![\"Retail](\"https:\/\/dmsretail.com\/RetailNews\/wp-content\/uploads\/2022\/05\/RETAIL-ONLINE-TRAINING-728-X-90.png\")
<\/a><\/p>\n
![](\"https:\/\/www.mytotalretail.com\/wp-content\/uploads\/sites\/14\/2018\/11\/millennials-shopping-in-store.jpg\")
<\/p>\nAmazon.com has been successful with many unusual strategies over the years, but one of the company\u2019s most recent wins has been convincing retailers to undervalue their physical assets and focus on trying to compete in the online sphere. This focus on digital commerce has successfully distracted retailers from fully monetizing the massive opportunity already within their control \u2014 real estate and in-person consumer audiences \u2014 and instead shifted them to try and battle with Amazon in an arena that the brown boxes already dominate.<\/p>\n
The Online Retail Media Myth<\/h2>\n
At first the meteoric rise of Amazon\u2019s retail media advertising sales business rightfully caught everyone\u2019s attention, brands and retailers alike. Soon after, other major players got in on the action \u2014 Walmart, Target, Instacart. The ability to put rich first-party customer data to work in an increasingly privacy-sensitive environment, partnered with the opportunity to reach high-intent shoppers just a click away from the point of sale, was a powerful combination.<\/p>\n
In every case, those that made names for themselves were ones with already strong e-commerce scale and operational infrastructure. If you look at the top five e-commerce retailers outside of Walmart and Amazon, you will see a common thread. Apple, Target, The Home Depot, Costco, and Best Buy all had a strong technology infrastructure and presence online and were able to easily monetize traffic and the inventory they already had. Warehouses, logistics and inventory management systems were already in place; they just had to add a layer of tech.<\/p>\n
Then came everyone else. Intrigued by the success of a few massive e-commerce engines and nudged along by the countless industry thought pieces telling them that NOW is the time to get in on the online retail media opportunity, retailers of all sizes launched initiatives to grab their piece of the pie.<\/p>\n
The problem with modeling a new revenue opportunity around what Amazon did is that no one else is Amazon. Amazon owns a cloud computing business \u2014 arguably the most successful one ever. It\u2019s an internet and logistics titan, not a traditional retailer.<\/p>\n
Insider Intelligence data shows that the volume of traffic to other retail sites pales in comparison to anything being delivered by Amazon and Walmart. To put it into perspective, Amazon is the top e-commerce site in the U.S. with over $412 billion in sales. Walmart, which is second in the U.S., will earn over $53 billion in U.S. retail e-commerce sales this year, just 12 percent of the volume of Amazon! Together, Amazon and Walmart account for 44 percent of all e-commerce volume whereas Apple, eBay, Target, The Home Depot, Best Buy, and Costco account for nearly 15 percent combined.<\/p>\n
Even as retailers are trying to establish their own retail media networks, they\u2019re already having conversations about how to boost inventory via off-site placements and partnerships because their \u201con premise\u201d websites don\u2019t have enough traffic. That means they\u2019re not simply undertaking an initiative to monetize something they already have. They\u2019re building something new from scratch \u2014 something that, in a best-case scenario, is still only a drop in the bucket when it comes to revenue.<\/p>\n
If you look at the sales data of most retailers, even the ones that have launched successful e-commerce portals, the vast majority of their sales are still being transacted in stores. According to data from Capital One, in-store sales represented 84.9 percent of U.S. retail revenue in 2023; 15.1 percent of U.S. retail sales revenue was e-commerce. And that\u2019s a good thing \u2014 a tremendous opportunity for new growth and revenue. The problem is that these retailers are so distracted by what feels like an urgent need to pursue online retail media revenue that they\u2019re neglecting what\u2019s right in front of them: the physical retail media opportunity generated by the tremendous number of transactions happening inside of their stores.<\/p>\n
Turning Attention to the In-Store Opportunity<\/h2>\n
The truth is, most retailers are playing an entirely different game than Amazon. Brick-and-mortar retailers\u2019 physical stores are incredible assets. They have recurring audiences that come in every single day and spend most of their money with the brand inside the store. Why aren\u2019t these retailers more focused on monetizing those eyeballs vs. the far fewer glances to their e-commerce sites?<\/p>\n
It\u2019s understandable how retailers were inclined to take the bait. The narrative around brick-and-mortar retail has been negative for a long time, positioned as a battle lost to the inevitably of a digital-first, deliver-it-to-my-house consumer. Little had changed in the world of physical retail to unlock new monetization opportunities, whereas digital commerce was a wide open field of growth. But that balance has shifted, with new capabilities emerging offline while the online opportunity plateaus.<\/p>\n
The truth is, logistical and operational behemoths like Amazon love the idea of retailers spending valuable time and money on a game they can\u2019t win. But what would happen if retailers instead turned their attention to the most immediate opportunity of monetizing the eyeballs that walk through their own doors?<\/p>\n
Developing in-store retail media networks (RMNs) focused on building additional messaging to consumers that are already on-premise would serve as an immediate win, optimizing their foot traffic using the same data-driven, point-of-purchase methods that online retail media promises. According to eMarketer, Amazon will capture 75.2 percent of the $45.15 billion U.S. retail media advertising market this year, more than 10 times that of No. 2 Walmart Connect. The fact that Walmart and a scarce few others have been able to emulate a sliver of Amazon\u2019s success speaks not to the opportunity for other retailers, but rather to the sheer scale of Walmart and those few others.<\/p>\n
In fact, in-store retail media offers massive audiences that are on average 70 percent larger than digital audiences for leading brick-and-mortar retailers.<\/p>\n
It\u2019s a way to realize more revenue from the real estate assets retailers already operate, as opposed to building out a digital infrastructure to support monetization of a mere fraction of a retailer\u2019s customer journeys.<\/p>\n
Amazon and Walmart have already won online retail media. The only way they can gain a bigger advantage is if other retailers are duped into trying to compete with them in that space vs. focusing their resources on the far bigger, far more tangible opportunity that exists right inside their own stores.<\/p>\n
Michael Provenzano is CEO and co-founder at Vistar Media, a global provider of technology solutions for out-of-home (OOH) media.<\/em><\/p>\n<\/div>\n