Craig Somerville: We got the data, we've got the evidence and we kind of almost a bit more of an understanding of what the new rules of the game kind of are.
Kate Collinson: If 2020 was saw the end of Black Friday, I think that a lot of people would be very happy being included, but I just don't think it's necessarily going to be the case.
Craig Somerville: We've fast forwarded our behaviors probably by a three to five year window in terms of digital adoption, e commerce, adoption, clicking Collect adoption, all those sorts of things.
Kate Collinson: The other night I joined a Zoom sex toy party and it was amazing.
[Voiceover]: Welcome to Add to Cart, the podcast that Express delivers all you need to know in the fast moving world of e commerce. Every month, Nathan Bush from 12 High and an E commerce industry expert will share the news, research and insights that you need to know to keep you at the top of your game and of course keep your customers Adding to Cart.
Nathan Bush: Hello and welcome to Add to Cart. My name is Nathan Bush, host of Add to Cart and ecommerce commerce consultant at 12 High. Joining me today is a return of some of our favorite guests and our friends of Add to Cart, Kate Collinson from Kate Collinson Digital Marketing and Craig Somerville, who's the Managing Director of Reload Media. Between them, they work with some amazing e commerce clients including Nimble Sealy, Sports Girl, Wrangler, Nike, Vino Mofo and Flight Center. We last chatted to Kate and Craig Back on 25 March when, if you remember, we were in the peak of toilet paper shortages, holiday plans had been upended and kids were being homeschooled and driving us absolutely nuts. For some of us in Australia, life has moved on while others, such as those in Victoria, are still battling through these restrictions and the uncertainty. So we thought it was timely that six months since our initial chat that we check back in to see how they are faring and to get their view on how their e commerce clients have adapted to this new Covid impacted world. I'm not going to call it the new normal just yet. If you're an e commerce retailer listening to this and at the moment you're feeling a little overwhelmed at how uncertain and crazy your world has got, I've
Nathan Bush: got news for you, this probably won't help you.
Nathan Bush: You'll find comfort though that in this chat you're not alone. So thanks to our partners Shopify plus and Signet, here's our catch up with Kate Collinson and Craig Somerville discussing the COVID impact. 6 months
Nathan Bush: Kate Collinson Craig Somerville welcome to Add to Cart Again, thanks for having us.
Craig Somerville: Yeah, pleasure to be here, guys.
Nathan Bush: Last time we chatted was six months ago at the start of COVID and at that time you were actually the highest listened to episode. And I think it was just because we put Covid in the title as well as having fantastic guests, but you
Nathan Bush: were like top of the charts for us.
Nathan Bush: That episode went well.
Kate Collinson: That's fantastic.
Nathan Bush: Yeah.
Nathan Bush: And of course you've seen, you've seen the benefits from our hundreds of thousands of listeners, right?
Kate Collinson: Oh, absolutely. Yeah. My LinkedIn's gone crazy
Craig Somerville: dimensions than before. So that makes a lot of sense now.
Nathan Bush: So, guys, six months on from COVID because we were talking at the, on the 25th of March, we were talking last and at that point it was all just a bit crazy. Like, I remember at one point in our conversation, we were talking about planning campaigns for our clients and we couldn't look anything more than 24 hours ahead of that point. That's kind of what we felt at that time because we just didn't know what was coming from a regulation point of view, from a customer point of view. Before we get into what that meant for marketing, what's changed for you guys in those last six months?
Kate Collinson: Personally or professionally?
Nathan Bush: Both. Hit us.
Kate Collinson: Well, I'm, I'm based in Melbourne, so unfortunately a lot's changed for me. But not positively, obviously, we're still in lockdown here. So we, we. Every time I get on the phone to any of my clients in, in Sydney or friends in Brisbane, I'm just like, you guys are living a parallel universe life to us right now. Like, I can't even contemplate it. So, you know, it's. And across all my clients, Victoria has been. Has outperformed every other state just because there's so much more uptake, obviously with online purchasing. So. Yeah, no, a lot, A lot has changed. And a lot hasn't changed in the sense that we been in lockdown for a lot longer than you guys and there's part of me that kind of hates you for that, but I didn't
Nathan Bush: get a chance to tell you what I did on the weekend.
Kate Collinson: What did you do, Nathan?
Nathan Bush: There was a little football game at the Gabba.
Kate Collinson: Did you watch the Saints get pummeled?
Nathan Bush: No, had tickets, but I didn't end up going. Got tickets to the grand final. Thank you. Thank you, Melbourne. Oh, you did?
Kate Collinson: Yeah.
Nathan Bush: We pray for you.
Kate Collinson: I won't hang up. I'm tempted though, so. No, no, like, since then, so much has happened. I think that, I think we've, like, we're probably approaching. We're hoping for Covid normal soon here in Melbourne. But Australia wide, I'm seeing that, yeah, Victoria is still outperforming every other state in terms of online purchasing and thank God for the rest of the states being open because we definitely, we've definitely needed it, especially some of my fashion clients who have weren't seeing any purchases sort of, well, whilst everyone was in lockdown, those sort of lessons, less essential items. So it's again, still very industry specific on my end and I think we're learning to live with it and roll with the punches a bit more. But it's, it's still, it certainly hasn't been as, as hectic as that. That month where we talked, where we had, I think every week was like a month's worth of news. It was, it was crazy. What about you, Craig?
Craig Somerville: Yeah, very similar. I think March feels like a generation ago now in terms of how things have moved on. And you're right, it was, it was just feeling like we had almost daily to what was changing and what was happening in the news. I feel like obviously we're not quite sort of through the worst of it, so to speak, or not through the whole economic crisis. But probably the difference is now that we kind of understand the rules of the game so we kind of know what we're actually playing with and what we're dealing with and things like you were talking about where depending on the stage of lockdown the state might be at or a city might be at or a country might be at. We kind of know how consumers might be behaving or thinking or responding at those different stages. So I think the availability of the data and the availability of the customer research now is just so much more advanced than what it was six months ago where we were really relying on a lot of gut instinct and sort of marketing guesswork. And now we've kind of got the data, we've got the evidence and we kind of almost a bit more of an understanding of what these, the new rules of the game kind of are.
Nathan Bush: And it's, it's brilliant to have you both on because obviously, Craig, you're, you're out of Brisbane. Kate, you're in Melbourne, probably feeling it a little bit more. And as much as I joke about it, we actually do feel, you know, for you guys, that'd be a horrible situation to be in, both professionally and personally. Like you think of the retailers too in Melbourne that are still doing it tough. Some of the clients that I'm working with have Melbourne stores that they've still got shut. So do you feel, and I feel we would get different answers here. When this first broke in March, we were expecting huge job losses, retailers going out of business, the economy stalling. We were pretty much just waiting for 2020 to plummet. Right. And this is before a lot of the government schemes and the rest came in. How much of that has come to life for your clients?
Craig Somerville: Realistically, I don't think an awful lot of it. I think the. The government stimulus has done a job in the sense of it's kept a lot of businesses going or probably more accurately delayed the decision on whether or not they're still viable businesses. We know there's been a lot of disruption. We know there's been a lot of industries that are probably never going back to exactly the way they were before. Travel, tourism, cruising a whole range of different industries that are probably never going to be exactly like what they were. But a lot of the stimulus and a lot of the. The support packages that are out there are almost kind of delaying those decisions for people. And then on top of that, there's a lot of safe harbor legislation that's come in to protect directors who are operating businesses and those sorts of things. So a lot of the decisions about are we still a viable business, do we have a future in this? Has kind of almost been kicked down to 2021. So I think there's a little bit of. We're in a little bit of the eye of the storm around that sort of stuff in that we haven't kind of completely seen the full effects, even though there has been pretty considerable job losses and redundancies across the market and furloughs and a whole range of different things. I still think we haven't seen the whole effect of that yet, and we're probably not going to until sometime into the middle of 2021.
Nathan Bush: Do you expect 2021 to be a worse year than 2020?
Craig Somerville: I don't know if it necessarily will be a worse year than 2020. I just think it might almost be the final bit that kind of really gives us the full effect in total. And it's kind of hard to say which part of it is going to be the most brutal, but I do feel like we're probably going to hear a lot more of businesses actually going into administration and liquidation, whereas we've probably seen a lot of the job losses in 2020. The business losses are probably going to come, or the business collapses are probably going to come in 2021. I'm no economist. That's just sort of what we're seeing from a marketing perspective and how consumers are responding. So don't take that as economic advice.
Kate Collinson: I think I agree though. I think, I think consumer behavior is dictated by how the economy is and consumers willingness to purchase is dictated by how the, how the economy is performing. And if we're looking at things like, you know, investors having to sell off investment properties next year and property prices decreasing and more job losses and potentially as well, particularly when Melbourne comes out of lockdown. I think the devastation of the lockdown will be more evident when businesses don't come back, particularly small independent businesses that haven't been able to survive lockdown. If you walk down Chapel street here in South Yarra, there's every third store has a police sign. I mean it's pretty, pretty brutal. But I think there's a lot of stores that haven't put those police signs up quite yet. And 2021 is going to be very evident. But I think it's a polarizing effect because there are some people who I think have more disposable income than they ever did because they were working a part time job or casual job and job job keeper has given them, has given them more and maybe this and there's other people who are saving on their travel and eating out costs they'd usually spend some disposable income on. So particularly people in lockdown still have, have also spent a lot online as sort of comforts and things to look forward to. So it's, it's a, it's a funny, it's a funny one. I think that I think depending on what industry you're in, you're still struggling. But then other, other, other industries are still getting by quite well or you know, essential products are well so God knows what's going to happen next year. But I do think we haven't really seen the worst of it quite yet.
Nathan Bush: Kate, is there any particular businesses or types of businesses that you are most concerned about reopening when Melbourne comes out of this?
Kate Collinson: Well, not so much E commerce, but bars and restaurants I think is and unfortunately for Melbourne, you know, that's what makes our city so amazing is the diversity of independently owned bars and restaurants. So that's what we're really worried about in terms of when we come out of lockdown, whether or not some of those will be able to survive because they'll have to have outdoor dining. So I think you see some of those businesses already pivoting in really cool ways like to E Commerce. So you're seeing a lot of virtual wine tastings and you know, some, some businesses are doing, are doing things where they like a very high end business like a, like a coda or you know, or chin chin are using a platform called Providor where they're sending, sending everyone gift like packs where you have to cook the remaining steps at home and a couple of friends have sort of have done that and look, they're expensive but it's also a way to support the restaurant. So people have been doing it and I think Melbourne will come back with a vengeance in terms of our dining scene. But I just don't know how many businesses will have been able to survive this period. So that's probably the industry I'm most worried about.
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Nathan Bush: I feel that we've got two types of retail going here, right? Is you've got E commerce. If you're a pure play e commerce you're probably going all right. Whereas if you're an omnichannel, the lift in E commerce isn't making up for the lack of footfall and the investment in stores. It's kind of propping it up and not doing the full job We've seen in the last four months. I think the figures have been that 40 to 60% growth in online sales month on month coming through, which is huge numbers.
Craig Somerville: Right.
Nathan Bush: And reaching up to 15% of total retail, of total retail sales being online, which was previously sitting around the 8 to 9%. Do you think that this type of growth is sustainable and we're going to continue seeing this through to 2021 as well? Or are people going to revert back to their original behaviors?
Craig Somerville: I think the first thing is that the growth itself is not sustainable, but the behavior shift probably is. So what I mean by that is when we get to March Next. And we've got to start beating March of this year's figures. It's not going to be 40 to 60% up. But do I think it's still going to be high? Possibly. I think that the behavior shift is not going to reverse. So we're not going to see that the big growth gains that have happened this year, we're not going to go backwards that in 2021. I don't think we're going to see that level of growth again. But the very fact is we've fast forwarded our behaviors probably by a three to five year window in terms of digital adoption, E commerce adoption, Click and collect adoption, all those sorts of things. And all the research that's coming out at the moment suggests that consumers aren't going to reverse those behaviors that the vast majority of people are reporting, self reporting obviously that they intend to keep up a lot of these behaviors like purchasing online, like click and collect, that they have adopted potentially for the first time during lockdowns and during 2020 and are planning to keep that going as 2021. So I think that's where I sort of see it playing out in 2021. I don't think we're going to be sitting here this time next year and talking about 60 growth year on year of our clients then. But I also think we're going to be saying that 2020 was the year that step changed E commerce and digital adoption more generally. And it was the year that made a significant change to how brands and E commerce and retailers generally look at the whole digital spectrum.
Nathan Bush: But on the other side of that, even though we've done a huge step change, we're still behind other markets like the US and the UK in terms of E commerce penetration. Right. Salesforce are predicting up to 30% of global online sales at Christmas. Being online. I don't think we'll hit that. I think we might hit 15, 20% if we're lucky. Do you think because we're in Australia we've got still a lot more growth than other countries or will that pattern of us being a little bit behind
Craig Somerville: in E commerce continue?
Kate Collinson: I think it has to continue a little bit because of how spread out we are and the price of our logistics. And I think we've seen how much pressure this year has placed on our logistics network, particularly Australia post. So my perspective is that we're never going to probably because of us, simply because of our population size and how remote some of our rural locations are, we're never going to quite get to where the US is at is my take on that. Craig, do you agree?
Craig Somerville: Yeah, I do. I think we're always going to trial the US and European markets. I mean that's just, that's been the trend in digital for 25 years. I don't think it's going to change anytime soon. I think we're always just going to be that three to five years behind. And so I can't see that fundamentally shifting because of COVID alone. The other thing that's really interesting out of the research so far is that a lot of the research being done about how consumers are expecting to behave sort of in the new normal or post Covid shows that internationally there is much more appetite for this change to be permanent than in Australia. So I was looking into some of the figures and it's closer to 70 to 80% of consumers across the world are saying that their digital behaviors and their digital shopping behaviors have permanently changed. In Australia it's around about 55%. So even though we're saying it's a majority of people are changing and there's a big step change happening, even our step change here in Australia has not been as big as what it is in other markets around the world. So I think we're growing but other people are still moving away from us even faster at the moment in terms of their adoption. So I just can't see us playing catch up without something that is unique to Australia and not a global event. Maybe if Covid was just Australia only and not the rest of the world, we might have caught up. But I just think the way it's unfolding at the moment, it's not likely to happen.
Nathan Bush: So it's likely we'll still be in a fast follower kind of mentality still post Covid.
Kate Collinson: And I think it's a good thing for it's not necessarily a bad thing for Australian E commerce that it doesn't become the preferred way to shop. I mean the act of going shopping is an experience in itself and that's never going to go away. I think people always want to be able to touch and feel the types of products that they're purchasing. But I think what could happen is we might see a bit more of what, what I've seen happen in the US where you have more showcase stores. So they don't necessarily, retailers don't necessarily keep as much stock on premise and they and they ship maybe overnight or same day shipping to customers homes, but the customer can still go in and test and experience the product in person. I Think we're going to see a bit more of that, potentially even more so than things like AI, which is, I know, really an augmented reality. Sorry, which is incredibly growing, an incredibly fast rate as well. But yeah, I agree with Craig. I think that I would never predict that kind of growth that we saw in that April, May period, which was just astronomic when the whole of Australia went into lockdown. I think that if we can meet those or remain level with those targets of what we hit this year, next year, that's still a success. I don't think we're going to be sliding backwards, but I don't think that brick and mortar retail is going anywhere, to be honest. And I think particularly after lockdown, people are going to be desperate to get out of the house and go shopping in physical form.
Nathan Bush: Putting on the spot here, what do you think a good growth rate next year would look like year on year on E Commerce?
Kate Collinson: I think it's very specific to the retailer. So I've been working a lot with some merchants on their monthly yearly target. And to be honest, we're predicting drops on at least April, May, we're predicting drops in certainly in traffic and conversion rate, understanding the context we're operating in. So I still think we can, I still think merchants can experience growth next year because there's, you know, they've acquired so many customers. I mean, just the act of people, more people online and the cheaper cost of media during the lockdown period has gained a whole bunch of merchants, a number of different customers and broader customer segments. But I think that, I mean, I wouldn't expect that we can hit the source of traffic and particularly the conversion rates. What I'm worried about next year because of the economic uncertainty.
Nathan Bush: So you think you'll still be a lot of browsers in market, but maybe not pulling the trigger as quickly as this year?
Kate Collinson: Yeah, definitely. And I think even now we're starting to see that behavior. I am across my clients anyway, the browsing behavior and it's, it's typical pre Black Friday, Cyber Monday, but we're definitely seeing a drop in conversion.
Nathan Bush: What about you, Craig? What are you seeing there?
Craig Somerville: Yeah, look, I think in terms of targets for next year, I think particularly when you start talking March, April, May, where there was almost panic buying of home gym equipment and all sorts of other things that people were trying to. They were imagining this world where they're going to be locked in their homes for the next two years and there was just, there was chaos in some of the E Commerce figures and growth Rates, I don't think you're going to even, I don't think you can even set a target around some of that stuff. I mean, some of our clients were 6, 7, 8, 100% up year on year. I can't realistically see him getting near that. But in terms of once you start aggregating over the course of the entire year and you start looking at, well, what happened to the states that were in and out of lockdown, you can start to maybe get a sense of where a good benchmark would be for 2021. And that's probably going to be more like what the rest of the states look like right now. So the states, minus Victoria, where we're seeing E Commerce still up, but it's not crazy up. And I think that's probably where brands are going to be starting to see the, the set the benchmark, shall we say, for 2021. And it's probably a good place to begin.
Nathan Bush: Yeah, I'll put, I'll put it on the line. I got asked it the other day and I said I still think there's about 20% growth next year based on the new customers, which is aggressive, but it's based on the new customers entering the market. We had a million Australian shopping online for the first time this year. And also the investment in E commerce, I've never seen that much investment, especially by some of the older retailers playing catch up. So that investment, I think may only start being giving the return next year once it's actually hitting processes properly, once it's, you know, just part of the organization. I think 2021 is the year to get the most out of that investment, whereas 2020 is just keeping afloat.
Kate Collinson: I think that's so true. And I was talking to a friend, a family friend who's just graduating uni at the moment. I'm like, because he's come out of marketing and I said, get into E Commerce, you're going to be in such high demand. I mean, my clients, we've been trying to hire several ECOM managers just because of just general turnover and change. And it is so hard to hire the E Commerce skill sets in such high demand this year versus last year. I think it's like the growth in investment in E Commerce is going to be huge and unfortunately it'll come down to who can afford to pay the most as well. And I think some of the smaller brands will suffer there.
Craig Somerville: Yeah, I think off the back of that too, we're probably likely to see a bit of a talent shortage. In the E commerce space in Australia. I mean, if you look historically at a lot of Australia's largest retailers and brands, their heads of digital and heads of E commerce have been recruited and poached from uk, Europe, us, Canada. We've tended to pick our heads of E commerce from some of the markets that are a little bit more mature than Australia for all those reasons that we just talked about. And I think particularly with not many people coming into Australia, potentially 14 day quarantines and all those sorts of things attached to it, there could actually be a real talent shortage in the Australian market next year when it comes to E commerce and digital. So I agree, I think we're seeing so much of brands investing in all those things and I know a lot of our more traditional clients are trying to find heads of digital and heads of E commerce, but there's a real struggle there in going from the awareness that this is important and the awareness that digital needs a bigger investment to the actual sort of capability and personnel to execute it.
Nathan Bush: Yeah, yeah.
Kate Collinson: And then you think about how work's changing to remote and the amount of talent flexibility as well that brands had that they never previously might have. So I wonder how much that's also going to balance out the market in terms of hiring.
Nathan Bush: Yeah, it's going to be fascinating. And because I think too, retail is very much coming through the ranks kind of industry too. So there's a huge opportunity for anyone who's in, you know, retail businesses that may be a merchandise planner, that may be a store manager to actually go. If I start getting some E commerce skills because I know the rest of the business, there's never been an opportunity to learn and come through at the end of this as well.
Kate Collinson: Absolutely.
Nathan Bush: What has been the biggest innovation or the biggest pivot that you've seen from a marketing perspective for any of your clients that you can talk about?
Craig Somerville: I don't know if necessarily they're massive innovations, but I think the thing that took me by surprise across March, April, May was how many there were. So I always kind of expected the innovative brands to like your Bunnings and those sort of guys to do and to adapt really quickly. They're good retailers underneath it all. And you just knew that there'd be some smart people behind the scenes who would adapt. And they did things like drive and collect and they did things like the isolation delivery kits for people who had to do four. That was back when I think was 14 day at home quarantine and they had offers where you could have prepackaged sort of stuff show up and you'd have a DIY project to work on at home in your 14 days. So I think those ones were expected. What I was surprised about was how quickly the SMEs moved. So it was our restaurant clients who moved into the home delivery services really fast, or built an E commerce site where they didn't have to use an Uber Eats or something like that, but actually built their own stuff, or the winery client of ours who kind of had to get away from weddings and functions and accommodations offerings and actually kind of turn into a genuine online retailer in a really short space of time. So for me, it was actually those little guys, the ones who you kind of went, if they don't respond here, they could be in a lot of trouble. And just the way in which they pivoted so fast was actually really quite inspiring in terms of how well and how open they were to so many different ideas. And it's amazing how much it kind of drove innovation, I think, right across the SME space.
Kate Collinson: Yeah, absolutely.
Nathan Bush: And have those behaviors stuck or have they reverted back to older forms of revenue now that everything's opening back up?
Craig Somerville: No, I think that's the exciting bit is that they're actually sticking with these things. So it's now looking at that we have more potential revenue streams into the future. So they're in a position now where they get to approach 2021 and go, well, we've actually got more revenue streams than what we did at the start of 2020. And so we're actually better diversified and better prepared for whatever the future might hold. And obviously there's still so many unknowns in terms of bor and functions and venues and how many people you're allowed to have over and all these sorts of things. And we could be up and down and in and out of lockdowns for, you know, who knows how much longer until there's vaccines. So I think there's a. There's a. An awareness now and certainly a preparation that we're kind of a little bit more able to handle these shocks depending on what we sort of get thrown at.
Nathan Bush: What about you, Kate?
Kate Collinson: Well, again, yeah, definitely the restaurants. I think the restaurants have done an amazing job at pivoting at this time when. When you can't eat out. And I think people have. It's been a real joy, especially in Melbourne, to be able to experience beautiful food in your own home. Do I think that's going to continue afterwards? Probably not, because people love the experience of going out. But then you hear really interesting stories. Like, I discovered this staging company that is now building flat pack office furniture online. They're shipping really easily and that sort of thing. So there's some really cool experiences. I've got a funny story, actually. Not funny so much as it might just give your podcast an R rating. But the Zoom parties for various different products and I joined a. The other night I was. I joined a sex toy party, a zoom sex toy party. And it was amazing. It was two hours of mostly education really, but going through the whole suite of the range and it was fantastic and everyone absolutely loved it. And she made about three grand on it. Afterwards, I found out. So, you know, I think it's the way that online is changing the way we sell on and the way sales are done, I think is going to be really interesting. And will that continue afterwards? Maybe for something like a sex toy party where you might not feel comfortable turning up in person to be able to do that online, where it's a little less of a high pressure environment, you can have your video off even if you just want to tune in quietly. I think that the way that it's changed that sort of industry is really interesting.
Nathan Bush: That's brilliant. So much better than a Tupperware party.
Kate Collinson: Yeah, well, they call it a Tuckerware party.
Craig Somerville: That's a great story.
Nathan Bush: And in terms of innovations that you've
Nathan Bush: seen, I mean, obviously we've seen people pivot. We will go to, you know, curbside pickup, contactless payment, click and collect, all that really quickly. What do you think is like the retail innovation that is here to stay and which were more of a fad in response to Covid Look, I think
Craig Somerville: the one that the ones you've talked about, like your curbside collection, you know, you click and collect all those sort of things, I think they were already sort of in and around the fringes of retail, particularly in Australia, and I think have been accelerated off the back of that. But I actually think the one that is going to get more traction is actually the booking of appointments into retail stores. So particularly when retail stores had limits on them and you could show up and then have to join in a giant queue, we had to wait outside until someone left and those sort of things. I actually think the booking of appointments, which was something that was a really fringe offering in retail, so some big ticket purchases like automotive and those sort of things. But I actually think we're going to start seeing that sort of stuff across a lot more retail, that people have kind of realized that the time is precious and If I'm going to get in the car on a Saturday morning at 9 o' clock and go off to some retail store, I kind of want to know that I've got a salesperson I can talk to, that there's going to be someone who can actually give me the proper attention. And I think we might actually see a little bit more of that booking appointment, become part of a normal retailers playbook moving forward.
Kate Collinson: I completely agree. I think especially in industries like fashion where customers can previously they wouldn't shut a store for you unless you were some rich famous person. If you can book an evening to shop in a store and commit to a minimum spend or something like that, I think that booking appointments for a personalized shopping experience will definitely become a bit more commonplace. I was just talking to a client the other day about selling tickets to their online warehouse or to their warehouse sale, their in person warehouse sale because we have to control numbers here in Melbourne in retail stores and it just makes sense to be able for customers to be able to book a time slot, pay a certain amount that's fully redeemable on purchase. So there are, there are some interesting ways that brands are using that booking, that appointment booking functionality.
Nathan Bush: Yeah, we've just implemented one for a jewelry client as well, an omnichannel jewelry client. And it's absolutely that it's the service knowing that I'm going to have someone there dedicated to me to spend some time because they're high value purchases. But it's also knowing that that stock is secured for me so that if I have to get in my car and have to drive 20 minutes, battle some traffic, go into a mall where there's heaps of people around, I know that when I get there it's going to be there for me. People just won't deal with uncertainty anymore.
Kate Collinson: Very true.
Craig Somerville: There's also been a few examples with some of the UK retailers have been doing that pre Covid as well where they had the ability you could shop online, you could fill your shopping cart essentially through full of products. This is in the fashion space. And then when you actually turned that into an appointment, you arrive and those clothes would be ready for you to try on in the changing rooms. So they're actually combining that omnichannel play exactly like you were describing Nathan.
Nathan Bush: Yep. There's a huge upsell, upsell, cross sell opportunity as well.
Kate Collinson: So I think, I think it's a really appealing strategy for men as well because like I just think about my dad and how much he does not like shopping and, and, and he would, he would love, like, he actually loves going to Hugo Boss and just having them like they, they will, they'll, they'll just descend on him and he does it once a year and he buys like a couple of grand of clothes and that's his one shopping trip for the year.
Nathan Bush: That's great. I think an even better system is for the guys to go on and do it and then our partners go in and get it for us. That's just fantastic. Doesn't work for me either. What then do you see over Christmas? So if we're now looking at what are we two months away, two and a half months away from Christmas, Black Friday, Cyber Monday is coming. You know, we've kind of got four big sale events in October, November. What are your strategies for your clients leading through this period? Especially Kate, with what you were saying around the Postal service being under so much strain at this time and uncertainty?
Kate Collinson: Well, I feel like, I mean, certainly as we get closer to Christmas, customers expectations get higher because they need something by a certain date. But I think during Black Friday, a lot of customers expectations are lowered because they know that it's a high volume period and a lot of brands do take longer to ship out. But I think it's interesting, it depends on your industry. Like some stores have a need to clear stock, others have no inventory issues whatsoever and they're just on sale just because they need to stay competitive. I think we're at the stage where a lot of brands have been on sale for a lot of the year just to survive. Covid and I think Black Friday might be less of a big spike this year rather than just a kind of a hill because merchants are starting Black Friday earlier. Some of the starting them as early as like two weeks before to try and get some of that customer wallet share. It's no longer just a week, it's like a month of sales and it's all kind of blending in. So I think we're, this year has been a bit of an always on sale period, which has been very unusual. Have you seen the same, Craig?
Craig Somerville: Yeah, I was going to say, I think it, as you said, it really depends via the industry. So we've got some clients who there's no backlog of stock. They've been struggling to get stock all year because of the issues with flights and logistics and getting stuff out of China and a whole range of other things. So the usual Black Friday playbook of let's put some old stock on discount, let's use it as a way to clear old lines or old collections and those sort of things. Some of those standard Black Friday playbook options have been taken away and so they have to think about it differently. I mean, if you'd asked me about Black Friday this time last year as well, I would have said that there's also a little bit of nervousness around brands and because now that expectation. We were talking before about how in your lead up to Black Friday, you often see a softening of your e commerce sales as you get towards October and into the start of November because consumers start expecting discounts and they start expecting things to go on sale. And if you were asking me this time last year, I would be telling brands who are not planning to that to be clear on that and communicating it out right now to say, hey, we're not going to be participating in the heavy discount periods this year. Covid and 2020 has kind of thrown that out a little bit because everyone's in a slightly different position. So our advice to the brands at the moment is to really work out, well, what are you hoping to use it for? Because you've probably already had a great year of new customer acquisition, which is typically why you discount. You probably don't have an awful lot of stock, or some people might, but a lot of people don't, which is another reason why you would do it. So I think it's really about understanding is there a valid reason to get involved in a heavy discounting cycle this retail season? Because you may just be shredding margin for not an awful lot of actual business gain. And I think that's the bit that every brand has kind of got to really do the analysis on before they start pumping out 40% off coupons on email.
Kate Collinson: So true. I feel like Black Friday has become one of those, those, those holidays that actually merchants are starting to resent because customers expect that they are on sale and a lot of customers are holding out for whatever they do on Black Friday. It's one of those, those promotions, it's really hard to get cut through because it's so noisy. And a lot of merchants are just on sale because they're expected to be. If 2020 was saw the end of Black Friday, I think that a lot of people would be very happy being included, but I just don't think it's necessarily going to be the case. But Black Friday is. It's one of those things that I've had a lot of conversations with clients about how do we be creative in Black Friday? And we've come to this conclusion where it's like, we just don't need to be. We actually just need to participate simply so that they customers who have been waiting until Black Friday can get the little boost of savings that they're expecting or needing in order to complete their transaction and save some larger sales and some bigger promotions for when we can get more cut through in a quieter period.
Nathan Bush: Yeah, I agree. And I think when I've been talking to people about it, it's about having, if you're going down that path, more frequent sales on a smaller range of products earlier in the year. And all you're trying to do there is to bring the sales forward so you can capture the market but also get the Christmas shopping out of the way before that peak peak hits postal service in December. Basically try and bring that shopping forward and then you're not overwhelming your customer service and your warehouse teams late in the day, trying to do everything that's pretty much out of your control to make customers happy. Because an unhappy customer at Christmas is the worst type of customer.
Kate Collinson: And that's absolutely true.
Craig Somerville: I think the Christmas one is a really, really valid point because, I mean, we talk in Australian logistics standards about when we start talking about Christmas campaigns. There's always. Most Australian brands have to advertise their cutoff date. So if you don't order by, you know, December 12th, we can't guarantee pre Christmas this year. I feel like that cutoff date to guarantee delivery before Christmas is going to have to be sometime in mid November. Right. Which is crazy because that's logistics stuff we're dealing with. So if brands aren't on top of that and starting to think about, well, a lot of, you know, Black Friday and Cyber Monday could actually be very much combined with a lot of the Christmas campaigns here because of the way that logistics network is going to backlog and there's going to be pretty significant delays across that because we saw what happened in March and Australia Post were reporting in March that they were doing Black Friday Cyber Monday levels every day and we saw the delays they were actually translating to in March. So if you multiply that, roll that forward to now, where we've still got the same set of conditions, where there isn't a lot of domestic flights happening, there isn't a lot of logistics in, in market to be able to get these products to people, it's going to put an awful lot of pressure. And I think brands have got to be really upfront and really on the front foot when it comes to their communication around that.
Kate Collinson: Yeah, absolutely. But also Auspost has known about this for several months now that Black Friday is going to be the biggest ever and possibly, you know, double the size in terms of delivery. So, you know, arguably you'd have hoped they will have ironed out a lot of the issues that they would have expected if this had happened in March. Right. So I think, I'm hoping that it won't be quite as dire as we're predicting. But, but I agree, like, I think a lot of brands are not thinking about the other messages they can use when it comes to promotions. Everyone always reverts straight to discounts. But there's a lot of other levers you can pull when it comes to driving conversion rate. It could be urgency, it could be limited stock, all these other levers that you've got to remember that you have at your disposal. So think about exclusivity, think about communicating stock levels, think about all those other options you have rather than discounting. If you're not going to go down the discounting route in Black Friday, that's
Nathan Bush: such a great point because we've got those levers that we didn't have previous years. The customers understand that urgency, the guarantee and, you know, all that's so important now that it wasn't as important. It was just expected before.
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Nathan Bush: had such a great conversation, but I can't let you go without talking about marketing because that's what we're on for. So when we were first talking back in March, we saw things like, like the CPCS starting to rapidly decline as a lot of retailers pulled their spend while they were trying to work out what was going on. Tell us about the last six months of the marketing landscape and what you've seen around return on investment and specifically any channels that you've seen evolve in those last six months to be really great for your retail clients.
Craig Somerville: So I think when we were talking in March, we were talking about how there were some advertisers pulling out of the space, which was actually lowering the cost of advertising inventory across the board, that didn't last long. So that probably, I think probably was gone and dust done and dusted within two or three weeks after that date. Because the initial panic that some of the brands had and decided to pull back on advertising spend was over very quickly. And a lot of them, three or four weeks later realized that, hang on, this isn't going anywhere. We can't just not advertise forever. That's not going to work either. And so they came back. Now, it did have a flow on effect though, because obviously the way a lot of these advertising products work is that when you're out of the game for a little bit, it actually impacts on how the systems actually treat your ads and the performance of them. So the guys that held their nerve, which is what we were advising on the podcast in March, but the guys who did hold their nerve and kept their advertising up, kept their marketing going, did see a stronger return. And we can see that across our client base, the ones who sort of followed the advice and went keep in market, keep targeting the right customers have had definitely had stronger years when it comes to their return on ad spend and their investment return than what those who may have gone in and out of the market based on what lockdowns were up to and various other sort of speculations. So as a general rule, I'd say that those who kept their hands in there did better than those who didn't. In terms of the question around channels and that sort of stuff. I don't think necessarily for us there's been any one particular channel that's shown massively stronger performance than the others. I think that it was fairly universal across the board. The effects people were either pulling, they weren't sort of being selective and saying, oh, we'll keep our Google spend going, but turn off our Facebook. It was largely around we're going to scale everything back and then scale it back up again. So I don't know necessarily it was channel specific, but we did see certainly from a type of campaign that acquisition campaigns performed really well because. Because as we all know, during times of economic uncertainty, that's actually when market share moves around the fastest. We actually talked about this on the POD in March as well, that when there is a bit of uncertainty, customers are very keen to switch or very open to switching between brands and we saw that I think during that period, particularly the March, April, May period there was a lot of brand switching and a lot of our clients who had pretty aggressive acquisition campaigns in market did really, really well off the back the of up.
Nathan Bush: Cool. And what did you say Kate?
Kate Collinson: Agree with all the above and I also think that costs are definitely media costs are definitely in a different position to where they were when we last spoke. I'm finding roas is a bit of a struggle at the moment. I think that there's a lot of people browsing and expecting sales and expecting to. I think there's a reluctance to spend, to spend retail right now to pay retail because there are so many brands on sale. People are expecting bargains and discounts. They're mostly buying when things are on sale. So I'm seeing big spikes in my clients traffic and sorry conversion rate when they're, when they're on sale and not so much with new product unless it's limited stock. But Overall I'm seeing CPMs are definitely higher and I think that's because again E commerce has grown so much as an industry. There's a lot more players in the market, there's a lot more ad spend going on and I think for that reason Black Friday is going to be more expensive. And I often don't see the roas from Black Friday come anywhere near as close as Boxing Day for example because there's so much global competition versus just Australia wide competition. So I think for a lot of brands it's a struggle right now on social ads and it's about really finding that audience and probably running a couple of always on sales or pulling a few of those other alternate levers that you can to drive the needle but really preparing for Boxing Day to be maybe the time when you see the big, the biggest margin.
Nathan Bush: Yeah, nice. And it also feels like there hasn't been much change in those channels in the six months. So we've had some small updates like Google have changed their my business, you know fields and ability to put Covid safe and all that sort of stuff. We saw Instagram rollout shopping but it was mainly in the US it hasn't really hit here and it feels like we've just spent our whole time wondering who's going to end up owning TikTok rather than any like and TikTok has
Kate Collinson: not fulfilled the promise of becoming the next advertising platform. I found that not surprising But I mean TikTok grew so substantially in users over lockdown and yet Their ad platform hasn't really taken off. I've experimented with it with a few clients and we haven't really had fantastic results.
Craig Somerville: I think that's often really the case with some of those newer social media platforms is that their advertising sophistication early on is just not there. But the fact that there are users there and you can still get quite significant traction from an organic perspective means that for some brands they're worth persevering with and for others they're not. But it is something we kind of expect to evolve a little bit more over the coming years. So a lot of our clients for those sorts of platforms, we would just advise doing test and learn campaigns and keeping fairly small budgets across them just to see if there is any potential return and trialling those during particular campaign windows. But yeah, it hasn't. To your point, Nath, I don't think the advertising landscape has massively shifted in that six month period. I think we've just had to change the tactics and the metrics mechanisms we use on those platforms more than anything else.
Nathan Bush: Yep, good call.
Nathan Bush: Now to wrap up guys, we've had our pre six months. Now if we look at the next
Nathan Bush: six months, if you were sitting in the seat of an E commerce manager, what would be the three things on your roadmap for the next six months that you'd want to invest in?
Craig Somerville: Okay, so in terms of the things that I would be looking at if I was sitting in E commerce right now, I think the first thing is just digital transformation generally. So a lot of the brands that we've worked with have used this time to up their inventory management stuff, up their ERP planning. You look at CRM systems and having better customer relationship systems behind that. I think there's been a lot of work gone into getting the digital infrastructure in place because of the step changes that we've talked about. And that's only going to continue. The second one for me would be to be investing in virtual and digital customer service experiences. So whether that's online product launches like Kate was talking about and product demonstrations like Kate was talking about earlier, or whether it's just new ways to launch particular things or have zoom sales calls and those sort of things, I think a lot of brands have got to think about all the stuff that used to happen face to face and we used to be able to rely on happening face to face. How do we get a digital version of that? How do we do that on mobile devices, how do we do that on desktop, how do we do that on tablets and how do we engage with customers into the future. And the third one, which won't be a surprise to anyone given what the game that we're in is to keep marketing marketing, the rules are going to keep shifting, we're going to have economic changes, we're going to have the seasonality changes, we're going to have to start doing a whole range of different things into 2021. And so it's going to be all the same messages we talked about six months ago, which is you've got to keep trying new things because we might talk about something great on this podcast because not many people are doing it. But then in six months time it's become a bit more of a known thing within the marketing game and you kind of got to adapt again, again. So it's that constant innovation for me. So they're the, they're the top three that I would be putting forward.
Nathan Bush: Great. So we've got digital transformation, virtual customer experiences and continue investment in marketing from you Craig.
Nathan Bush: Kate, what about yourself?
Kate Collinson: Yeah, absolutely agree. My three would probably be firstly third party logistics and just automation as much as possible of inventory and communications across, across different departments depending obviously on how big your business is. I think that logistics as E commerce grows as a whole is going to change in Australia and it's probably going to jump in terms of development several years. So I think that making sure you have a solid 3 PL in place and that your customer service around that. So secondly, customer service I think is really important because as people spend less time buying in store they're going to attend, expect that same level of customer service they get in store online. So investing in other platforms for customer service as well in order to make sure that you're getting back to customers in a timely and sufficient manner is super important. And then thirdly, I'd say that I think there's a real opportunity and obviously depending on retail store stores sizes, I think there's an opportunity in physical still I think that E Com is never necessarily going to always operate as a pure play and, and with rents and the number of lease signs I see on the streets these days, particularly in Melbourne, but I'm not sure if the same is in Brisbane and Sydney and other parts of Australia. But rents are down and there might be a real opportunity to either acquire a short term pop up or something to showcase your product in person. I think even when people come out of lockdown or when we get into summer, there's going to be more markets, people looking for physical activity and physical ways to experience a brand after this digital era that we've had this year. And I think that the more brands can also take advantage of that and try and access customers that way will be really a bit more unique and definitely a strategy that you shouldn't forget about when you're running an E commerce store.
Nathan Bush: So get back to having a bit of fun in physical retail.
Kate Collinson: Yeah, absolutely.
Nathan Bush: Awesome. So we've got logistic operations, customer service and showcase stores from uk. That's fantastic. Kate and Craig, thank you very much for joining us on Add to Cart. It's been fascinating to look back on where we were six months ago and to see where we've got to and it's great to see that we're just as unsure on what the next six months hold. So that's, that's a great outcome, isn't it?
Kate Collinson: But we're all in it together.
Nathan Bush: Oh, stop it. You're in it on yourself, Victoria. I mean, no, we're here with you. We are. We are here with you, Kate.
Kate Collinson: That's right.
Nathan Bush: If people want to contact you guys to discuss anything further from what they've heard today, what's the best way for them to get in touch with you? Start with you, Kate.
Kate Collinson: For me, probably LinkedIn or my website. Kate collinson.com and Craig.
Craig Somerville: Yep. You'll also find me on, on LinkedIn. And of course you can check out our website, reloadmedia.com as well.
Nathan Bush: Beautiful. Thanks, guys. Kate, we are hoping that you are out of lockdown very soon and that all your Victorian clients are hanging in there and we're back to normal very soon.
Kate Collinson: Thanks, Nathan. Appreciate it.
Nathan Bush: That was a little bit like e
Nathan Bush: commerce therapy, wasn't it?
Nathan Bush: Was for me, at least.
Nathan Bush: Kate and Craig have a brilliant insider's view across a range of clients and industries and they're seeing right into people's Google Analytics accounts. But even they, as you heard, don't have any certainty over what the future holds. And just quietly, guys, I'm a little bit disappointed that you weaseled your way out of that question around giving us a growth figure for 2021. Answered like real politicians. We're going to get you next time. But what Kate and Craig have given us is some brilliant insights around the
Nathan Bush: patterns that they are seeing.
Nathan Bush: Some you might already be seeing in your business, some might be new. For me, their advice around that upcoming silly sales season and having a purpose for why you're participating in 2020 really hit home. Now, it's likely you won't be in the same position this year as you were last year heading into these sales, you've probably already beaten budget, you've healthily boosted your new customer database, and you may even be running low on stock. So if all that has changed and they were the primary drivers for your silly season sales, what are your objectives now? It's certainly something to think about before diving in and giving margin away. If you're looking for more e commerce news, case studies and research, sign up to 12High's High5 newsletter. Every week I read all the e commerce news and send you five things which I've found which will help grow your business. Visit 12high.com auhi5h I g h5 to
Nathan Bush: sign up for free.
Nathan Bush: Thanks for listening and until next time, keep adding to cartoon.
