Ecommerce is booming: Annual pre-pandemic growth of about 1% was eclipsed by an online sales spike that shot ecommerce from 18% to 28% of total US retail between March and May last year. In the UK, ecommerce growth in just July was 54%, according to GroupM.
- Early-2020 COVID lockdowns collapsed newsstand sales and advertising, but sent ecommerce sales soaring. “While advertising revenues were crashing, ecommerce revenues were exploding for those set up to take advantage of that shift,” wrote John Wilpers in FIPP’s Innovation in Media 2021 World Report.
- The closure of physical stores left people with few alternatives to online ordering. But stay-at-home shoppers with time on their hands also turned to trusted publishing brands for inspiration on how to fill their time productively.
- Chief Content Development Officer at Hearst UK, Betsy Fast, said, “From mid-March , that really became our MO: Helping readers find what they need and couldn’t get before, help them pass the time, help them with life spent at home.”
- Affiliate ecommerce has been publishers’ first foray into online retail. At the beginning of 2020, 43% of respondents to a Digiday survey said that affiliate ecommerce was not a source of revenue for their companies. By the beginning of 2021, the number of companies not engaged in affiliate ecommerce had dropped to 34%.
- In the US, Hearst publishing brands helped generate one-million product sales through commerce content, an increase of 143% over March 2019. Bustle Digital Group’s affiliate business was up 84% YOY in Q2 2020, offsetting a 35% decline in advertising sales.
- But affiliate ecommerce can leave publishing organisations exposed, once again, to platform power. Last April, for example, Amazon cut commission rates, with some dropping from 8% to 3%.
- James Stables, CEO of Wareable.com told Media Voices: “Amazon have cut the rates over the last year since the pandemic, despite them making record profits. They’re passing less back to publishers. As of March 2020, we were sending twice as many people to Amazon year on year and earning half the amount.”
- BuzzFeed made $300 million from affiliate ecommerce in 2019. But last year it launched Shop BuzzFeed where readers can make purchases directly. The company now expects to average 25% commission on sales from its own store, compared to 10% or less on affiliate sales.
- “We know that we drive meaningful discovery for our audiences, and we’re now focused on collapsing that journey from discovery to conversion,” Buzzfeed’s Senior VP of Commerce, Nilla Ali, told AdAge.
- Brand licensing, bookazine and subscription boxes are all products that publishers are looking to go direct with. US magazine giant Meredith generates $25 billion from licensed merchandise including bookazines, putting it second only to Disney in global licensed merchandise sales.
- GQ’s $50 subscription boxes arrive once a quarter for subscribers. The Best Stuff Box, containing products selected by GQ’s staff, has a retention rate of 75%. Revenues tripled in 2020.
Will the boom bust?
To do ecommerce properly, publishers need to make a real investment in marketing, customer services and even infrastructure. So is the ecommerce boom likely to outlast COVID-19? Brian Wieser at GroupM says yes, elevated levels of growth for ecommerce are likely to persist beyond the duration of the pandemic.
- Data from the UK’s Office of National Statistics shows online sales in January 2021 accounted for more than 35.2% of all retail, beating the previous May 2020 high of 34%, when the coronavirus crisis was at its first peak. Research shows 32% of UK consumers surveyed say they expect to continue with their new ecommerce habits.
- In the US, Adobe’s e-commerce division reported $813 billion was spent online during the calendar year 2020, up 42% over 2019. It forecasts growth to continue, reaching $1 trillion by 2022.
- Globally, by 2024, retail ecommerce sales are forecast at $7 trillion annually, or 25% of all global retail. If this growth trajectory continues, retail ecommerce could be worth $10 trillion by 2027.