Percent Of Retail Sales Selling Online? Bet You Don't Know The Answer!

Before you read any further in this blog, take a guess at what the answer is to the question below…

What percentage of total U.S. retail sales takes place on the Internet?

While you are figuring out that number, I will share with you some observations.

I remember attending a marketing conference and listening to a young lady from one of the large New York ad agencies talk about the work she does with a large Consumer Package Goods (CPG) client.

Her specialty is online and social media marketing. She was the VP of a group of more than two-dozen folks at the ad agency.

She talked about the great targeting message strategy she developed based on both content and online behavior of the CPG online consumers.

Her team was proud of the “very cool” predictive models they built.

I asked how those models could then translate to more conventional marketing and promotional sales programs.

She smiled and said, “well, not much… they are based on detailed online behaviors and are constantly being updated and remodeled.” 

She went on and said… “And conventional media channeling is really useless for marketers because soon everything will be done online.”

Those attending the marketing conference very quickly shook their heads in confirming agreement.

I then asked her, “How many customers are in your online audience base?”

She put up a slide and said, “just over 22,000.”

“Wow” was my reply.

I remembered how a fast food franchise had just told me the day before that they rejected a retail site because it only was drawing a daytime working base of 40,000 folks vs. another one that was drawing in double the number.

I preach a bunch about rifle-targeting in the blog posts and often harp on how media folks are programmed around “the bigger the reach – no matter who is being reached – the better the media option.”

The answer to the question that I posted in the second line of this blog post?

Here is the quote from the article in this week’s WSJ article…

“Online purchases account for just 5.8% of total U.S. retail sales in the second quarter of 2013, up from 5.1% a year earlier.”

Wow.  That’s phenomenal growth!

The reason why I took time out to write this blog is that there is an overwhelming belief among some of the most educated and trend sportscasters that the web is dominating everything, everyone, every where.

Social media and website marketing dominate the seminar subject agendas.

The 20-something Millennials streaming into the ad agencies believe that newspapers are just rotting on the vine and that everyone gets their news onine.

Retail store marketing?  Well shoot, that’s easy, get cracking on your Facebook storefront.

Even the by-products of the incest ad agency mega-mergers, the Madison Avenue Ayatollah preach that it’s the web firms that are the money makers and that conventional media buying can be automated online.

All for that 5.8% of the retail revenue sales volume and those 22,000 CPG consumers!

I guess that other 94.2% of sales must be dwelling in the Stone Age!

Maybe its because I am a Baby Boomer that I did not rule out the day that the travel agencies would be back.

Or that the retail store fronts still had a place and a role that probably would become even more important as the Millennials enter the home ownership phase.

Or that those community newspapers were not likely to fade away.

Maybe the most fascinating part of the WSJ article covering these new statistics is the significant amount of the article dedicated to sharing just how difficult it is to secure online sales figures.

Just as it cites in the article, reporters would call the online sales divisions and they would either (a) change the topic and show the reporters some new website tools… (b) play stupid and say that they did not track that information in their department … or (c) talk about how difficult it is to measure online sales.

Reminds me of my niece with the chocolate covered hands and when I ask if she got into the candy jar and she replies… “I don’t know.”

My prediction?

Board members and shareholders are not smiling right now when they read the article and figure out the ROI of all those investments and staff hires they approved to fund the generation of 5.8% of sales. 

The Discovery Of Insight And Brands Embracing It

There’s an article on the front page of today’s WSJ Marketplace titled, “Subaru’s Got A Big Problem: Its Selling Too Many Cars.”

Not sure how many of the readers have seen any recent Subaru advertising, but the ads might be some of the very best that capture the emotional context of the brand experience.

There are no spokespeople, no cars driving in an unrealistic environment, no cars speeding at 100 mph, no gimmicks, no animation, no flashing rebate numbers.

The ads are snapshots of the common life of their brand equity target customers.

The picture of the Subaru in this morning’s WSJ displays the Subaru SUV up against a backdrop of a forest of trees.

The name of the model showcased is “Crosstrek.”

Some of my friends say that I watch way too much television.

And I am the first to say that television is really no longer the premiere medium of advertising. 

Broadcast today spans the spectrum across everything from the laptop to the smartphone to the iPad… anything that connects to the Cloud.

One of the reasons why I watch television is to watch the commercials.

Sometimes, I actually watch commercials, see how bad and off target they are and then pick up the phone and connect with the CEO of the brand being advertised and actually net new business.

I don’t make that up.

There are a lot of brands out there today in which the ad is nothing more than the CMO speaking from a podium about the physical make-up of the physical brand. 

Nothing about the brand experience and interaction with the brand.  Nothing about the person using it. Nothing emotional.

As I have shared in this blog before, in order for the human brain to store something encountered in long-term memory, the right side – the emotional side – of the brain has to be stimulated.

Now back to Subaru. 

If you Google Subaru, there is a set of links that appear on the first page about how Subaru has become the top brand purchased by Lesbians.

I can see how Subaru might be favored by Lesbians.  Go back up a few lines and read about the picture of the Subaru Crosstrek in this morning’s WSJ.

Whatever the case, the ads that are running right now on TV capture the experience and not taut how the vehicle physically is built nor place the car racing on an imaginary, high-speed track.

Subaru is cashing in on how insight can drive their car sales. Literally. 

There’s another set of ads that I applaud.

They feature the brand experience and interaction with one of the P&G brands… Swiffer. 

When I first saw one of the ads, I immediately thought there had to have been one fabulous account planner working with the P&G creative team.

The ads feature an older retired couple interacting with the product.

Part of me thinks that the couple might just be the grandparents of the account planner and he took the camera guy over to their house on a Saturday morning unannounced and gave them a Swiffer and said try it out.

I don’t really think that P&G is running the ads to target seniors.

I think that the ads actually target the Millennials.

The Millennials likely perceive the senior couple in some ways like their “helicopter parents,” and the commercial as a YouTube video.

All of that is much more trustworthy to a Millennial as they watch “TV” on their iPad.

I know that for some of the MBA marketing folks and agency A/Es, I might be speaking in a foreign language they don’t understand.

There is actually a series of these Swiffer ads and they are all smack on target as far as I am concerned.

Lastly, there was an article about 10 days ago in the WSJ about KIA and the success of their KIA Soul ads.

These are the ads with the hamsters driving the KIA Soul and dancing to funky street music.

KIA developed the Soul and launched the campaign to target Millennials.

The article cites KIA Soul 2013 sales exceeding projected goals.

Fascinating however, is that the folks buying KIA Souls are not the Millennials. 

But, instead, the Boomers.  The Aging Boomers.

Turns out that the jiving Hamsters reach deep into the Boomer headset and bring back the nostalgia of their youth.

Left-brain MBAs and A/Es will understand this… the KIA Soul is also a quasi-SUV that is very easy to get into vs. the conventional SUV.

There’s a bunch of hype this week about how media buying is being automated.

Some of the writers go so far as to speculate that advertising, as we know it, will be automated soon too.

Some folks… especially the ad agency A/Es like to tell clients that what I do is research… data analytics.

Actually computers can do data analytics far faster than I can.

That’s why I type these blogs on my MacBook Pro.

My title is Discovery Chief.

Computers… and left-brain MBA execudites… often fail at discovering insight.

Folks like me and the observant, grass-roots creatives working on brands like Subaru, Swifter and KIA Soul indeed glean insights and bring brands to life by embracing the insight!