James Glover, co-founder and CEO, Coherent Path
Over the past several years, America’s largest retailers have been on shopping sprees of their own. In 2017, Amazon’s purchase of Whole Foods rocked the grocery world. Its biggest rival, Walmart.com, has also been aggressive over the past few years, gobbling up companies like Moosejaw, Shoebuy, Bonobos and Modcloth, to name just a few. We are also seeing acquisitions within niche retail industries, including Samsonite’s acquisition of both Tumi (2016) and eBags (2017). All of these deals gave the acquiring companies access to millions of shoppers outside their core demographic—and a whole lot of data thanks in large part to their successful email marketing programs.
Retailers are well aware of the importance of email. In a recent test, an Internet Retailer Top 500 specialty apparel retailer we work with withheld part of its email list from its marketing communications. During the test period, the retailer found that customers who received marketing emails spent 68 percent more than those who didn’t. If that isn’t proof enough as to why you need a strong email program, you can stop reading here.
Look at it this way: When a shopper goes to an e-commerce site, they typically have an idea in mind of what they are shopping for. A customer visiting Walmart.com may be in the market for a game console and will shop for just that item without exploring other areas of the site. What’s great about email, on the other hand, is the ability to put hundreds of new products in front of shoppers every year and see which emails they open and which products they click on. This gives retailers ten times as much click and open data as simple transaction data. In fact, a large majority of what a retailer knows about a shopper comes from their email engagement, which makes email incredibly valuable when trying to stitch together a 360-degree view of shoppers and is just one more reason why retailers love digital engagement.
Tying shopping data together from visit to visit isn’t easy, after all. While there are plenty of vendors who will likely tell you otherwise, it is an enormous undertaking to paint a complete picture of an individual shopper—let alone individual profiles of millions of shoppers. A shopper may pay cash, not belong to the retailer’s loyalty program or any number of things that make it hard for the retailer to identify them across channels.
With email, a retailer can see what types of email each customer opens (e.g. ‘Shopper X’ opens a department store’s apparel emails more than its emails about shoes and accessories), clicks on (what they are exploring) and, ultimately, purchases—and everything is tied to a single email address. In theory, a web cookie could do this too, but is far less stable than an email address.
Does Email Play a Role in E-commerce Acquisition Prices?
If email programs are so important, do they play a role in acquisition purchase prices for deals like Amazon/Whole Foods and Walmart/Bonobos? This is a tricky question. Since email is related to e-commerce (i.e. the call-to-action in an email is usually to drive people online to buy), every retailer with a strong email program is driving significant revenue online—making them an attractive acquisition target. So, while an email program might not be the sole reason a retailer acquires a company, email certainly plays a significant role in boosting the company’s revenue and putting them on the radar of larger retailers. When retailers shop for acquisitions, they are looking for companies with high engagement and repeat business. And those with repeat business are certainly doing email right.
But things get even more interesting in email after a company is acquired. A company like Walmart can consolidate all the information they have on customers from the companies it has acquired in the background, based solely on their email address, which is key to their identity. So, if a consumer has shopped on multiple brands over the years—several times a year at Bonobos and twice a year at Shoebuy, for example, Walmart can take that data and score how good of a customer that person would be for them or for any of the other sub-brands. So “good” Bonobos customers, for example, may suddenly start receiving display ads from Moosejaw—indirectly leveraging the data collected across all the retailers’ email programs and, as a result, making display ad dollars much more effective.
There are plenty of other indirect ways retailers benefit from joining this data together on the back end, making email lists of all the acquired companies an extremely valuable asset. My guess is that, over time, you’ll start to see either Walmart-owned companies selling each other’s merchandise on their sites (e.g. Bonobos khakis merchandised in lifestyle photos on Moosejaw’s site) or vice versa.
Email can often get overlooked as a necessary tool in your marketing arsenal that may not be nearly as sexy as Instagram marketing. But the click and open data collected can be invaluable to brands that want to understand their customers more in order to build digital engagement, acquire new customers and grow purchase frequency—ultimately making them prime for an acquisition of their own.
Coherent Path specializes in email marketing optimization and personalization.