Reason #3: Apps = Middlemen 

 November 29, 2022

By  HiFlyer

This ecommerce strategy article is an excerpt from our new book, The Ultimate Ecommerce Email & SMS Playbook. We’re diving into our ecommerce strategy chapter focused on the 7 Reasons Why Ecommerce Customers Leave Your Brand.

In chapter two, we’ve established that apps and direct-to-consumer brands are inserting themselves between you and your customer.

What you need to know is this: apps now have all the information they need, and they’re soon going to be pressured to profit from it. 

Let’s take Peloton: they accelerated quickly during the pandemic and now, as 2022 began, quickly stumbled due to a misforecast on product demand. Peloton quickly learned that the demand from pandemic customers isn’t the same after the pandemic craze subsided, and they’re now under pressure to maintain revenue goals before people go back to the gym. 

DoorDash and UberEats are in a similar predicament. Remote workers, who relied on these apps for quick delivery in a restricted restaurant sit-down environment, will soon be returning to the office and their beloved lunchtime routines. 

Going “back to normal” means fewer customers ordering via app and preferring to walk a few blocks to their favorite lunch place. That means DoorDash and UberEats will need to find new ways to monetize their newly acquired customers as well as raise their fees and percentages from restaurants.

For these apps, there’s one path forward: monetizing their existing customers with a solid customer retention strategy. Peloton, ShopRunner, DoorDash, UberEats, and more will prioritize retention over acquisition these next few years, trying to extract more revenue from their base through upsells, value offerings, and loyalty programs. New offers to increase customer lifetime value, customer loyalty programs, and financing offers will pop up, and your brand will be forced to compete with all these new value propositions. 

One of the most likely outcomes from these apps will be retail media networks; essentially, this means advertising options for the brands and stores selling on their platform. Take UberEats: they have hundreds of thousands of restaurants on their platform and can now extract advertising dollars from every restaurant. ShopRunner can monetize the retailers on their network and position top spenders higher than brands like yours. These media networks will help apps get a quick cash injection and monetize their customers while potentially positioning you lower than their advertisers in search results.

Apps have inserted themselves between you and the customer, and now, as the pandemic subsides, you’re facing an uphill battle to win those customers back to your brand. The e-commerce brands that will win are the ones who act now and create a rock-solid customer retention plan before the apps kick off their value stacking, media networks, and loyalty programs.

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