profound shift in mobile device behaviors. Data-heavy behavior such as consuming live video streams and participating in immersive apps are now commonplace.

2017 will see an explosion of video-based ad types, as this is the logical next step for increasing mobile engagement in a noisy digital world. Fewer customers will respond to static or animated image-based ads and will gravitate instead to video ads that can show multiple angles of a product within a few seconds. Ad technologies that allow marketers to launch, test and produce video ads quickly will explode. Lastly, consumer satisfaction with their shopping experience will increase as it’ll be easier than ever before to fully understand a product before buying it.

Trend 3: Cross-Channel Marketing

Savvy marketers spent 2016 working on sophisticated multichannel attribution models that assign varying levels of credit to multitouch conversion funnels. The best ones are tying in customer lifetime values to individual marketing campaigns through back-end business intelligence and are adjusting levers to acquire and retain the most valuable customers.

In 2017, the tools, personnel and technology needed to accomplish this will have a much lower cost of entry. Free tools such as Google Analytics now contain data and analytics about how various channels interact with each other and how this eventually ties to revenue. Its User-ID functionality will even allow marketers to do some rudimentary cohort analysis based on date and source of acquisition. Marketing channels will continue to bake in this type of transparency into their baseline reporting metrics on a post-click and post-impression basis. Affordable paid tools such as KissMetrics will continue to proliferate and give marketers deeper insights into how they can sharpen their marketing budgets. There are more ways than ever to identify customers across a variety of offline and online data sources and marry disparate data points together.

With the amount of data available, marketers can now plan and launch sophisticated cross-channel campaigns that take into consideration forecasted revenue and lifetime value, number of touchpoints needed to convert and eventual effects to the campaign’s bottom line contribution margin. This allows marketers to pull back on marketing spend on marketing touches that are ultimately ineffective while increasing budget to campaigns that eventually net out to a larger than expected gain.

Trend 4: Snapchat Marketing

Facebook advertising continues to be the breadwinner in the paid social space, but 2016 saw the nascent rise of the Snapchat influencer community as well as highly publicized (and expensive) Snapchat advertising campaigns. Even though direct response marketing via Snapchat continues to be a work in progress, the first set of pioneering branding campaigns on Snapchat are showing promising recall and engagement metrics.

Look for 2017 to exhibit signs of a maturing influencer marketing within Snapchat—there are already droves of Snapchat influencers with captive audiences that are looking for novel ways to monetize, and agencies and software as a service that will help expedite this growth. For example, Snapchat analytics platforms will allow companies to manage their brand analytics, analyze competitors and automate the publishing of stories.

A gold rush period will ensue while Snapchat continues to experiment with the development of its advertising platform. One can only assume the Snapchat advertising API will continue to grow at an exponential rate as core tools such as A/B testing, email list matching and lookalike modeling are already in place.

Trend 5: Vertically Integrated Brands   

It’s no secret that the e-commerce space continues to be an unforgiving battleground that favors those that can execute, innovate and scrap for growth. Behemoths such as Amazon and Walmart continue to swallow up market share with unparalleled operational efficiencies, massive advertising budgets, worldwide brand recognition and paradigm-shifting innovation. What is an upstart e-commerce company to do?

The answer: vertically integrated brands. Brands such as Warby Parker and Everlane have trail blazed a new e-commerce business model that helps to insulate them against marketplace leaders such as Amazon. Key advantages include:

  • Lean inventory model. Brands such as Zara are adept at “just in time” inventory models that maximize turn. Efficiently forecasting demand against inventory reduces holding costs and increases the company’s flexibility
  • Optimized supply chain. Companies such as Everlane own every piece of the supply chain, which reduces cost of goods and increases gross margins. This leads to a lower cost to the customer without a loss in product quality
  • Branding as the “anti-brand.” Greats, a shoe company, has positioned itself as a voice for savvy consumers who are increasingly disillusioned with the marketing tactics and branding of established players in the space. It seeks to provide high end footwear to customers who aren’t willing to shell out $500+ for a pair of sneakers. Greats microwaved its brand quickly with its prowess in social media and influencer marketing.
  • Disruptive business models. Casper has taken an opaque and cumbersome industry—selling mattresses at retail—and turned it on its head. Casper’s novel delivery methods, operational innovations and customer feedback-based marketing allowed it to quickly establish a name for itself in the sleep space.

Edwin Choi is the founder and CEO of CellularOutfitter, an online retailer of cell phone accessories, as well as vice president of marketing at Mobovida LLC, a vertically integrated online retailer of mobile phone accessories.

 

 

 

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