Advertising on marketplaces is becoming more expensive, and 60% of purchases are still made offline. How to combine both channels to increase sales?
Offline is dying – myth or reality
Digitalization, pandemic and departure of Western brands provoked the rapid growth of marketplaces. Data Insight research showed that the volume of the eCommerce market in Russia grew by 39%. The most popular platforms in Russia are Wildberries, Ozon, Yandex Market and Megamarket. Consumers choose these sites because of ease of use, fast and free delivery, regular special offers and discounts, as well as access to a wide range of goods.
By contrast, customer traffic in offline stores is declining. According to a study by T-Bank and T-Data, in 2024 the number of purchases in shopping centers in Moscow and the Moscow region decreased by 4% compared to the previous period.
Does this mean that the end of offline is approaching? In fact, the rapid decline in the popularity of offline outlets is an illusion. The volume of sales in such stores still significantly exceeds the share of online purchases.
Let’s turn to statistics. According to the acquiring network of Russian Standard Bank, in the first half of 2024, 60% of the total number of purchases were offline, and 40% were online. Traditional trade continues to occupy most of the market, as everything that cannot be implemented online is possible in physical stores. At the same time, offline stores remain leaders not only in terms of the volume of transactions, but also in terms of the average check – here the difference with online purchases is 10%.
Pros and cons of promoting offline and online
The popularity of online platforms is growing, as well as the number of sellers on them. Competition is tightening. If earlier, the store could be promoted organically on marketplaces, only with small investments in content when working out product cards, now such a scenario is impossible. Platforms are increasingly motivating sellers to connect additional advertising tools. Therefore, in addition to the costs of logistics, storage in warehouses and commissions, brands are spending more and more budgets on online promotion on the sites themselves.
Undoubtedly, advertising digital tools have advantages. For example, you can set up more accurate segmented communication and track the real result in money. Of the minuses – these costs do not always pay off. Therefore, it is extremely important to analyze very deeply profits from online platforms and carefully consider the unit economy for marketplaces so as to avoid negative slippage.
As for offline sales, here the set of advertising tools is more limited. However, advertising, especially for new brands, is indispensable. What to pay special attention to? First, the representation of goods on the shelf is important: calculation according to well-compiled planograms, maintaining the presentation of the product, up-to-date information on price tags, promotions and discounts. The effectiveness of the listed tools has already been tested by time.
At the same time, increasingly advanced offline promotion methodologies and methods are emerging, such as point personalization through loyalty programs and omnichannel scenarios that give overviews of consumer reactions to marketing messages across the customer journey.
For example, X5 Media has expanded its digital inventory and introduced large digital advertising screens in offline stores. With their help, the network began to analyze sales in retail outlets faster. In addition, integration with applications in buyers’ phones allowed for targeted promotions that increase sales and loyalty. Data Insight research shows that many offline retailers rely on seamless omnichannel, when all points of contact with the client act as a whole (online and offline).
Thus, the space of an offline store turns into a media outlet, and digital screens and personalized offers in loyalty programs turn into new “magnets” to attract attention. In addition, large retail chains can integrate in-store media with their own CRM systems and offer the buyer “here and now” promotions based on data on his past purchases.
Offline becomes part of the omnichannel path. For example, an order is placed online, and you can pick it up at the nearest point. Returns, on the contrary, can be made in the store, even if the purchase is made on the marketplace. On the one hand, such “seamlessness” gives the client a sense of convenience and reduces the barrier between offline and online channels. On the other hand, it is expensive to process and analyze customer data.
Experiences you can’t buy online
The main weapon of offline in the struggle for the attention of the buyer is the customer service. First of all, we are talking about tastings, events and other promotions. If on the Internet a buyer can only read a review or watch a review of a product, then in a physical store he will “get acquainted” with the product live: taste it, feel its texture, test it. Here, when buying, a sensual experience is involved that cannot be obtained in a digital environment.
For local brands, offline becomes the main entry point to the target audience. It allows you to present your product comprehensively and establish strong ties with the buyer. Master classes, meetings, contests, events – all this turns an ordinary store into a center of attraction, where the brand can directly “talk” with the client. Although these tools do not scale as quickly as the banner on the marketplace, they give deep contact with the audience and form brand loyalty.
What is more profitable for business now
Online is growing faster – this is a fact. Promotion in this way may seem more profitable: lower costs for renting space for pick-up points, fast scaling and automated work with millions of SKUs (units of goods). However, competition in marketplaces is intensifying and the cost of attracting a client online is growing. It is no longer as attractive as, for example, three years ago.
Offline, in turn, holds stable positions due to the ability to interact with the product directly – to see, touch, try, compare it. Thanks to this, the buyer’s confidence is formed through the real presence of the goods.
Given this, it is impossible to give a universal answer to the question of what is more profitable. For fast-growing categories where turnover rate and coverage are important, online is the most effective channel. Especially when end-to-end analytics are built and competent advertising management is carried out within the platforms. For categories where the customer makes a decision with “feelings,” from food to cosmetics and homewares, offline remains indispensable.
However, the highest sales figures are still for those brands that do not oppose channels, but use them synchronously: online – to attract and reach, offline – to build trust and make the final decision to buy.
5 tips on how to squeeze the maximum in a competitive environment
Firstly, clearly understand the strengths and weaknesses of both channels, taking into account the specifics of your business. The ideal scenario is to combine the benefits of offline and online to create a seamless experience.
Second, analyze your target audience regularly. The level of loyalty, checks, RFM segments are all the most important sources for studying customer behavior. This analysis allows you to implement personal promotions both when promoting on marketplaces and at physical points of sale.
Third, take a closer look at Retail media. According to Okkam, this channel is one of the fastest growing investment areas among the leading market players.
In addition, implement RM strategies to retain customers, increase customer loyalty, and encourage repeat purchases. This makes it possible to combine the scale and speed of online with the loyalty and logistics of offline.
Finally, making offline promotion, do not forget about the client service, dynamic planograms and competent merchandising. These tools will help make sure that the product at the outlet always remains in sight of the buyer and is sold more efficiently.
By Evgeny Kozdoba, Marketing Director of Open Group