Online Retail Sales Are Down, And Why Some Retailers Don’t Care

Question for you: If you’re retailer and you get a sale but you’re not sure where said sale came from, does it still make a sound? Does it still impact your bottom line? Depending on whom you ask, you may get a different answer to these questions for those in the specific marketing departments of said retailers and/or their agencies may respond one way whereas those higher up in the marketing food chain may reply another (way).

Of course everyone posed such a question would reply in the affirmative re: affecting the bottom line but when say a digital marketing department is being judged by how many sales it brings in specific to their online endeavors you can be darn sure they’re going to want the credit for the sale.

Provided the sale came from one of their endeavors.

But what if the bigwigs at the same company/brand didn’t care where the sale originated from?

In late August I read the following headline on the Wall Street Journal website: After Decades of Toil, Web Sales Remain Small for Many Retailers. I was was immediately intrigued for the title alone drew me in and I thought to myself ‘how can this be after all this time? How can online retail sales be “small” as the title implied?’

As I perused the piece I was none too surprised to learn that Amazon was leading the way when it came to online retail sales figures. In fact they reported online sales that were higher than their next 12 competitors – combined. Competitors that included Walmart and Staples.

How could this be? I realize Amazon is an online-only company but online sales greater than the next 12 brands combined?

Well it seems the  Securities and Exchange Commission wanted to know, too as they asked these brand behemoths “to provide hard details about the amount of goods they sell online” as per the WSJ piece. Seems the SEC is openly questioning whether these same brands are overhyping and overselling, in a matter of speaking, what their actual online sales figures really are.

And it appears that online sales numbers for many large brands are treated as private, secrets known only to them “even though they are a big focus for investors” as astutely pointed out in the article.  And if not private, somewhat confusing.

From the article:

“Target has highlighted its online performance, telling investors last week that its digital sales have grown by double-digit percentages and that it is ‘moving quickly to ensure we stay relevant in an increasingly digital marketplace.’ Asked by the SEC to quantify its online results, the discount retailer said in June that ‘digital sales represented an immaterial amount of total sales.'”

What?

On one hand Target is telling investors how it’s staying relevant in the digital space and it’s double-digit percentage growth in digital sales is an indication of that while on the other hand telling the SEC that the same digital sales were inconsequential to the overall sales figures.

Am I the only one who sees a disconnect there?

A Sale Is A Sale Is A Sale

Apparently Target is not all that concerned as to where a sale comes from acknowledging the fact its “strategy is to book sales whatever the channel, so it doesn’t need to break out its Internet business.”

Peter Fader is a Professor of Marketing and Co-Director of Wharton Customer Analytics Initiative. I interviewed him for a piece I wrote back in April When It Comes To Big Data Is Less More? 

And just as he was then in speaking about big data, he’s equally blunt in speaking about this issue.

“Today’s marketing activities (and consumers’ behavioral actions) are so inherently ‘multi-channel’ so that it’s nearly impossible to sort out how much commerce is attributable to online vs. offline,” he said matter-of-factly. “And I find attempts to come up with an overall number to be an absurd waste of time.”

Paraphrasing Robin Thicke, Casey Carl, who oversees Target’s omnichannel efforts, would seem to agree. “There’s such a blurring of the lines that it doesn’t make sense to delineate between whether it’s an online or in-store sale,” he told the WSJ.

What About Online Advertising?

If more and more brands adopt this same mentality of being channel-agnostic when it comes to a sale, will it matter if there’s online advertising or perhaps better still – will it matter if it is referred to as online advertising as opposed to just “advertising?”

If brands are not going to care much less track the origination of a sale, what difference does it make?

Eric Bradlow, himself a Professor of Marketing and Co-Director of Wharton Customer Analytics Initiative, says online advertising has its place in the marketing and advertising world.

“Online advertising, in the short term, tends to lead to clicks; however, that is a small fraction of its benefit,” he says. “But, in the longer run, banner ads and online advertising can also raise awareness of a brand, the long-run equity of a brand.”

In Closing

I think there are two scenarios at play as to why online sales numbers are not higher than they are.

On one hand you have brands such as Target who don’t seem to care where a sale comes from as long as they get the sale so if a sale that should’ve been tracked to a digital source somehow gets “misplaced” and get counted in the in-store sales total, so be it. As long as they get the sale all is well.

And on the other hand I think you have brands who simply do not know how to track online sales. Not to sound overly simplistic but I believe that is exactly what’s at play here.  Big, small or somewhere in the middle many brands do not know to properly attribute a web based sale accordingly.

Not sure if it’s apathy or ignorance or incompetence.  Or something else altogether.

Curious to hear your thoughts on this.

Sources: Wall Street Journal, Google Images