Online sales promotion – a missed retail opportunity?

The growth of online retailing is set to exceed bricks and mortar for at least the next five years, with retail’s imminent future being a blending of online, mobile and offline. In this new environment brands can capitalise on the emerging opportunities for sales promotion, but the agencies will need to lead the way.

If you didn’t know it already, online retail is going to be huge. According to Forrester Research the number of online shoppers in Western Europe will rise from 140 million today to 190 million by the end of 2014. The growth of online retail at around 10% per year is expected to outstrip that of bricks and mortar retailing for at least the next five years. In some ways this should come as no surprise: internet shopping deftly fulfils modern society’s desires for convenience, choice, value and immediacy.

And for those who put their money on mobile in the early noughties, only to be openly mocked year after year, the last laugh is set to be on them. Mobile commerce – or m-commerce – is where everything is headed, with many retail giants such as eBay already recognising its potential.

The trading site’s chief executive John Donahoe states: “We expect eBay mobile commerce to generate almost $5 billion in merchandise volume this year and PayPal mobile to exceed $3.5 billion in payment volume. Mobile is one way that online and offline shopping are blending into a single commerce environment. We are focused on enabling commerce, helping consumers shop anytime, anywhere, and being the commerce partner of choice for retailers of all sizes.”

And with that comment you actually have, in some ways, the paradox: “Online retail will die; long live retail”.

Much in the way that it has become archaic and faintly quaint to say “I’m going to go on the internet”, so online, mobile and bricks and mortar retail will merge into one. The retail experience of the future will be immersive, mobile and connected. Indeed, being able to shop in the way that suits you is already happening – ‘Click and Collect’ and ‘Buy and Deliver’ are two such iterations. The mobile device is enabling comparison on the go and it’s only a matter of time before it becomes a primary purchase channel itself.

So where does this leave marketers? In some ways they are missing an opportunity that is staring them in the face. The power of shopper marketing and sales promotion is well known, practiced and documented. The store as a marketing medium has grown in influence, and is becoming a significant revenue stream for many. But to date there has been little demand to create or exploit an online equivalent. Which is somewhat odd when you consider that each week in the UK over 10 million people will ‘walk’ through the doors of sites such as Amazon.

In a recent article for Marketing Week, Guy Phillipson, chief executive of the Internet Advertising Bureau, anticipates that major retailers will “start to enhance the media opportunities on offer to brands through translating their traditional point-of-purchase tactics into online environments”. In fact many of the online retail ‘pure-plays’ are doing this already, with Amazon, ASOS and eBay all in possession of a media sales division. In its recent report, ‘The High Street to the i-Street’, eBay goes further and cites the disconnect between ‘advertising and retail’ as a significant barrier to growth. The report states: “Online shopping sites are offering an increasingly diverse range of opportunities for brands to communicate with customers at the point of sale. There is now further imperative for media spend and sales related activity to come together more constructively at both a client and agency level.”

So why hasn’t it? Well partly because there still exists a ‘silo’ mentality at many client organisations, with ‘marketing’ and ‘retail marketing’ running separately, but also because to date marketing service agencies, while providing a broad spectrum of services have left the art of sales promotion to the specialists. Simply put they haven’t considered it their ‘bag’.

“There is a huge opportunity for sales promotion agencies here,” says Getmemedia.com managing director Pete Davis. “Not only will mobile point of sale offer brands the most direct route to target customers in the future it is inherently more accountable than any other channel. It may require a shift in focus for retailers to see themselves as media owners and their ecommerce sites as their media channel, but if they can do this and incorporate sales promotion ideas to harness their power, then I think we will see online and mobile POS becoming an increasingly important part of the marketing mix.”

While sales promotion agencies have in general been slower to adopt all the disciplines of the new digital era, this is one area where they can make a real impact if they grab it with both hands. Applying their know-how to shifting units in the new and evolving retail environments will become increasingly business critical. The door is still wide open.

Alex Marks, Managing Director, Fresh and Frank