The Evolution of Shopping

Click here to order the November 2017 issue in which this article appeared.

Remember when getting online was a big deal? Twenty years ago, internet connections were wire-bound, sporadic and slow. Email addresses and web access at work were the exception. We flipped open a cellphone to make a call and that was about it.

Web-based and mobile technology seemed so cutting edge, but it was only developed enough to allow us to make a lateral move from conventional communication channels. So when omni-direct lifestyle company Youngevity International launched in 1997, its founders didn’t think much about having an online presence. Not many consumer product companies in any sector did. “We didn’t even have our own URL,” says Steve Wallach, CEO of the Chula Vista, California company.

In fact, the U.S. Census Bureau didn’t start tracking online sales until 2000, reporting $5.3 billion for the fourth quarter of 1999 as its first statistic. These dollars represented only 0.6 percent of the total retail sales reported.

As wireless communication became faster and more ubiquitous, we started to use our computers and phones in ways they had never been able to do before. Youngevity and others realized that the web was becoming an indispensable tool for growth and customer engagement. New questions began to emerge in boardrooms and marketing offices: What’s our brand’s digital strength? Are our products shareable? How many followers and likes do we have? Concepts that would have sounded like undecipherable slang years ago began to occupy a good portion of the marketing strategy and budget.

The ease and speed with which consumers can connect today has made being online no big deal and a bigger deal than it ever was—especially when it comes to shopping. The Census Bureau reports that the dollars spent online in 2016 had grown to nearly $390 billion—representing 8.1 percent of total retail sales—with no end in sight. The dollar amount estimated for 2017 year-end tops $450 billion. Research firm Forrester’s report, “Forrester Data: Online Retail Forecast, 2017 to 2022,” projects that e-commerce will account for 17 percent of all retail sales in a short five years from now.

Following the trail that Amazon and eBay have blazed, retailers are pouring massive amounts of money and time into virtual versions of themselves to keep up with consumer demand for instant access to their favorite brands. The National Retail Federation says e-commerce will grow by as much as 12 percent this year alone, and a recent study by Astound Commerce, a digital commerce agency in San Francisco, says brand manufacturers have an advantage in the quest for online customer loyalty. More than half of the online shoppers it surveyed said they turn to brand websites over retail websites for product information, customer service and better prices.

Clearly, the continued growth in online selling and an increasing preference, particularly among millennials, for buying directly from brand manufacturers can only be ignored at great peril. Companies that have not fully embraced the digital storefront as the independent consultant’s ally in competing with retail may find themselves left behind.

Only those companies that critically examine their sales strategies and ensure their online brand message is strong will be fit survivors in the shopping evolution.

Getting into the Game

Direct sellers, especially legacy companies, have traditionally been late to board the e-commerce train. It makes sense, given that at its core this channel is a person-to-person business. But as technology becomes a critical business management tool for distributors, and as regulators push the channel to connect more directly with end customers, e-commerce must become a priority for any company that wants to stay competitive in the sales game. Many have made this commitment; the proof is in the size of their technology investments.

LifeVantage, a health and wellness company headquartered in Sandy, Utah, has a similar story. “Ten years ago, we probably did not spend even 1 percent of our top-line revenue on technology initiatives,” says Stephanie Kelley, Vice President of Brand Strategy. “Now I think companies in our space are devoting 2 percent to 5 percent of top-line revenue to technology.”

Personal care and wellness brand Arbonne first launched e-commerce websites for its independent consultants in the late 1990s, but over the past decade the company has significantly ramped up its digital marketing focus. Ten years ago at Arbonne, “there may have been one person leading the digital development,” says Chief Creative Officer Michael D’Arminio. The Irvine, California-based company has since expanded this department, hiring an in-house social media team, an email marketing team and user experience experts. Arbonne has also built a film studio that broadcasts live and produces videos for later use, all in support of the sales field.

Recent regulatory pressure to track and market more clearly to retail customers also is driving changes to the channel’s e-commerce strategies. Direct selling companies are making big investments to reconfigure back-end systems so consumers can buy product online without seeing any messages about the business opportunity, making their sites look more like, and be more competitive with, other retail sites.

Wallach says having a more conventional shopping portal is especially important for Youngevity, which has a wider variety of products than many of its peers. “We have tens of thousands of SKUs (product categories),” Wallach says. “We have to act like a retailer that manages multiple brands.”

Social Standings

Websites were the first e-commerce frontier. Brick-and-mortar multibrand retailers figured out early on that their websites couldn’t be just digital billboards—they had to be interactive online stores. Brand manufacturers have been playing catch-up as they realize that shoppers will buy directly from a brand’s website if it offers a larger assortment of its products, sizing tools, customization options and more-detailed brand information, says Lauren Freedman, Senior Vice President of Digital Strategy at Astound Commerce. And a strong brand supported by social media packs a double punch.

Social media is online shopping’s newest frontier, and it couldn’t be more fertile ground for direct sellers simply because both were built around the idea that people want to connect with others who share their interests and goals. This common bond can be leveraged by making it easy for distributors and customers to see and share content about products they love on Facebook, Instagram, Twitter, YouTube, Pinterest and Snapchat. Astound Commerce’s research shows that the more visible a brand is on social media, the more visitors that brand’s website will get. Of the online shoppers surveyed, 51 percent said they are prompted to visit a brand manufacturer’s website after seeing an ad in a social media feed.

Napa, California-based WineShop At Home is especially ripe for a social media strategy, says President and CEO Jane Creed. “There is great alignment between our brand and what social media is,” she says. “The wine-tasting experience is social, and it can go across any medium. It was created thousands of years ago—I’m sure they wrote about wine on tablets!”

When Creed says any medium, she’s serious. WineShop’s consultants routinely work with hosts to conduct virtual tastings, with the consultant in one state leading a tasting party in another state through Facebook Live, Skype or Google Hangout. Tasters learn about the wines, compare notes and then place their orders online. “You can raise your glass online as easily as you can in person,” she says.

The hard work direct sellers are putting into raising their social media profiles is paying off. Creed says WineShop is on track to grow its social media presence by 20 percent in the next year. Arbonne Chief Sales Officer Ashley Good says the company’s global corporate social media profiles include more than 800,000 followers, and if you add those who follow its 250,000 independent consultants, that number exponentially increases. Arbonne’s consultants and customers regularly share videos from its Facebook page and YouTube channel, too, bringing the views to more than 5 million just since April.

LifeVantage and Youngevity, both of which have traditionally drawn a slightly older demographic, are seeing their corporate and distributor social media page followers grow into the hundreds of thousands as they broaden their appeal to millennial shoppers, who often become consultants.

Social Strategies

Social selling via social media is a deceptively sophisticated process, company officials say. Casual social media users don’t usually think about how their posts and tweets reflect on their personal “brand.” But a direct selling company needs its brand story to be consistent, clear and positive. That takes planning and oversight—especially in a medium where information can go viral in minutes and in a channel with independent consultants who want their marketing to be as personalized as possible.

Executives who talked to us for this story have similar approaches to managing social media messaging. Cross-functional marketing teams write content and create videos and images for posts on the corporate-run social platforms and for consultants to share through their own social channels. Consultants also have access to templates and tools to create posts that align with the company’s brand while still reflecting their individual needs and style.

Good says Arbonne sees its social media presences as a “blend of what our home office does on our platform plus how we enable our independent consultants to create their own organic content. If they were all sharing just the exact same post from Arbonne, it wouldn’t resonate as real and true.”

Part of keeping distributors’ organic social promotions on brand is making sure they don’t run afoul of regulators. Sometimes in posting about a personal experience with a product, a consultant will make an innocent statement that violates product claim rules, Kelley says. “We have to monitor all of their posts and if a post isn’t compliant, we ask them to make it compliant.”

Direct selling companies also are capitalizing on the ease and popularity of social media video. LifeVantage and Arbonne use video to talk directly to independent consultants—introducing and answering questions about new products and providing training and demonstrations to field teams. Arbonne teaches its independent consultants how to use social media to engage their customers beyond just browsing and buying product—using it to conduct 30-day nutrition challenges, for example, Good says.

Top executives increasingly use video to connect on a more personal level with the field—something that’s been “unusual in our channel,” Kelley says. LifeVantage President and CEO Darren Jensen holds Facebook Live videos almost every Monday, Tuesday and Wednesday and is also active on LinkedIn. Kelley adds, “Ryan Goodwin, our Chief Marketing Officer, has Tech Tuesdays, and a lot of times people will send him messages saying, ‘I forgot how to do X. Can you teach us how to do it again?’ ”

Hands on Site

The rise of social media as an e-commerce and communication platform is great news for direct sellers. Maybe even greater news, though, is that the reports of the death of traditional shopping and in-person customer interactions are greatly exaggerated.

Yes, malls are closing or struggling to fill vacancies, and department stores and big box chains have thinned their ranks. But Goldman Sachs analysts told USA Today in August that 85 percent of retail sales still are made in physical stores. Even Amazon opened an actual bookstore in New York City in May and has plans to open six more. A great many shoppers continue wanting to see and feel merchandise before they buy it. In the Astound Commerce study, 70 percent of survey respondents said they go to a brand manufacturer’s physical store so that they can put their hands on a product. The Census Bureau statistics also bear this out—while the total dollars of e-commerce activity continue to represent huge numbers, online sales will only account for about 17 percent of total retail sales by 2020.

From structured in-home parties and demonstrations to casual consultant-to-customer meetings, the direct selling model holds its appeal because customers get to experience products in person. “Arbonne is a heart-to-heart business,” Good says. “Virtual experience and virtual connection are excellent tools to increase your connection with a broader client base, but they will never fully replace the in-person interaction.”

Millennial Force

Millennial shoppers represent the driving force behind the growing importance of building a strong brand online. According to Astound Commerce’s research, 64 percent of online millennial shoppers are prompted to visit a brand manufacturer’s website after seeing an ad in a social media feed. The report also indicates that 56 percent of millennials interact with their preferred brands on social media every week and make more than 36 percent of their total purchases online.

But millennials see through slick. Beautiful, shareable content may bring them to the digital door, but substance and values will make them walk through it and stay. This demographic is most loyal to brands whose values they share—especially those that are socially and environmentally responsible. According to Nielsen’s annual Global Corporate Sustainability Report from 2015, 73 percent of surveyed millennials indicated they would spend more money on a product if it’s produced by a sustainable brand. Further, 81 percent expect companies to make public declarations about their sustainability efforts.

Direct selling companies demonstrate their values in a range of appealing ways, from creating philanthropic foundations to making sustainability a central business strategy. LifeVantage is converting its printed marketing materials to digital files to get them to the field more quickly and update them more often, but also to become a greener company, Kelley says. Arbonne’s environmental focus has always been strong, D’Arminio adds. For example, the company has used “clean” ingredients for its products from the beginning. “Our founder came up with that philosophy 37 years ago, way before that was in fashion,” he says. The company also focuses on decreasing its carbon footprint by using recyclable materials and reducing waste.

WineShop’s Creed sums up the importance of millennials in this channel this way: “Millennials will build the future. If you’re not getting them now, you’re going to be in trouble.”

Bottom Line for Brands

Shopping as we have known it is definitely changing as consumer habits and expectations adapt to changing technologies. Smart direct selling companies know how they fit into this rapidly evolving retail landscape and are spending money and time developing and integrating their commerce and marketing channels.

While it is true that retail stores are closing, department stores are shrinking and Amazon has changed retail forever, it is also clear that consumer confidence and attitudes toward buying remain high as the Consumer Confidence Index continues in a steady upward direction. Is your company doing what’s necessary to meet the new shoppers on their terms?