Push Notifications and the Blending of Content and Commerce Are Here to Stay, But Free Shipping May Not BeNov 17, 2016 - by Kristine Lowery
The updated version of “There’s no such thing as a free lunch” has become, “There’s no such thing as free shipping.” Even if consumers aren’t paying for it, retailers—even Amazon–are increasingly squeezed by the need to offer free shipping to stay competitive. This week we’ll dig into the economics of all that free shipping, but first we’ll see how push alerts encourage readers to engage with their mobile media apps, and how content and commerce are coming together to create new revenue streams.
How CNN and BuzzFeed Readers Respond to the Power of Push
Push notifications are proving to be consistently effective tools for engaging consumers with news apps. A study from the Engaging News Project, a research project at the University of Texas at Austin, asked participants to download news apps from CNN, BuzzFeed, or E!News, and then to either enable or disable push notifications.
- 27% of users who turned on push notifications opened the related news app daily.
- 12% of users who didn’t receive alerts used the app each day.
Participants reported that they used notifications because they were relevant and increased their news knowledge. Fifty percent of those that turned on notifications said that they went to either the app or website in response. But there also are also clear indications that notifications need to be personalized: participants reported that they “least liked” the frequency and lack of filters for notifications.
How Publishers Are Increasingly Turning to Retail for New Revenue Streams
The purchase of product review sites Wirecutter and Sweethome by The New York Times has focused attention on publishers’ efforts to connect their service journalism, which includes reviews and news of products and services, to retail, opening up new revenue streams.
Food52, a cooking publisher, bills itself as both a blog and a shop. Digiday reports that the site earns two-thirds of its revenue selling everything from kitchen gadgets to tickets to its events. Its online content includes articles about new items, incorporating images and pricing in the story itself, with a purchase just a click away. A third of the products sold by Food52 are exclusives.
Last month New York Magazine launched a new feature called “The Strategist,” intended to help readers “shop the Internet,” reports Niemen Labs. The publication makes money through affiliate marketing programs at Amazon and via “contextual shopping” tech provider Bam-X.
The goal: Connect readers directly to shopping, allowing them to skip the search altogether, and make some money in the process.
Why Free Shipping May Not Last
Thanks largely to Amazon, online consumers have come to expect free shipping. But for retailers, shipping isn’t free and it may not be sustainable, according to a recent Fast Company article. Even Amazon isn’t immune to the growing costs of direct-to-home shipping and logistics, as evidenced by its plans to create its own shipping business.
“Direct-to-home has a supply chain cost three times higher than a store-based model. So when we say the internet retailer can charge less, how can that be?” asks Jerry Storch, CEO of Hudson’s Bay Company, in an interview with Fast Company. “Maybe this is why so many of us have so much trouble emulating Amazon’s model and making any money.”
Dig into the supply chain models for direct-to-home shopping compared to stores, and the reason for this cost differential becomes clear. For traditional retailers, the supply chain supports the single goal of getting product to the physical store predictably and on-time. With ecommerce, this process is much more complex, because it includes options such as third-party logistics services, e-commerce fulfillment houses and drop shipping.
Instead of one truckload with one purchase order and one invoice, online retail creates hundreds of packages, each with its own purchase order, invoice and delivery location. Consumers also expect customer service via phone, email, chat, website or various social media sites, and the ability to return their products.
When shipping is free, all this happens without any fees to offset the costs. Compound those fees with the costs of customer acquisition and profits become even more elusive. Free shipping for a one-time purchaser often ends up a net loss, which makes customer retention efforts even more critical for financial success.
Bottom line: Free shipping is costly for retailers – and it may not be free for customers much longer, either — but for businesses with deep loyalty like Amazon, it still seems worth the offset when buyers keep coming back.