How Retailers can avoid war between online & offline P&L holders …

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Looking back, I can see that many business projects start out as follows …”Putting aside the fatal flaws, let’s discuss details A,B,C”. Huge issues like conflicting incentives never get resolved, and the inevitable result is failure. It strikes me that traditional retailers have one such big issue they need to address – how to make the online and offline P&L holders play nicely together (for as long as these P&L’s stay split). In-store digital requires these P&L’s to dance vigorously on each other’s feet, and leaving it up to executive altruism to reconcile this is not a viable strategy.

This problem has been solved before – the concept of ‘assisting’ a sale is well understood, tracked and remunerated in the online world already. Affiliate sites act as virtual ‘showrooms’ with the transaction happening elsewhere. TradeDoubler and Affiliate Window have built the ‘honest broker’ infrastructure to track this and enable everyone to play nicely together. I suggest we need to implement something similar to sit between real world showrooms and online stores – enabling both to act as ‘affiliates’ for the other. In such a solution one would not just track ‘clicks’ as one does in the online world, but physical presence in store (browsing the shelves), use of returns facilities etc… to track leads and ‘attribute’ value. Services that ‘recognise’ your presence in store (rather than at the checkout) will be particularly useful in this regard (e.g. Pay With Square, ShopKick etc…).

I believe such a service is needed to manage the P&L tension within a single retailer (between stores and online). But one can imagine a world also where physical ‘showroom-ing’ also links to 3rd party online stores, with appropriate ‘affiliate’ commissions being paid for the leads generated.

In time the P&L split between online and offline may dissolve, with physical stores treated as just another marketing channel in a unified P&L. Even in this case however, we will still need/want a way to track how these channel contribute and inter-play with each other. Extending online into offline analytics (and vice versa) is a huge growth area … and one I’m keen to be involved in.

2,959 thoughts on “How Retailers can avoid war between online & offline P&L holders …

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