Businesses Evolve with E-Commerce – Los Angeles Business Journal
In the world of e-commerce, brands are faced with challenges when it comes to reaching old and potential customers. From ad blockers to the ability to track data, it is more difficult for companies to reach their desired audiences.
Running online ads has also become more expensive, with less payback.
And two years into the supply chain crisis, brands found that shipping costs were much higher than they were pre-pandemic.
Despite such changes in the industry, e-commerce continues to be a driving force in the U.S. economy. According to Statista, e-commerce sales in the United States last year reached a total of about $871 billion, a number that economists predicted would not be possible until 2023. Globally, almost $4.9 trillion in total was spent on e-commerce last year.
That’s where Tapcart comes in. The Santa Monica-based company has designed a technology that integrates Shopify, an e-commerce platform for online stores and retail point-of-sale systems. Shopify merchants can use Tapcart to become more connected with their shoppers through a mobile app. They can also sync their online store’s backend and build a mobile app with an online editor.
“Consumers are using mobile devices. (Over) 90% of their time that they’re spending on e-commerce is actually on a mobile device, not a web browser,” explained Eric Netsch, founder and chief executive at Tapcart. “That naturally started to evolve and change the ways that merchants could market to their best customers.”
Founded in 2017, Tapcart is a software-as-a-service platform that helps brands across several industries create mobile apps to help companies reconnect with their customers.
“We believe that having an owned marketing channel that you can rely on is extremely important. Placing ads on Instagram or Facebook, you don’t own that traffic, you have to pay for it,” Netsch said. “Being able to have a website that you own and control is important, but the same thing with your mobile experience having a sales channel, like a mobile app, that you can own and customize and rely on.”
Email and SMS are marketing channels that companies can own, and the best way to market utilize them is via text push notifications. According to Tapcart, push notifications increase retention rates by as much as 88% and reduce cart abandonment rates by as much as 30%.
“You own the data,” Netsch said. “That (info) that’s coming in through push notifications, you can get access to using our platform and use that data to better power your marketing campaigns.”
Tapcart makes its revenue through a subscription model to access it services. Companies such as e-commerce brand Fashion Nova, for example, pay a monthly subscription ranging from $250 to $1,200 and higher. The price could increase if the brand drives more use to its app.
Netsch said the app store ecosystem and push notifications have become very important to companies like Apple and Google.
“They want you as a business to have an app, want to have push notifications, and they’re going to help you in that process,” Netsch said. “That’s something that people don’t talk about a lot. It’s usually that ‘Apple is killing email and advertisement businesses,’ but the one thing that they’re doing the opposite of is they’re prioritizing mobile apps and they’re prioritizing push notification experiences.”
“That’s a good thing to bet on if you’re a business is they’ve invested so much into the app store, into their push notification technology, that they’re going to continue making that more accessible and a better experience, not just for consumers, but also for brands,” he added.
A changing market
Marketing looked very different just a couple of years ago.
According to Netsch, merchants relied heavily on email marketing, but that channel became saturated and no longer had the same effect. Email marketing becomes 45% less effective every year, he said.
“Email marketing started to get deprioritized by systems like Gmail and Outlook and other systems that would categorize your mail. So now we’re seeing a lot of merchants relying on email as a traditional marketing tactic, but it’s getting stuck in the promotions tab,” Netsch said. “You probably have thousands of emails from your favorite brands that are just locked away in this area.”
In April of last year, Apple released an update that made it harder for companies to track users. Before this update, an Apple device would automatically send the Identifier for Advertisers (known as IDFA), which is a device identifier that advertisers can use to track in-app activity and how users interact with certain advertisements.
“In the old days, the principle was ‘opt out.’ If you didn’t like to be tracked, you had to go through seven levels deep inside Facebook or Instagram and opt out of being tracked or getting ads,” said Gerard Tellis, a professor of marketing at USC. “That is changing. That means the default is you are out, and companies have to get you to opt in in order to be tracked. And what that means is that they will have to give consumers an incentive to be tracked.”
We believe having an owned marketing channel … is extremely important.
According to Adjust, a marketing analytics platform, about 20% of iOS users cannot be tracked using the IDFA because they opted out of ad tracking.
“With Apple removing some of the tracking capabilities, it’s even harder to tell if your marketing is working or not,” Netsch said.
On top of that, the ad market is more competitive than ever. A few years ago, placing an ad online was fairly easy and affordable, allowing businesses of any size to participate.
According to Netsch the advertising industry, like many others, was shaken up by the pandemic.
“A lot of large industry players (were) pulling back on ads, and that really put some fuel on the fire for millions of e-commerce brands to start placing ads and start competing with each other in this space. So now there’s more competition than there ever was, and it became more and more expensive,” Netsch explained.
The biggest and most recent shift, according to Netsch, is that companies such as Apple and Google have placed restrictions on performance tracking, meaning brands have a harder time retargeting their customers based on how well their advertisements do.
“Your dollar that you put on Facebook and Instagram, you don’t know if it’s going to work or not,” Netsch said. “There’s a cutoff there and (it) adds what was another big traditional marketing technique for e-commerce brands that is getting less and less effective and more expensive every single year now.”
Most recently, Tapccart released a product called App Clips, mini-apps that require zero downloading. How it works is that on a merchant’s website a shopper can scan the company’s QR code and gain access to the brand’s mobile app without having to download it. According to Tapcart, a brand can utilize App Clips to reduce the friction that comes with discovering and installing an app, allowing the seller to increase conversions, get new downloads, and encourage repeat business for the long run.
“You don’t go to Blockbuster to rent your movies anymore; you stream them when you need them from Netflix and other services,” Netsch said. “It’s the same concept for applications. And (I) can picture the world in one year, two years, three years where you’re never going to have to press that install button and download an app ever again. You can just use them when you need them, and we actually support that functionality.”