A Blog by Jonathan Low

 

Jul 28, 2018

Now For Sale: The Empty Potential Ad Space Inside Ecommerce Packages

Ecommerce has driven up deliveries, but driven down retail sales and profits. It has also taught merchants the value of monetizing every available space.

In an effort to make the proverbial lemonade out of a lemon, retailers are now ramping up the insertion of promotional advertising inside the boxes in which those purchases arrive in hopes of taking advantage of the delivery focus. JL



Khadeeja Safdar reports in the Wall Street Journal:

The rise of online shopping has taken a toll on retailers as shipping costs and investments in e-commerce capabilities have cut into profits. Retail margins fell to 8% last year from 10.2% in 2012. Over that period, e-commerce sales expanded to 17.6% of total sales from 10.5%. Retailers hope they have a remedy: Wring more money out of the space inside the box.
In the sliver of room between a new pair of shoes and the books you ordered online, retailers have found a different way to monetize the empty space in your packages.
Saks Fifth Avenue, Zulily and Barnes & Noble College are among several businesses that have joined a new marketplace allowing advertisers to buy and insert paper ads in customers’ boxes. More than 25 retailers have listed slots for sale in their packages in the weeks since the website, called UnDigital, went live.
The rise of online shopping has taken a toll on retailers as shipping costs and investments in e-commerce capabilities have cut into profits. Retail margins on average fell to 8% last year from 10.2% in 2012, according to consulting firm AlixPartners. Over that period, e-commerce sales expanded to 17.6% of total sales from 10.5%.
Retailers hope they have a remedy: Wring more money out of the space inside the box.
For years, companies have been adding product samples or targeted coupons in their packages in hopes of encouraging shoppers to place another order at their stores. Some retailers brokered occasional deals with existing vendors or advertisers. With UnDigital, retailers are offering their packages to a broader range of potential advertisers.
On the UnDigital platform, retailers post monthly listings with a number of packages and the maximum number of inserts per package. Advertisers can specify the number of packages in which they want inserts at a price set by the retailer. The average price per insert is between 10 and 12 cents, and the average number of inserts per box is two to three.
Once an advertiser buys the inserts, UnDigital manages printing and payment logistics. It also sends the ads to the retailer’s shipping facility for them to be inserted. Advertisers can add unique links on their inserts to track conversion rates.
Because retailers can break up the volume of packages into segments, smaller brands and niche advertisers are able to buy inserts, said Ryan Millman, co-founder and CEO of UnDigital. “If you want to try 100,000 units instead of five million, it might cost a few cents more, but it allows an advertiser to test with a very large company.”
Online retailer Zulily said it has included inserts in packages in the past but mainly from its existing vendors. The retailer joined UnDigital in hopes of finding new advertisers and generating more revenue to reinvest in the business, said Chris Johns, manager of integrated marketing and partnerships for Zulily. “A penny saved is a penny passed along to the customer,” he said.
Barnes & Noble College is looking for advertisers that sell products specifically for college students, such as those related to technology or entertainment, said Lisa Malat, chief marketing officer at the company.
Saks declined to comment.
Touch of Modern, an e-commerce site that curates products for men, said it is working on an agreement to include inserts in the packages of Cabela’s Inc., which sells hunting and outdoor gear. Though the cost of an insert ad is much higher than a digital ad, an insert can be a more efficient way to reach a shopper, said Ian Yung, senior director of business development at Touch of Modern. “It’s rare that someone will order something online and not open the package.”
Some shoppers say they open packages but don’t bother looking at the inserts. “My main objective is to get my item as fast as I can—I don’t look at anything else,” said Corey Gorman, a 27-year-old accountant in Scranton, Pa. “The only way I would look at the ads is if they were shoved in my face like YouTube ads.”

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