2023 has been a blur. In this week alone, in my world, "How quickly it's gone" has replaced the Irish small talk go to of the weather by a ratio of 3:1. In itself, newsworthy. Yesterday I posted some of my comments from earlier in the year to try stroke my ego to prove they were right. Self gratification over reflection was a bad sauce. A morning of reflection left me trying to figure out in this 10 month blur what has happened. Where is it going? A reflection usually starts with a realisation of where we are at a moment in time.
Oct 5th 2023 - A confusing time. Not my words. Just the headlines.
Tesco Raises profit forecast after strong first half
Tesco buys more turkeys are it plans for bumper Christmas.
Footfall to decline ahead of Christmas with high streets bracing for the worst
Amercian Candy Shop numbers fall amid crackdown
B&M and Poundland rescue deals at risk as rvials renegotiate leases
Boohoo slashes profits forecasts as consumers cut back
Macy's will open up to 30 new stores as it looks to strip Mall growth.
I know where my money is going. Or not rather.
Insomnia - It's been a tough year.
It is never been easier to start in eCommerce and it is has never been harder.
(Edit: Were it me starting a new brand today, i would be designing a brand that lives in breathes in TikTok - a product fit for TT users and that fits the worlds that surrounds it. A tablet to restore my hair maybe. And document the journey in the the voice of my hair in the third person. Compelling viewing. Why does the hair always reject me? )
The sheer depth of considerations to take is so vast as to make decision making tough. Social only? Omnichannel? What team do I need? The real questions should exist way before that - what am I selling that has value? Can I earn margin. The bascis really. But if you are already in this mad cap world you are probably in the insomnia bracket.
The beginning of the year, all of the rhetoric was about
Very soon into the year, we realised survival was the name of the game. Fluctuating inflation (by fluctuating, I mean going up a lot), has seen almost blanket uncertainty when it comes to costing and planning. There have been price hikes across the board and continues to be. UPS announced a $1.50 surcharge on some orders heading into peak. What do you do a week before you are hitting peack season? Change carrier. Alot of opportunism has trumped creativity or strategic planning. 2024 will be the year of the great switch up. Some SaaS company will form from a #DTC failed brand and expose switching costs and comparisons as an app.
Brands and retailers have competed with this all year long. It has been unrelenting. With the volume of retailers already facing bankruptcy, there is more to follow.
Look at the headlines. Peak is supposed to be our main trade period. Consumers are living, largely on credit, buying things they do not need. The realisation of need versus want is interesting. I felt I left the pandemic needing less. Certainly wanting less. I don't feel differently now.
Shein delivered £1.22B in revenue in the UK alone this year. ASOS did more revenue. Shein at a modest profit. ASOS at a continuing loss. Boohoo will extend their losses too. Fast fashion does not seem to add up to profitability. I made my first Temu purchase this year. Testing experience etc. Shamefully, it was a coat of under $2. 90% off. Or so they would say. With a huge marketing budget, what can you do to combat it - not much. But with these astronomical numbers in the fashion vertical alone we need to look at order volumes, they are enormous.
We are talking about 3 - 4 brands here. What does this tell us about our consumer approach to being better global citizens? Do we care? Today it was reported we just had the hottest September on record by some margin. Ireland is due to be in excess of 20degrees C for 3 days in the next 4. In October. This is better than the summer vacation weather many of my American counterparts will have experience. Come for the food and drink, not the weather!
Live for today, not tomorrow. A new trend. Have we lost hope? Have we no faith in ourselves?
What has this got to do with ecommerce?
Inception - Marketing, Funnels Channels and more
Our 2 tier eco system continues to tell us one thing and act like another.
The Market: "Be where your customers are."
Me: "I cannot afford to. "
Me: "Tell me where best to place my bets"
The Market: "But what about your customers. Your non loyal customers and their LTV?"
The sheer volume of outlets for ads, marketing and headspace is absolutely mind blowing. If you are a large, well structured organisation you might be able to service these and do it at a scale that makes sense. Certain brands are expected to be everywhere, all of the time. These brands will be spending maybe 8 - 12% of revenue on marekting.
How the other half lives. Most small, growing brands and retailers will be spending north of 20% across a variety of channels, diluting their ability to compete (lack of budget) and through increased competition. And let's not forget - "Don't hold back on brand marketing, double down on it".
What I have struggled with is the marketing leaders who are well educated in the science or marketing. Many do a fine job of articulating their points too. Not many of them have worked with a brand doing uunder $5M or with a team of 7 people, who incidentally, do the pick and pack too. Marketing budgets are finite for most and marketing effetiveness does not work in the same way for small brands or retailers. It can't.
Marketing at that level is, for me, a function of distribution. To continue to survive, distribution will be king or queen. Distribution gets eyeballs. Distribution requires budget. Distribution takes time.
Every channel requires a re think of the approach. A nuanced switch that generally drives the brand owners crackers.
"Why can't my agency just give me a simple answer?" - there are none. Ads and marketing feel like the never ending script to a Nolan classic.
2024 promises to add even more complexity to the mix. Larger retailers evolving ads platforms will mean more attention grabbing and more decisions. So the job of marketing in 2024 is not really about attribution for me, it is about distribution. You can refine later. We can talk about retention another day because luck does not randomly bestow itself on just anyone. It is the result of tireless efforts to get something right. It is that recognition that maybe you did, get it right.
The cost of being in ecommerce now is at a tipping point. More on marketing, less on tech. I encourage you to start understanding how a more generous budget on tech can start to grease the wheels to success elsewhere. I have it on good standing that 3% is a solid average tech allocation per year. Seems like sweet FA.
Cost reduction exercises should also consider human time and effort as part of the cost. Can it be reduced and the time better spent elsewhere? In planning the budget for 2024 look on tech as an investment in a better P and L. Technology is continuing to improve the harmoney between people and processes and we should invest time to following this through our businesses in the months ahead. It is not going to get easier.
The more the patterns continue, the more I believe we need to find a new way to deliver ecommerce. We need new models, we need to be braver. We need to make harder choices and cut our cloth to measure.
Earlier Stories on how the year will play out
Q 1 - 2023
My year so far in articles on LI
2024 - ecommerce needs a new focus - the system is multi tiered now.Join me a for a drink this friday to talk it over. 9pm GMT or 4PM EST or just join for the beer and some fun.#retail #ecommerce #strategy #usretail #ukretail