McKinsey’s shares 6 actions for eCommerce to navigate inflation and not get squeezed too much

We are going back to early July 2022 McKinsey study which gives some insight into eCommerce strategies which might prove useful in the context of potential persistent inflation and with customers looking for more value.

Remember you might always try to turn these inflation- related challenges into opportunities and make decisions to actually make your eCommerce better.

6 Tips:

1. Revisit their category strategies to reflect shifts in consumer purchase behavior and margin profiles.
2. Address end-to-end cost-to-serve through enhanced supply chain visibility and diversification.?
3. Go granular with pricing and promotion and tailor value delivery to consumers.
4. Use next-gen sourcing tools to drive sourcing excellence for private-brand and branded goods
5. Rethink store operations to optimize productivity.
6. Set up an inflation “win room.” (a flexible, cross-functional structure with the authority to coordinate the inflation response)

Full text: https://www.mckinsey.com/industries/retail/our-insights/navigating-inflation-in-retail-six-actions-for-retailers

Deflation comes to e-commerce as online prices fall 2% in July but what this means?

Online prices were down 2% in July compared to June and 1% compared to last year, according to the Adobe Digital Price Index. This is the first decrease since January 2020, just before the pandemic. Most (14 of 18) categories tracked by the Index saw monthly price drops. Electronics, the largest e-commerce category with 18.6% share of spend in 2021, had the second biggest category price drop, down 9.3% YoY (2% month over month). Seven categories – personal care, office supplies, furniture, home and garden, appliances, flowers and related gifts, and medical supplies – had year over year price increases, while dropping month over month. Groceries saw the biggest yearly price increase (13.4%) and second biggest monthly (1.4%).

The global ecommerce share breakdown

China leads the world in retail ecommerce share, with 45.3% of the country’s retail sales occurring online this year. The UK will take the No. 2 spot, with a 35.9% share, followed by South Korea, where 30.1% of retail sales will be via ecommerce. Not only does China have the highest online sales share, but it also has the largest ecommerce market in the world, hitting $2.879 trillion this year.

Only 38% of marketers are very confident in their customer data and analytics systems

Only 38% of marketers globally are very confident in their data, analytics and insight systems, according to a new report from The CMO Council. And, while 91% say direct access to customer data is a critical competitive advantage, only 11% say that data is readily accessible to them. Most of these numbers are global ones, but the ones specifically from North American marketers are not good. Only 28% say they are very confident in their data systems to win and retain customers. Compare that with Europe where 61% answered yes to this. The biggest things preventing marketers from maximizing the data they already have? Some 55% said a lack of systems connecting data silos and making it easy to access. The talent shortage is No. 2 on the list, cited by 52% of respondents. Next on the list at 44% was not having the money to improve data systems.

Marketers say biggest challenge is getting cross-department alignment

Nearly a quarter (23%) of marketers say their biggest challenge is getting internal alignment on go-to-market initiatives across departments, according to a survey conducted by MarTech in partnership with Highspot. Differentiating their brand from competitors was next on the list of biggest marketing challenges with 17%. Driving demand (15%) and proving ROI (14%) were practically tied for third. Marketers said the most notable change in customers over the past three years is the desire for new insights (28%), more content (26%) and less interaction with sellers (23%).? Some 43% of marketers say new tech tools are helping them solve their challenges. However, 29% say they didn’t know if this was true, suggesting problems with measuring success and ROI.

Report Reveals 92% Of Customer Calls Are Opportunities for Business Growth

According to a call trends report from Ruby.com, nine of ten calls a business receives are opportunities to win or retain customers.?

Key insights from report:

• 92% of phone calls represent opportunities for business growth—to win, retain or lose business, improve perceptions, strengthen connections, and more.
• Small businesses receive the highest call volume from 8 a.m to 2 p.m. PT with the peak occurring between 9 a.m to 10 a.m PT.
• Businesses receive fewer calls outside of working hours (6 p.m to 5 a.m PT) but these calls are increasing in frequency YOY, up from 3.2% in 2020 to 3.8% in 2021.

Study: Marketers Are Being More Careful With Their Language

Brand marketers are tamping down their language to avoid appearing tone deaf to the issues faced by consumers, according to the study by Phrase. Of the marketers polled, 92% say they are “playing it safe” with their language for fear of being canceled in the current climate.? In addition, 79% are concerned about using relevant and appropriate brand messages. And 64% fear their message may be misunderstood or fall flat.? Another 26% are worried about possible consumer backlash. Moreover, 42% lack confidence that their content marketing is driving adequate conversion rates. But only 29% optimize their language with technology. Yet 55% would trust AI-driven language technology.?

Mcommerce sales continue to grow, albeit at the lowest rate in years

Building on momentum from a significant pandemic bounce, mcommerce sales continue to grow, albeit at the lowest rate in years. Growth will speed up again in 2023 and stay level above 13% through 2026. The long-range curve for mcommerce sales closely aligns with ecommerce trends, such as rising click-and-collect sales, and growth in large ecommerce retailers such as Amazon and Walmart. Shopping apps had a huge pandemic bump. In 2019, shopping apps had 122.6 million users, but that jumped to 155.0 million in 2022,? according to eMarketer estimates. Not all shopping apps contribute to mcommerce sales. Many consumers view apps as a way to improve shopping in stores and online—not necessarily as a way to buy.

Mastercard reportedly begins widespread rollout of BNPL program—though not everyone is on board

Mastercard is reportedly automatically enrolling merchants in its buy now, pay later (BNPL) program Mastercard Installments—though they do have the option to opt out. US BNPL payment volume is expected to grow 77.3% year over year (YoY) in 2022 and hit $75.60 billion, according to Insider Intelligence forecasts. Next year volume is forecasted to grow 25.5% YoY and reach $94.87 billion. Twenty-seven percent of US respondents said they have used BNPL services and 22% said they hadn’t used it but were at least somewhat interested in doing so, per a June 2022 Insider Intelligence survey. Mastercard’s vast merchant network and technology expertise gives its BNPL program a competitive advantage over incumbent BNPL providers like Afterpay or Klarna. And Mastercard’s ties to banks may reduce the perception of risk and add clout since they can promote the BNPL service to their customers.

Two thirds of marketers increase in-store investment to lure consumers to high street

According to new data from In-Store Digital Engagement company M-Cube, which surveyed 250 retail and marketing leaders in the UK, 27% of retail leaders say consumers will return to the high street fully. The research also found that 67% respondents are equally prioritising in-store and online investment, with 13% investing significantly more in in-store experiences. However, over half (53%) will not be reducing their e-commerce investment as consumers return to physical stores. When asked what digital services are being prioritised in 2022, the majority of respondents personalisation services (39%) is a top focus. This was followed by fulfillment and inventory technology (26%), apps (24% ) and evolute payments (11%). Sales assistant experiences (10%) were also identified as key.

US online sales to reach $1.6 trillion in 5 years, Forrester says

Online sales will top $1 trillion this year and grow at a 10% compound annual growth rate through 2027, a Forrester report says. United States ecommerce will continue its upward trajectory, reaching $1.6 trillion — almost 30% of all U.S. retail sales — by 2027. With the pandemic becoming less severe, ecommerce will continue benefiting from the factors that drove its growth before COVID-19. Those growth drivers are lower prices, larger product selection, fast delivery and convenience. The top three merchandise categories in ecommerce are clothing & footwear, consumer electronics, and food & drink.

Welcome emails have best click-to-open and first purchase rates

Welcome emails and those triggered by inventory changes have the best click-to-open and first purchase conversion rates, according to a new study. Email campaigns triggered by price cut and back in stock notices resulted in first purchases from 25% of recipients, according to Bluecore’s 2022 Retail Benchmark Report. Abandoned cart notifications had a 23.9% success rate, with welcome emails succeeding 23.3%. The least successful (14.9%) were those aimed at people who searched for a specific or category/product and didn’t take further action. Abandoned cart and welcome emails also had the highest revenue per click for first purchase and conversion at $34.82 and $30.82 respectively.

Best, Greg