With a -7% decline in conversion rate (nearly -9% on mobile), on top of the prior year's -4%, we’ve fallen into a conversion crisis.
The visits are happening. Traffic is up 3% YoY. Conversions are proving harder to come by.
Why is conversion cratering? Let's look at a few of the shopper composition metrics:
Site search: 6% usage and 16% GMV contribution in Q3 2023, down from 8% and 19% YoY. That’s a contributor.
Social's share of that traffic was up to 9% overall from 8% last year. This raises a question - are the walled gardens suppressing our view into social traffic’s impact? Regardless - the 1 ppct increase from social - a notoriously poor converting channel - is unlikely to have too much of a drag on conversion.
More traffic is mobile. 7% traffic growth led mobile to claim 76% share of all visits, accounting for 65% of orders. While mobile continues to under-convert the larger computer screens, the gap between traffic and order share, 11ppcts, has remained the same over the past year. Not much conversion rate impact here, either.
Short answer: these values can’t - by themselves - explain the conversion dip.
There are certainly other factors (changing visitor composition! economics!) that are influencing conversion here. But, I’d rather offer a qualitative perspective on the plummeting conversion rate in ecommerce:
The culture of (DTC) ecommerce is killing conversion.
Recently, the ‘move fast and break things’ culture of commerce has been replaced by a carefully considered and ... <gulp> ... consistent one.
Profitability-pressure has surpassed growth-at-all-costs as the prevailing approach to DTC. And with it, there is a seemingly singular path trodden across DTC. It preaches for hamburger menus, pop-up modals, spin to wins, product recs, reviews, and email triggers ... and that’s what we’re hanging on every commerce corner. As such, the tech stack supporting the shopper journey looks awfully similar from brand to brand, too.
We’re all burying our noses in the same old dusty textbook masquerading as 'best-practice.'
Simultaneously, the DTC enablers have grown up. ~ Most commerce platforms and the largest marketing platforms are now publicly traded.
~ Customer acquisition runs through some of the biggest companies in the world - Meta and Google.
~ Even the systems integrators helping brands develop their sites have been folded into mega-agencies.
As a result, ecommerce has turned into a mature industry governed by real economic responsibilities. Increasingly DTC brands are opting to be indoctrinated in this approach.
And as more and more DTC brands take the bait, shoppers are getting lost in a sea of sameness. We're losing the unique sense of brand that DTC once flexed so proudly.
DTC commerce culture was unmistakenly the product of the collective's brand strength. And, without that sense of brand, the culture languishes.
When 'Digitally Native Vertical Brands' first entered the chat, there was a sense of excitement. The product brought the brand story to life, and customers reveled in it. We all remember the one that captured our heart - maybe it was an eco-friendly toothpaste. Or that chic ergonomically friendly razor. Their eponymous site was the exclusive purveyor of their story. Even if the fonts often looked alike and the minimalist approach bore resemblance to a competitor, the brand was strong. That is, until growth slowed, and the best-practice whispers turned to shouts.
The story was relegated to an 'about us' page, and shoppers now were forced to run the gauntlet, choosing whether to give up their digits, or 'decline this offer.'
So here we are. DTC commerce is now a collection of brands that have lost the one thing that made them special. Brand was the unique element that allowed DTC companies to get on the radar and win the shopper.
The way out of the DTC commerce conversion crunch is not a quick tactical change. It's likely not as easy as an AB test of a landing page, or subject line.
Brands need to re-assess their entire go-to-shopper approach, and how they apply that to commerce. Just as Nike re-thought *where* they would meet their shopper (even if alienating some fairly large retailers), and how Amazon maniacally focused on *value* in its early days, today's DTC brands must think about how their *brand* dictates how, where, and when they connect with their shopper.
Is it a stretch to think that the conversion rate decline is tied to the drop in brand essence and resultant culture loss? I don't think so.
For DTC brands looking to reinvigorate conversion, it might just be a brand revival that allows them to capture real growth.