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Strategy

Overcome Ecommerce Merchandising Strategy Challenges With First-Party Data

How to use first-party data to overcome ecommerce merchandising strategy challenges so you can grow your business, customer base, and sales revenue.


  • First-party data is crucial for ecommerce success because it's more reliable, accurate, and secure compared to third-party data, and allows for personalized experiences without invading customer privacy.

  • Increased competition in ecommerce requires businesses to work harder to stand out and offer unique value to customers, with low-cost platforms making it easier for new businesses to enter the market.

  • Apple's privacy changes and Google's plan to phase out third-party cookies have increased acquisition costs and made customer personalization a challenge, but SMS marketing and subscriptions can be effective ways to connect with customers while respecting their privacy and generating recurring revenue.

 


 

Did you know...

...that ecommerce was invented back in the summer of '79? 

That's when Michael Aldrich used a telephone line to connect a television to a computer. His creation sounds pretty stone age compared to what online shopping is like today, doesn't it?

Fast forward to 2023.

An estimated 274 million U.S. consumers are shopping online. And that number is expected to top 279 million in 2024. But all this extraordinary growth has also led to many growing pains and challenges for ecommerce businesses. These include rising competition, customer privacy concerns, and increased acquisition costs.

The solution?

First-party data. This powerful source of customer data can help you grow your ecommerce business, customer base, and sales revenue. 

Below, we'll take a closer look at these ecommerce merchandising challenges. Then, we'll go over three ways you can use first-party data to overcome them and build a successful ecommerce merchandising strategy.

Here we go!

Closeup of hand holding credit card

Challenge #1: Increased Competition Makes It Difficult To Stand Out

The world of ecommerce is getting a little more crowded these days. As more consumers shop online, more businesses have entered the market, leading to a highly competitive landscape. 

As a result, businesses from all over the world are all competing to get a piece of the ecommerce pie. There are now an estimated 12 million to 24 million ecommerce websites worldwide.

Additionally, online businesses have lower barriers to entry than traditional brick-and-mortar stores. This makes it easier for new businesses to enter the market. And with low-cost platforms like Shopify and WooCommerce, businesses can easily set up their own online stores and start selling products. 

Merchants must not only focus on growth to maintain their market share but also work harder for that growth. They also need to work harder than ever to stand out from the competition and offer unique value to customers.

Challenge #2: Apple’s Privacy Changes Have Increased Acquisition Costs

Apple's changes to its privacy policies on iOS devices has made it more expensive for businesses to use targeted advertising. Specifically, the App Tracking Transparency (ATT) feature has led to higher acquisition costs.

With ATT, users must opt in to allow apps to track and track their activity across other apps and websites. Approximately 96% of Apple users decided to disable tracking once the feature became available.

Now the fruitful relationship that most ecommerce businesses had with Apple has turned sour. Businesses have seen a reduction in the amount of data available for them to use for targeted advertising.

With less data, advertisers are forced to cast a wider net with higher acquisition costs. They now pay more to reach the same number of potential customers.

Challenge #3: Google’s Plan To Get Rid of Third-Party Cookies Makes Customer Personalization a Challenge

Ecommerce marketers and Sesame Street's Cookie Monster both share a love of cookies. But alas, Google plans to eventually phase out third-party cookies. This will make it harder for marketers and ecommerce merchants to target and track customers and prospects.

In the U.S., 86% of marketing decision-makers have relied on third-party cookies to some degree. Third-party cookies allow businesses to target users with relevant ads based on their browsing history. Without them, businesses will have access to limited user data. And, of course, this makes it harder to deliver personalized experiences. That struggle to deliver targeted ads could lead to lower engagement rates.

To stay relevant, online businesses must explore alternative solutions for providing personalized customer experiences while respecting user privacy.

Use First-Party Data To Build a Successful Ecommerce Merchandising Strategy

Data Controller on Black Control Console with Blue Backlight. Increase, improvement, control or management concept.

The solution to these challenges is a direct and trusted relationship with your customers. And for that, you need first-party data. This is data that you collect from your customers via your own channels. For example, from your website, social media, SMS marketing, and subscription commerce. 

Compared to third-party data, first-party data is more reliable, accurate, and secure. It also allows you to better understand your customers and deliver personalized experiences. And you can do this without invading their privacy, too!

1. Connect With Your Customers Through SMS Marketing

The great paradox about online shopping is that customers want their experiences to be highly personalized. But, they don't want their personal information to be misused or to serve corporate business interests. Enter SMS marketing. It allows you to engage directly with your customer while respecting their privacy and earning their trust.

While many iPhone users have chosen to opt out of iOS tracking on their mobile devices, customers are more receptive to SMS marketing. A reported 62% of consumers have subscribed to receive texts from businesses. And 52% say they are most likely to opt-in to receive texts from businesses in the retail and ecommerce spaces. With SMS marketing, customers opt in to text messages, which means they have given explicit permission to be contacted.

Additionally, SMS is an owned media channel. This means you control the communication channel, content, timing, and frequency of your messages. It's like having a direct line to your customer's hearts and minds without all the creepy and invasive third-party surveillance. You can use SMS marketing to reach out to customers and prospects with personalized messages that are relevant, timely, and useful.

Smartphone with finance and market icons and symbols concept

For example, let's say a customer purchases a laptop from your online store. You can use SMS marketing to send a follow-up message recommending related products, such as laptop bags or accessories. This message could be tailored to the customer and their purchase and even include a discount code to encourage them to buy more.

By creating your own list of SMS subscribers, you won't have to rely on third parties for your ecommerce merchandising strategy. And Rebuy's integrations with Attentive and Klaviyo can help with that. You can use them to capture phone numbers within Smart Cart™ and send product recommendations via SMS.

2. Harness the Power of Subscriptions To Generate Recurring Revenue

Subscriptions are an excellent solution for ecommerce merchants who are reeling from high customer acquisition costs and are looking for ways to increase ROI for their existing customers. 

When customers subscribe, they pay a regular fee to get products or services from you. This makes them more likely to stick around and buy more from you in the future. Plus, you'll make money on a regular basis. #LifetimeValue

According to eMarketer, in 2023, subscription ecommerce revenue will top $38 billion. That's more than double the revenue it generated in 2019.

You can tap into this lucrative business model by offering subscriptions on your own ecommerce site. For example, you can drive more subscriptions via add-to-cart popups, in-cart subscription upsells, and other ways, too.

After Ritual Zero Proof, a maker of non-alcoholic spirits, added an upsell widget to its Rebuy Smart Cart™, customers were able to upgrade their products to a subscription with a single click. The result was a 66.7% increase in subscription revenue and a 46.3% boost to AOV! Subscriptions also saved Ritual Zero Proof a ton of money because the company didn't have to advertise for those customers to buy.

3. Use Product Recommendations To Personalize the Shopping Experience

Cross-sell concept featuring Related Products

To make shopping more personal for customers, you can use A.I. product recommenders. They are another excellent option for low-acquisition-cost marketing. That's because they use information you already have about your customers instead of expensive ads to get new customers.

Imagine you run an online store that sells activewear. You can personalize content for your customers by incorporating different product recommendation strategies:

  • Best sellers: When a customer lands on your homepage for the first time, highlight your most popular and well-loved products. This helps you leverage the power of social proof to nudge customers toward their first purchase.
  • Frequently bought together: If a customer adds a pair of running shoes to their shopping cart, you could cross-sell products commonly purchased with that shoe. Like moisture-wicking socks or a sports armband for their phone. 
  • Related products: You can also suggest a higher-priced, premium version of the same product with more features.
  • New arrivals: You can use SMS or email marketing to inform customers about new products. This encourages repeat purchases and generates recurring revenue.

Strategic product recommendations like these boost conversions. Plus, they encourage customers to make more purchases without incurring significant marketing costs.

Ecommerce Personalization: The Complete Guide for Founders, Merchants, and Marketers

Your ecommerce personalization journey starts here.👇

Propel Your Ecommerce Business With Rebuy

Fierce competition, rising acquisition costs, and less effective ad targeting. While these challenges can be daunting, they shouldn't keep you up at night.

Rebuy's flexible personalization platform will help you rest easier. Our Intelligence Engine analyzes billions of first-party data points (order data, browsing patterns, preferences, products, etc.). Then, it provides real-time, intelligent insights to create specific product recommendations for each unique shopper.

The result is an increase in conversions, a boost in AOV, and a good night's sleep. 💤

 

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