Understanding Changes in eCommerce

eCommerce First, B&M Second

As the title suggests, many businesses are changing their focus from establishing brick-and-mortar stores to putting the eCommerce side of business first. Popular brands such as Warby Parker, Birchbox, and Dollar Shave Club start with eCommerce, and as they grow, they seek out retail partners, open retail stores, and/or contact distributors to further grow their retail footprint. The eCommerce first strategy is allowing companies such as the ones above to find a market and then partner or be acquired by larger, well-established retail brands. For example, below are a list of headlines and excerpts which reference the success of eCommerce first brands:

So how do these eCommerce first brands reach such a level of success that garners attention from retail giants? Through appealing to individualism and tribalism.

Individualism & Tribalism

The two terms are very contradicting in definition, but in terms of appealing to consumers who consistently online shop, the duo go hand-in-hand.

Focusing on tribalism first, the very definition states that it is, “the state of being organized by, or advocating for, tribes or tribal lifestyles.” In relation to eCommerce, this results in people finding one another based on their lifestyles and preferences and forming “tribes” of sorts. Examples of these tribes are those who advocate for environmental preservation, veganism, cruelty-free cosmetics, LGBTQ+ friendly companies, equal wages, and so on. This concept of neo-tribes is made possible through social media, and can be seen as a creation of social micro-groups and sense of belonging through shared beliefs, emotions, and consumer behaviors.

Below are a few examples of tribalism:

Harper’s Bazaar magazine reported that with the rise of veganism in the past few years, the vegan cosmetic industry is reaching $20.8 billion annually, and below is their list of makeup brands that have made the switch to cruelty-free, vegan products:

• Dove
• Kat Von D Beauty
• Milk Makeup
• Hourglass Cosmetics
• Covergirl

They also reported that by 2020, any cosmetics or ingredients tested on animals will be illegal in the state of California.

Now while tribalism has a huge impact on individuals, especially with millennials, the desire to be unique and stand out from the crowd is still prevalent among consumers. By catering towards customers’ desire to have unique products through programs and initiatives, marketers can garner higher traffic to their sites and thus improvements to their eCommerce numbers. An example of this is Warby Parker’s unique Home Try On program.

First, Warby Parker does a sort of survey with buyers to see which kinds of colors, lenses, and frames they like, then they suggest an array of glasses. Consumers have the option of choosing 5 pairs of glasses to order to their house and try on, free of charge. After they’re done, they send them back and can choose more, or buy a pair. This lets shoppers feel like they are in charge and are having products personalized to their needs.

Rewarding Loyalty

Another way for marketers and business owners hoping to capture a larger market by appealing to individuals and the tribe at the same time is to introduce a loyalty program to their brand. Loyalty programs allow brands to retain their current customers, 20% of which will result in 80% of a business’s future revenue. Furthermore, it costs a business 16 times more to bring in new customers than to retain their current customers, and $1.6 trillion is lost annually by companies once their customers switch brands.

Now you may be thinking, “this all makes sense, but how does it tie into what we’ve already talked about”, and we’re going to satisfy your curiosity below. Let’s use Sephora as a perfect example. Sephora has a loyalty program called ‘Beauty Insider’, in which all the details from points earned, rewards that are given out, and tier status are listed in an easy to read grid, which we’ve placed below.

Sephora’s Beauty Insider rewards program does a great job by appealing to people’s desire to be part of a community by giving them the option of becoming an Insider for free, receiving 1 point per dollar spent, options for birthday gifts, and more. They also promote the idea of spending more to become a VIB (Very Important Beauty Insider), in which their points per dollar rises and they receive tier gifts. Spending even more per year allows customers to gain the elite Rouge status, in which they gain free shipping, early access to products, exclusive events such as sales, and a $100 Rouge Reward. Beauty Insider as a whole serves to satisfy the need for a tribe, and the different tiers result in letting members feel unique and pampered through exclusive deals and gifts. Reaching these tiers and feeling closer to the company increases loyalty to the brand, and thus increases the amount of money that consumers spend annually, hoping to continue their tier status into the next year.

If you’re still not convinced, we’ve pulled some statistics provided by Annex Cloud in regards to loyalty programs:

• 87% of shoppers reported that they want brands to have loyalty programs
• 80% of consumers say that they want a personalized experience and are more likely to do business with a company that offers one.
• 41% of Americans report loyalty to organizations that offer new products, services or experiences.
• Over half of the surveyed population reported that, if they like a brand, they will rarely purchase something different. This includes 55% of older millennials, 53% of younger millennials and 51% of Gen Z said the same thing.
• 54% of consumers say that they would consider doing more business with a company for loyalty rewards.
• 46% said that they have already increased the amount of business with a company because it offered loyalty rewards.
• 68% of millennials report that they will not be loyal to a brand if that brand does not have a good loyalty program.

We hope that this article has shed some light on new topics and trends that may have caused you some confusion, and we hope that your brand will implement some of the tips we’ve highlighted. We also understand that implementation of these new ideas take time, effort, and trial-and-error before yielding results, but there is no need to fret. Our experts at Spaceshop Commerce have the industry knowledge and experience to guide you through these consumption changes, so reach out today and let’s discuss how your brand can conquer both the tribes and tribulations of eCommerce.