Growing global ecommerce sales 'leading multinationals to reassess'

Ecommerce functions are being managed through “fragmented and siloed” operating models which need to evolve along with consumer experiences and KPIs, a report by the World Federation of Advertisers and Dentsu International has warned.

Worldwide ecommerce sales will reach $6.2tn by 2023, making up 22.3% of total retail sales, the report has found, while six in 10 respondents from multinationals saw double-digit growth in sales via ecommerce channels compared to 2019.

Ecommerce’s growth was accelerated during the pandemic but is still a small proportion of total sales from 2021 to 2022. For 73% of respondents ecommerce made up less than 25% of all sales.

The study also discovered 50% of major multinationals surveyed described ecommerce as critical and 20% said it was very important currently, a total of 71%, which rises to 93% over the next two years.

Brands that saw ecommerce as more important or are “more exposed” to ecommerce are spending 59% of media budgets on increasing short-term sales.

This is compared to those who see ecommerce as important or growing in importance who set aside 37% of media budgets for driving immediate sales.

Only one in five respondents to the WFA study combined ecommerce and traditional sales channels into a single function whereas most respondents said it was managed in “specific siloed teams” either in sales (37%) or marketing (16%) teams.

Only 28% said traditional sales channels are managed independently from a central ecommerce function.

The research revealed ecommerce leadership and ownership in multinational organisations was “unclear” in most cases. For example, 26% of respondents selected “other” when asked which senior leader in an organisation was responsible for the ecommerce agenda and strategy.

Barriers to further adoption of ecommerce included the need to create or re-engineer existing processes (61%), lack of available resources (58%), warehousing, packaging and distribution (45%) and delivering integrated media planning meeting short and long-term planning (42%).

Another finding of the research was that not enough organisations had focused on developing partnerships with other major retailers aside from Amazon. It said Amazon was a critical part to any ecommerce strategy, but only one part.

The survey found 59% of respondents see Amazon as a major channel for ecommerce strategy while 41% stated indirect online commerce offerings from contracted retailers or wholesalers were a major channel.

Over half (54%) of those in the study said they had established strong relationships with relevant retail partners with joint business plans and appropriate processes.

Social commerce remains “underutilised” while influencer marketing tactics were more common.

In addition, shoppable media had been trialled by all respondents but with “significant room for growth” into 2022 and 2023. Integrating creative and media efforts will be required to grow this.

Only 14% of KPIs listed by respondents related to ecommerce contributions to profit and only one in five were aware of the impact on profitability that their ecommerce activity had.

By 2023, nearly half (48%) of respondents expected to have the ability to understand the impact of all media on sales.

“The Covid pandemic was responsible for triggering a step-change in the growth of an already fast-growing ecommerce marketplace, and these consumer behaviour changes are here to stay. Organisations cannot simply continue with business as normal; they need to reimagine the consumer experience, develop new go-to-market strategies and innovate with how they connect through media,” said Nick Broomfield, global director, transformation consulting, at Dentsu International.

Broomfield added: “At the same time, organisations will need to better integrate their internal operating models across functions to be able to deliver the required changes, cost effectively.”

The World Federation of Advertisers conducted a survey of its members in H2 2021 for its report with Dentsu International, Developing a Successful Strategy for Global eCommerce and Marketing.

The report defined ecommerce as the online purchase of goods and/or services by the end customer, including the ordering and purchase of goods and/or services at a physical venue via electronic/digital devices.

The report is based on responses from 41 major multinationals, across 13 sectors, with 46% in media roles and 48% in sales/eCommerce roles.

The total combined global ad spending of the respondent companies represents in excess of $50bn.