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Happy Friday, especially to those in Philadelphia for Natural Products Expo East. We’re adding a countdown for Prime Early Access Sale alongside our Black Friday ticker, and keeping everyone in Hurricane Ian’s path in our thoughts. Here’s a quick rundown of this week’s ecommerce news:
Prime Day, again
(Photo via Amazon)
Amazon got the week off to a roaring start by making long-rumored news official: A second deals event for Prime is coming October 11-12. This one is called Prime Early Access Sale, and it’s being positioned as a kickoff to the holiday season. While reports indicate Amazon has already been in touch with many merchants about sending in deals and inventory, brands will still have to decide whether and how they want to participate.
The takeaway: Embedded in this new shopping holiday is a bid to shift holiday shopping earlier. Amazon isn’t alone in this, as Walmart will kick off discounts on Oct. 1, and Target is holding its own Deal Days event Oct. 6-8. But only Prime Day has shown the power to bend the calendar to Amazon’s will, while delivering for consumers who have been so far unable to resist a deal. With a second edition, the closest competition isn’t other retailers. It’s Black Friday.
Crossover appealShopify POS Go in action. (Screenshots via Shopify)
In-store shopping is on the rise this year, and it’s expected to be a bigger part of the holidays, NPD reported. But there will still be plenty of tech involved. Shopify released an updated point-of-sale for brick-and-mortar retailers as it saw offline GMV rise in the second quarter. This comes just after Instacart released a host of new tools for in-store grocery shopping, such as smart carts and out-of-stock trackers. We also spoke with Kadro CEO Rick Johnson about his learnings from years of helping retailers implement buy online pickup in store, or BOPIS.
The takeaway: The return to traditional in-store shopping underscores the importance of aligning brick-and-mortar and ecommerce operations. Inventory is going to become a big talking point.
Talking shopScreenshot from Search On. (Photo via Google)
New shopping features for users were among the highlights at Google’s Search On conference, which rolled out a host of updates to the world's largest search engine. Overall, the features are designed to provide a more visual experience, and bring the trends and research that Google already has onhand into the shopping experience.
The takeaway: We’ve been watching Google talk more about prioritizing shopping over the last year as it made updates to give brands more tools and revamp ad upgrades with Performance Max. The user-facing updates appear to aim to embed shopping within the search experience, rather than relying on a specific tab. These features arrive in the same week that Instagram is beginning to test a previously-reported change that would remove the Shop tab from the home feed. It seems that platforms are looking to make shopping a built-in part of the user experience.
Not now for Apple Pay LaterBNPL update: Apple Pay Later delayed, Canadian expansion
Apple made a big splash back in June when it announced it would roll out a Buy Now Pay Later service with iOS 16. But, as Bloomberg’s Mark Gurman noted, iOS 16 arrived, and there was no Apple Pay Later to be found. Engineering issues were cited as the reason, but Apple gave no official word.
The takeaway: This comes at an unsettled moment for BNPL as a whole. Inflation could be a boost to these services as consumers look to stretch dollars, but falling interest rates will likely cut into profit margins. Klarna recently made a second round of layoffs. Affirm and Afterpay are looking for expansion in Canada. Meanwhile, regulation looms and Apple’s entrance looms. Is consolidation in the market next?
Ciara with the items she curates for Instacart. (Courtesy photo)
For the first time in 50 years, the White House held a conference focusing on nutrition, hunger and health this week. Given the food focus, it’s no surprise that CPG and grocery were well-represented, and took this moment to make a splash. Instacart rolled out a sweeping health initiative that included product updates, partnerships, policy planks and new research. Shipt and Albertsons each made pledges to fight food insecurity. Meanwhile, the White House rolled out a new proposal to add front-of-package food labels and change how items are classified as healthy.
The takeaway: While that proposal will likely see plenty of debate and we’ll have to see how companies follow up on their pledges, it’s striking how the act of holding a conference can bring this much policy engagement from the industry. When you’re the White House, just inviting people over is a meaningful act, in and of itself.
Quick hits: J&J’s consumer health company has a name. Mondelez seeks “disruptively delicious” startups. Walmart builds in Roblox. Macy’s launches a third-party marketplace. Sephora adds same-day delivery subscription. H&M could start charging for returns. Peloton will grind into Dick’s. Lululemon looks in the Mirror. Retextion and RetentionEngine merge.
Thread of the week: Walmart+ is the biggest consumer product no is talking about.
Weekend reading: User reviews are much less important for DTC sites.
Trending in Economy
Retail media networks must drive sales incrementality, a new report from the Association of National Advertisers states.
Retail media networks are creating a new layer to the relationship between brands and retailers, and a new report indicates that brands in particular are still navigating the growing pains.
The last two years brought fast growth of retail media networks, as retailers recognized the value of providing advertising opportunities through ecommerce marketplaces that grew rapidly during the pandemic, and the value of the first-party data they possessed in a world where third-party cookies and IDFA are becoming less valuable tools. For a historically low-margin business like retail, digital advertising also presents an opportunity for a high-margin business line of 50-70%.
Brands have proven to be eager adopters as they sought new ways to reach customers in this environment, as well. According to eMarketer, ad revenue from retail media networks will reach $52 billion in 2023 and $61 billion in 2024. Over the next two years, retail media will account for one in five digital ad dollars spent by marketers. The spend is only expected to grow. According to a survey from the Association of National Advertisers (ANA), 73% of brands said they expect to be spending somewhat or significantly more on retail media in the future than they do today.
However, this proliferation has also created “more marketing decisionmaking complexity for advertisers,” ANA CEO Bob Liodice said in a new report.
The need to navigate multiple networks and still-developing tools to maximize the opportunity presented by retail media is leading to a multitude of approaches. Layer on top of that the fact that brands are both selling goods and advertising through retailers, and it’s clear the landscape is being reshaped.
A recent report from the Association of National Advertisers uncovered the areas where fault lines may emerge under the surface:
- Reluctant buyers: 88% believe they are somewhat or heavily influenced by retailers to buy advertising on retail media networks.
- A multitude of players: 56% said they are currently working with five or more different retail media networks.
- Differing goals: Two-thirds of respondents see driving conversion as the most important investment. Only 12% indicated the most important objective was “to invest for future brand growth,” and 7% cited “to drive awareness.”
The results underscore key areas where relationships between brands and retailers can be strengthened.
Sales vs. growth. Retail media must be able to drive both conversions of a single sale in the lower funnel, and brand equity growth in the mid- to upper-funnel.
As one respondent put it, "The jury is still out on if the RMNs are truly driving sales incrementality."
This also has implications for how a brand is budgeting retail media. Some brands are shifting dollars from shopper marketing, brand marketing, and trade spending, which could put the emphasis on short-term sales. But as another respondent put it, "There is concern that while attribution shows RMNs are driving brand sales, they are not necessarily driving brand growth. This is especially concerning where incremental RMN spending is being sourced from brand building budgets."
Standard measurement. Brands want to see an improvement in transparency in measurement. They also want results to be measured in the same ways across platforms. Further, brands believe retail media networks are not fully optimized for their KPIs.
This all leaves room for retailers to show they truly understand what brands are seeking from retail media, and show how they are delivering, all while reducing complexity.
As the report put it, “The next phase of growth for RMNs and value creation for brands will be through RMNs assuming shared responsibility with advertisers for driving brand growth, and demonstrating the ability of their platforms to drive incrementality and positive ROAS for brands. In other words, the next stage of growth will be driven by results versus relationships.”