Reveal The Total Effect Wholesale Has On Direct Ecommerce Sales, Using Post-Purchase Surveys
This is a partner guest article by Nick Doren, Senior Manager of Growth
at Part and Sum. Learn more about Part and Sum
here .
Just as everything else, online acquisition
costs
continue to rise every year. Part of the reason why modern online
advertising is so effective is that it allows new brands to quickly
reach “in-market” audiences, or those that are already shopping for your
product category and are ready to buy. However, as a brand continues to
seek top line expansion, it must start advertising to less qualified,
out-of-market audiences.
These audiences need more education, convincing, and brand imprinting to
make a purchase. This added effort equates to more dollars spent on each
marginal customer and leads to a loss of advertising efficacy and
increased customer acquisition costs, or CAC, as it is often referred
to. Eventually, this environment of ever-increasing costs and declining
efficiency becomes unsustainable.
Because of this, many brands become motivated to explore distribution &
discovery channels outside of traditional paid media. Wholesale partners
are a logical next step. They provide brands with something paid media
cannot: an influx of potential customers seeing their products without
additional dollars spent on advertising. Large retailers like Nordstrom,
Saks Fifth Avenue, and Revolve have curated years of brand equity and
trust and are rewarded with large swaths of customers coming both to
their physical stores and websites to find new products every day.
Wholesale partners are a source of discovery for the brands that occupy
their shelves. When going into wholesale, brands must understand that
these retail partners are not only an additional revenue channel for the
wholesale side of their business, but also an added online customer
acquisition channel with spillover effects on their online DTC business.
Let’s examine just how much of an impact wholesale discoverability has
on online direct ecommerce sales using real data Part and
Sum collected for a long time client and
partner.
Lizzie Fortunato is a New York city
based women’s jewelry and accessories brand with strong wholesale
distribution (both brick & mortar and online) in outlets like Nordstrom,
Revolve, and ShopBop. While long suspected, it was only recently proven
that these wholesale partners have the added benefit of driving quite a
bit of sales volume directly through lizziefortunato.com.
In a separate effort to better understand sources of new customer
acquisition, Part and Sum advised Lizzie Fortunato to install a post
purchase survey Shopify app on their checkout page to ask new customers
“Where did you FIRST hear about us?” In addition to getting clearer data
on the impact that online advertising channels drive for the brand, it
also became apparent that 12.8% of all new customers self-report
discovering the brand through wholesale partners.
However, when digging into the “other” bucket of responses, the post
purchase survey reveals that the percentage is actually higher than
initially reported. Many self-provided-responses refer to wholesale
partners the brand sells through and therefore should be categorized
under the “boutique/retail” bucket of responses.
Using Fairing’s new Response Data
Reclassification
, which allows for manual recategorization of open ended responses, we
reassigned these uncategorized long-form answers into the appropriate
categories and discovered that over the last few days, 18.01% of new
customers that purchased directly from the lizziefortunato.com website
first found the brand through a wholesale partner!
Having access to this data when entering wholesale is critical. As a
marketer, it helps rectify an influx of previously undetectable and
miscategorized conversions on a last click basis. Brands fortunate
enough to score a large wholesale account may experience a large
spillover effect of sales to their ecommerce site as a result of the
additional discoverability and awareness that physical and online
retailers provide.
If a brand is stocked in a physical store, the discrepancy in conversion
tracking is obvious - one cannot “click through” from a physical
shopping experience to the brand’s ecommerce site. Similarly, there’s a
lack of direct click through data from an online wholesale partner. A
brand’s wholesale partner will not externally link to the brand’s own
ecommerce site for an obvious reason: they want to claim that revenue
for themselves. Any traffic and conversions generated from these points
of discovery will come through reports that emanate directly - ie. a
user types the brand’s URL directly into the address bar, or through
organic / paid branded search.
This leads to three potential marketing problems:
- One: the marketer is unable to identify what’s causing the spike in
unattributable direct & organic sales and cannot properly allocate
budget.
- Two: the marketer mistakes a lift in organic / paid search to
halo-effects driven by paid social advertising and incorrectly
assigns credit to these platforms for the additional performance.
They then mistakenly increase budgets on these channels assuming
they are producing more results than they actually are.
- Three: the marketer sees a lift in paid branded search and allocates
more spend to bidding on the brand’s own keywords, even though these
last touchpoints in the acquisition journey are largely
non-incremental.
The impact on overall allocation of resources at the business level is
perhaps more important to consider. Brands selling through wholesale
partners receive periodic reporting from retail partners - either weekly
or monthly as to how well their product is selling through. At the end
of the year, let’s say a fictional brand is generating $10 million in
revenue directly through their ecommerce website and $10 million in
revenue through wholesale partners. As a result, the business allocates
50% of their resources (staff, investments, production) towards growing
wholesale and 50% towards growing direct ecommerce.
The same brand implements a post purchase survey and discovers that 20%
of their ecommerce new customers are finding the brand through
wholesale. This discovery prompts the business to reallocate resources
more heavily towards wholesale since it’s proving to have synergistic
effects on their overall business growth. This level of insight and
control is not possible unless there is a system in place to discover
the key drivers of their ecommerce revenue beyond last-click reports.
As brands continue to see customer acquisition costs rise across the
board using paid media, they need to leverage alternative discovery &
distribution channels like wholesale. It is important they have a system
in place for reconciling the additional messiness these channels create
in attributing revenue on the direct ecommerce side of their business.
With Fairing, Lizzie Fortunato now has a better understanding of a
formerly “black-box” portion of its online revenue and can more
accurately allocate attention and resources to the different channels it
sells through, leading to smarter and more efficient growth in the
long-term. As a trusted partner to our clients, Part and Sum welcomes
the difficult challenge that attribution presents and works hand-in-hand
with brands to introduce the necessary data collection efforts so that
as a team, we can understand the most effective ways of pushing the
brand forward to its next stage of growth.