To better understand this reality, it is important to start by addressing how to buy and how to be influenced by the act of buying. At physical stores, the way space and products are organized strongly influences what eventually goes into the shopping basket. This is the shopper marketing job - how to do brand marketing directly at the purchase point, with immediate influence on the buyer - that turns out to be an essential sales and market share tool.
This phenomenon is also helped by the fact that many people do not have shopping lists when entering retail spaces and, having them, are often unwritten and/or not very strict. There is always room to add something more to the cart and, in fact, retail knows how to work this phenomenon.
A clear example is how IKEA organizes its area and corridors, forcing buyers to go through all sections, even if they only want to buy a single item, such as pillows. It will be considered a success for the buyer's wallet if the result in the shopping cart is, besides the new pillows, just a few more candles and a few glasses of wine. However, most of the time, consumers end up with more products in the cart and success is essentially for the IKEA wallet.
In e-commerce this reality is different.
While in a physical store it's clear where people come in and out, and in the case of IKEA you can even define where they go, in e-commerce shoppers can come to the same product page from several sources, such as an online search or by clicking on category pages. If we look at the IKEA website, we can clearly see that the reality of physical stores does not transfer directly to e-commerce, as the IKEA web store does not force us to go through all categories until we find the pillows. Just use the search bar and type “pillows” or “click” on products, then the bedroom and finally pillows. It does not take all Saturday afternoon and does not offer the traditional tools to influence buyers' decision-making.
In e-commerce, shopping lists also take on a different and more sophisticated dimension, such as favorite lists, past shopping lists, and desired product lists. These lists, unlike humans, have no memory problems and do not require us to look for the product on the shelf. They are just a click away from the "add to cart" button.
An interesting pattern in e-grocery (e-commerce of grocery products) is that users spend a great deal of time the first time they use the web store to select products and create the first shopping cart, but the following times are faster sessions and users reorder from the past shopping list. According to Kantar, 55% of online shoppers use the same list from one purchase to another.
At a physical store, even with a written shopping list, a shopper who enters the store basically starts from scratch and shopper marketing tactics are there to play their influential role. In e-commerce, you don't start from scratch. Shopping lists are already full and convenient, and this has implications.
In fact, customers have less exposure to campaigns and highlights than they would with other traditional shopper marketing tactics. The customer can log in to their account and join their list directly. This type of customer, who bypasses the entrance area, has to be worked with alternative tactics to let him know what news and promotions can be added to his cart. E-commerce shopper marketing has to use its own tools for the digital world, such as content marketing or first basket campaigns.
Additionally, it is important to look at customer acquisition with a long-term perspective in certain categories, especially consumables or others with a high degree of repeatability. A marketing campaign, instead of impacting only one transaction, ends up impacting more transactions if that product ends up in the cart and is repeatedly ordered from there. Instead of thinking of the customer with the lens of a single purchase, one has to think about LTV (lifetime value) and how much one is willing to invest to get on such a shopping list that has no memory issues.
Amazon, which though a giant remains a pioneer and innovator in the e-commerce world, has an even more sophisticated program than a simple list. With Subscribe & Save, customers can choose how often they want a product delivered to their home and let Amazon handle the rest, saving 5% or more on the list price. From there, with the time-frequency defined, the product comes home. It's a very popular program for categories like diapers and pet food, and it's not hard to see why. Here the customer's LTV lens still gets bigger, because from the moment the customer decided it was going to be the ABC product to subscribe to, it becomes much harder for the XYZ competition to win that customer.
For a brand, getting on the first shopping list or being chosen for a subscription is a significant advantage. There is a first movers’ advantage to being on a shopping list, and a disadvantage to being left out, which means having to fight harder and invest more marketing budget to get a competing product off an electronic shopping list or a subscription.
In Nova SBE Executive Education's 360º E-Commerce Management program, we'll address how to work through the shopping lists and subscriptions phenomenon so that your business can create this first-mover advantage. The program, which features guest speakers, will cover the fundamentals, tools, and strategies of e-commerce so that your organization can take advantage of this increasingly important sales channel in all business areas.