The old path to digital growth was simple: traffic, traffic, traffic. Not anymore. Shopper spend – the amount a shopper spends per visit – has overtaken traffic as the key growth driver. The growth game just changed.
Since the inaugural Shopping Index in 2015, we’ve segmented digital growth into two major sources: traffic growth and spend growth. Traffic has been the dominant driver of revenue growth — providing over 80% of digital’s growth at times. But the last two quarters have seen a significant shift – shopper spend accounted for less than half of the growth in Q4 2016, and this quarter, spend drove just a hair more than half of digital growth.
OK, so the numbers flipped – why does the source of digital growth matter?
As digital commerce continues to mature, retailers will feel increased pressure to maintain the strong growth to which we’ve become accustomed. Finding (specifically – buying) more traffic was a well-worn path to that growth. On the other hand, increasing shopper spend can be daunting – nothing makes a brand team squirm than the words ‘conversion rate optimization.’ The shift towards relying on shopper-spend to carry your growth has two major implications that will ripple through digital teams.
First, the spotlight will shine even more brightly on the site experience, as making visits more productive will be monitored more closely than ever. Retailers will personalize more of the shopper’s journey, creating more impactful areas of the site than just the product detail page; site search results and category pages provide a bigger audience and earlier opportunity to surface relevant products to the shopper. And yes, expect to see a rise in conversion rate optimization practices within digital teams, as test and learn becomes the mantra of high performing teams.
Second, finding net new traffic is going to get harder and more expensive (hello, supply and demand!). The old means of filling the top of the funnel with new visitors isn’t sustainable. Instead, retail marketing teams will continue to refine ad buys and optimize paid channels. In addition, more focus will be put on relevant marketing — we’re looking at you, email. The days of “batch and blast” sends have long been numbered, but relevance will be a key requirement in this next phase of digital marketing.
For more data-driven insights, take a look at the latest Shopping Index, which uncovers the true story of shopping activity of more than 500 million shoppers across the globe, with a focus on key markets: the U.S., Canada, the U.K., Germany, France and – new this quarter – Australia/New Zealand. This battery of benchmarks provides a deep look into the last nine quarters and the current state of digital commerce.