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Writer's pictureTeresa Sperti

Digital Commerce – Diversification, Influence & Innovation are Key to Future Success


Virtual shopping

The vast majority of consumers now buy online. In 2021, a report by Accenture found a whopping

92% of consumers across eleven countries purchased through digital commerce channels. This reinforces that the idea of a digital consumer and a traditional consumer is beyond outdated. Consumers are not buying in one way or via one channel – they are moving across channels seamlessly, often blending their use of channels along their path to purchase. Whilst this might sound obvious for some, many brands still lack a true understanding of the value and contribution of digital to their bottom line, beyond directly attributable eCommerce sales. If COVID taught brands anything, it was that eCommerce is a vital channel to effectively serve consumers of today, and whilst eCommerce sales have been healthy – these sales do not represent all of the value that digital delivers.


In fact, research shows that in 2021, 62% of all CPG purchases were influenced by digital in some way shape or form, up from 49% two years prior.

What this data shows is that, even if consumers are not buying online, the majority of their purchase decisions are being influenced by digital, making digital commerce critical for every senior leader - not just those leading eCommerce functions. Unfortunately, today however the level of “digital influence” on a company’s performance is often invisible within organisations - which leads to poor decision making, stifles growth and enables newer, more nimble and agile brands to grow share in the digital space.

With a strong outlook for eCommerce moving ahead and digital likely to increase its stronghold on consumer decision making, brands need to re-think their digital commerce strategy to adapt to the changing consumer, and part of this includes thinking through the role digital plays more broadly to deliver key business outcomes.


Consumer behaviour is “changing”


If we look back 5 years, most eCommerce brand strategies were fairly one dimensional, focused on direct distribution via home delivery. But as consumers evolve, so too are the demands on businesses to adopt a much more diversified digital commerce strategy, and much of that change is being driven by the buying behaviours of younger generations whose power and influence is rising by the day.


According to a recent AfterPay report, Gen Z and Millennials in Australia currently account for 36% of the total retail spend, and their share of retail spend will grow to 48% by 2030, as more of Gen Z (currently aged 9-24) enter the workforce. These generations of consumers are more digitally literate than any other generation and their preferences and purchase behaviours reinforce the vital role digital plays to either fulfil their end-to-end experience or enable and influence core parts of their experience.

Over the past few years, Gen Z and Millennials have adopted new channels including social, marketplaces, quick commerce and live streaming, as well as new fulfilment options including click and collect, pre-order and last mile delivery at a far greater rate than any other generation. The latest Accenture digital commerce study has found that in the US, 81% of Gen Z are now using curbside / instore pick up for goods, whilst 76% of millennials are doing the same. Up until a few years ago, curbside pick-up or click and collect was still fairly nascent, but adoption has shifted the eCommerce landscape demonstrably in a few short years.


The adoption of channels like click and collect in the US are also mirrored down under. As of 2022, 49% of Australian consumers say they prefer click & collect (BOPIS) as their primary means of fulfilment for food and medicine, according to Inside Retailer - with the immediacy of need often trumping all else. Click and collect affords consumers the immediacy and the convenience of an all-in-one buying experience.


Immediacy and an insatiable demand for convenience is also driving adoption of last mile delivery. Whilst last mile delivery is hitting a few speed bumps in the wake of a global economic downturn, appetite for consumers is still incredibly strong. In the US, 72% of consumers are now leveraging last mile delivery and there is little surprise as to which generations are showing the highest levels of adoption.


Social commerce, re-commerce and other new channels and trends are also changing the landscape, challenging organisations to think differently about their digital commerce strategy.


Importance of digital commerce transcends industries


The increasing importance of digital commerce isn’t isolated to retail or consumer goods, either. In categories like hospitality, consumer behaviour is also evolving rapidly. According to research from PYMTs, forty-one percent of restaurants' revenue in the US is now generated via digital. Pre-ordering food online or even digitally enabled in-dining ordering is increasingly becoming the preferred way to purchase via branded apps and other third-party websites. Close to home, 7 million Australians used meal delivery apps in 2022 to get food delivered to their home or to enable order for pick up, and once again we see uptake greatest for Millennials (45.3%) and Gen Z (43%).


Exerting greater digital influence


Whilst diversification to remain relevant is a critical part of any brand's future strategy to enable commerce everywhere, so too is gearing your digital commerce strategy to effectively influence offline sales. Traditional bricks and mortar retail still by in far represents the vast majority of consumer purchases in developed markets including Australia. Despite this, however, many brands are failing in their ability to connect the dots between digital's role to drive the instore transaction. A recent report by Woolworths found that 61% of consumers who visit the Woolworths website buy within 4 days instore – six in 10 customers. This example demonstrates the link and influence of their digital strategy on their instore performance. Whilst Woolworths has clarity over the role digital plays to influence the path to purchase, too often today brands are over-simplifying how they think about digital. Our first-hand experience partnering with brands large and small has shown us that still today brands are orienting the majority of their digital activity around driving eCommerce outcomes, with little focus on leveraging digital for the purpose of influencing the instore sale. For many brands, this is where the largest opportunity lies to drive sales growth as part of a broader digital commerce strategy.


Digital commerce success – preparing for the future


The commerce landscape has rapidly evolved and will continue to evolve as digital adoption continues. So how should brands best prepare for the future?


1) Re-assess the changing landscape and challenge old assumptions;

Given the pace of change, brands need to continuously ask themselves the question of: Where do we need to be to ensure our product is visible / can be discovered by potential and existing customers? The growth in marketplaces, need-it-now platforms (last mile), social commerce, re-commerce sites and more demands greater diversification in our digital commerce strategy, and for us to ensure our strategy is still and always fit for purpose.


2) Think beyond the eCommerce sale;

As we have laid out, the influence of digital commerce on instore transactions is significant. This means a digital commerce strategy must go beyond direct and in-direct eCommerce to maximise sales in the traditional environment. Whether you are a retailer, a CPG brand, a restaurant or otherwise, digital marketing plays a dual role. Ensuring your digital commerce strategy influences offline sales alongside of online is vital if you are to maximise market share.


3) Better integrate eCommerce teams within your core business;

eCommerce teams are often isolated with too few understanding the complexities of the channel and the landscape. With digital playing such a fundamental role in influencing all transactions – leveraging digital has to be the new norm for doing business. This means it needs to be embedded within all parts of the organisation as opposed to being managed by a team and viewed as a bolt-on channel.


4) Quantify the full value of digital commerce to your business;

Understanding the value of sales directly attributable to digital (eCommerce) as well as those sales that are indirectly attributable (influenced by digital) will help to change the dialogue internally and challenge peoples’ beliefs around the value of digital investment


Need help to review your eCommerce strategy and future-proof it to meet market changes? Find out more about our eCommerce and digital sales services.


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