Brands are missing out on the E-commerce party
Even with millions spent on advertising, brands often miss opportunities with e-commerce. Here’s how they can close the loop.
At Semantics3 we’ve seen it all. Having worked with a wide variety of customers — from independent developers all the way up to the IR500 retailers — we have had an eagle eye view of e-commerce and the rapid expansion this industry has seen in the past 2–3 years.
While almost everyone has been minting the ole’ Benjamins with highly sophisticated business models, like this particular curated shopping application, one set of players who has been conspicuously missing from the party are consumer goods (FMCG) brands.
That’s odd isn’t it?
FMCG brands are among the biggest spenders on marketing and advertising. They spend billions on brand value, so much so that some pundits have argued for their inclusion on balance sheets.
FMCG brands have their own personalities and niche messaging too!
P&G’s Secret brand of women’s deodorant “has always shown women’s evolving role in society through its advertising.”, according to their North American Brand Director — hence this ad that examines “larger, generational reasons why young women sweat — often because of political, gender-based struggles — and not just their more random individual reasons”.
All this while pitching women’s deodorant on the side.
So why the heck aren’t brands doing e-commerce?
The reason isn’t so simple.
The equation to selling more FMCG goods is actually pretty simple:
FMCG Sales Volume = Marketing Budget x Sales channels
FMCG companies are extremely beholden to retailers, specifically brick and mortar retailers like Safeway, Walmart and Target to push their product.
They pay premium dollars for prime positioning in shopping aisles, at the checkout counter, at gas stations. The truth is that for FMCG companies, at least 75–80% of their sales comes through brick and mortar channels. E-commerce still forms a very small portion of their sales.
But that’s changing.
As retailers are increasingly shifting to online retail, with Target, and Walmart taking on Amazon at the shopping game, FMCG brands have a unique opportunity to capitalize on this phenomenon.
While FMCG brands don’t actually sell stuff directly (because it’s cheaper to sell in bulk to retailers), they can work closely with online retailers to allow consumers to purchase product directly from their brand pages.
This makes a ton of sense, especially since many consumers are increasingly exposed to brand-level advertising online (on social media, on video streaming channels and even on online cable TV). This drives traffic to brand pages, rather than the retailer pages themselves.
However, as traffic increases to brand pages, little is being done to convert this traffic to sales. While visitors can read all they like about the latest products from Nestlé, its a kinda impossible to actually buy anything from Nestle.com:
This is an almost criminal waste of opportunity. Traffic to brand pages are driven almost entirely by advertising (online, TV, and print) and these are incredibly expensive to make and distribute.
If you spend all that effort to drive traffic to your website and not convert any of it to sales, that’s a horrible waste of your money!
How do you fix this?
There’s many ways to skin this cat. The good news is that almost all of them will make you money:
2. Pick a retailer of choice, then display live offers from that retailer on your website:
3. Use a universal E-commerce gateway like TwoTap to allow your visitors to purchase products right on your website, but have the orders placed on the target retailers.
How can we help?
Semantics3 operates the world’s largest product database, available as an API. Hook up your shopping front end to our API to pull live offers (with fresh prices) from any and all online retailers to display on your website.
This is an extremely easy and effective way to convert your website traffic to actual purchases, helping your sales and marketing divisions accurately track the effectiveness of their campaigns.
This creates the gold standard of advertising: A virtuous cycle of feedback for ad spend via trackable conversions for online advertising.
Lovingly made in San Francisco, Singapore and Bengaluru by Hari Viswanathan and the Semantics3 Team.
Published at: May 12, 2016