Forget About Ads. There Are Smarter Ways to Draw Customers.

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Ecommerce is a much different game than it was even a few years ago. The biggest change: It’s way harder.

Think you can still stand up a Shopify site, run some Google or Facebook ads and build a viable business? Good luck with that today.

Calling the digital retail market fiercely competitive is an understatement. Ecommerce sites have almost tripled in number since 2019, giving consumers roughly 27 million choices. And rising ad prices keep making life more expensive for brands. Between 2013 and 2022, the average cost of acquiring a customer online rose from $9 to $29. Spending that kind of money to get lost in the shuffle is a losing battle for many digital retailers.

To get ahead, brands need a marketing edge that isn’t purely paid. If you’re counting on advertising to make sales, it takes a ton of cash to cover any particular market. I’m talking the same outlay as big newspaper ads or highway billboards. That’s an easy way to get into trouble — if you shell out money better spent on other things, you’ll eventually hurt the business. 

So, what’s a retailer to do?

At the ecommerce agency I run, my successful clients have gotten past reliance on advertising. They’ve done that by creating a following in other ways, which boosts their reputation and lets them use their ad dollars more effectively. 

Here’s how online retailers can get shoppers in the digital door without breaking the bank.

When digital sales pick up, double down on activities that help build your brand. Going local gives you more bang for your online buck — and creates a playbook for expansion elsewhere.

Hit the streets in a local market

It might sound counterintuitive, but digital retailers are better off focusing their geographic reach than trying to conquer the world.

I’m seeing brands take a more targeted approach by localizing their marketing efforts to build relationships. The game plan: Choose a city or region, then literally hit the streets to supplement your online presence with real-life interaction. 

That might mean a pop-up store, in-person activations or events. For example, athleisure brand Halara recently debuted a pop-up in New York. In addition to holding gatherings in Miami to connect with customers there, men’s shirt maker One Bone does activations at fellow retailers.

When digital sales pick up, double down on activities that help build your brand. Going local gives you more bang for your online buck — and creates a playbook for expansion elsewhere.

Some online retailers have gone a step further by opening their own stores, combining a physical presence with the power of online for a multiplier effect. Streetwear brand Kith has expanded internationally by launching lone stores in select cities. Its handful of beachheads in Europe and Asia — some of them collaborations with other retailers — create major buzz for its online business.

The effort can be worth it: More than half of shoppers are likely to look at a product in-store and then buy it online. 

But before making the jump to offline, retailers should consider what they’re trying to accomplish with their store — and be careful not to overextend themselves logistically. For instance, rather than fill a pop-up with inventory, tell visitors you can ship orders fast and then deliver on that promise.

Build a brand that can stand on its own…

As brands look for alternatives to traditional online advertising, they can’t ignore the rise of retail media networks. But they should think twice about going this route, which could cost them not only big bucks but also their independence.

It’s easy to see the appeal of joining a retail media network run by the likes of Amazon, Target and Walmart. These platforms, which let other brands advertise on them, can offer enormous reach. And they’re getting huge. One estimate puts the global retail media market at almost $130 billion, with 10% growth expected in 2024. In a few years, it could eclipse linear TV.

But choosing not to sell directly to consumers means playing by someone else’s rules. Those big retailers can raise ad rates anytime they like — putting newer brands that aren’t flush with cash in a difficult spot.

The price of admission is already high. Sure, for most advertisers, retail media networks deliver better returns than other channels. But at $20 to $50, their cost per thousand ad impressions (CPM) is similar to connected TV. By contrast, the CPM for Facebook ads, which are expensive in their own right, is about $10.

It’s no easy task, but smaller retailers that want to build a solid brand should do it themselves. The best way to get there: Create your own marketing content and customer following. In the long run, that beats getting dragged around by the retail powers that be.

…But be open to the value of collaboration

Standing on your own two feet doesn’t always mean going it alone. This might be the biggest mindset shift in recent years: brands daring to lean on each other. When retailers collaborate to create a unique product together, both partners can benefit from each other’s brand and reach new customers. The potential reward is a bigger impact than they could muster with their own advertising dollars.

For example, The James Brand, a retailer of knives and tools for everyday carry, collaborated with Timex. The James Brand x Timex watch collection lends a relatively small, specialized brand the cachet of a major timepiece maker. For Timex, it’s an opportunity to connect with shoppers who like the unique aesthetic of The James Brand. 

Some product collaborations are a marriage of equals, like Swatch and high-end watchmaker Omega. With the relatively inexpensive MoonSwatch, those two big brands let customers tap into a luxury name they might not otherwise be able to afford.

There’s no doubt that such ventures are a draw. Seven out of 10 consumers like co-branding partnerships, and half of luxury buyers purchase items from collaborations, with Gen Z shoppers leading the way. Brand collaborations can also extend into co-marketing — for example, GoPro’s campaign with Red Bull, which has seen the camera maker and the energy drink giant cross-promote each other online and at live events. 

In a crowded marketplace, it won’t get any easier for digital brands to thrive. Those relying on ads to get the job done will end up disappointed — or even out of business. By connecting with customers in person, doubling down on creativity and joining forces with fellow brands, online retailers can stop throwing good money after bad.

Thanks for reading! I'd love to hear about your thoughts or experiences in the comments below. And for more ideas that challenge the status quo, subscribe to Retail Insights.

(Content from this post was originally featured in Forbes).