What Co-Selling Tells Us About the Future of Retail

The other day I purchased a hoodie from a direct-to-consumer brand that I like. “The softest hoodie ever” was how they hooked me, but post-checkout I found myself upsold to buying eye cream.

How did they do it? Co-selling. And it’s going to transform every brand into a marketplace.

Co-selling is on the rise, and early adopters stand to reap big rewards. A common co-selling scenario works like this: when an order confirmation page appears (read: post-sale) it offers more than just the usual order and tracking numbers. It presents the shopper with items in adjacent product categories from simpatico brands, which shoppers can purchase with a single click. Technically it’s a separate sale from a separate brand, and the user will receive two separate packages, but because there’s no need to re-enter credit card and shipping information, it feels like one transaction.

When I saw the eye cream, I got the jolt of dopamine our brains deliver when we acquire something exciting and wholly unexpected. Quickly, however, the e-commerce geek in me took over. I thought, wow, this transaction, a prime example of co-selling, cracked open brand discovery in e-commerce. At long last, digital has a chance to catch up to brick-and-mortar in this area, and that’s going to shake up the retail world in a huge way.

Now, I realize that a lot of innovation has gone into brand discovery on marketplaces like Amazon.com and Walmart, but it just can’t compete with a brick-and-mortar experience. If I’m in the cereal aisle, I can turn my head 20 degrees in either direction and be exposed to 25 different brands in a highly visceral way. Amazon can’t do that.

Co-selling can get close. It isn’t a new concept; Todd Snyder, an apparel brand, is known for its highly curated collections, some of which include products from other brands in adjacent categories, like Aesop skin care products. I’ve always endorsed this idea to retail clients because it’s an easy way to provide more reasons for customers to return to a site. I might be in-market for Tom Snyder pants once or twice a year, but I’ll need to replenish my Aesop on a monthly basis. And every time a consumer returns to a site, it’s an opportunity to engage them in a new and different way.

I always thought it was just a matter of time until technologists realized the opportunities of co-selling and got to work building turnkey solutions. That time has come.

Operationalizing Co-Selling

Today we see a new crop of platforms, like Co-Op Commerce, that take the Todd Snyder co-selling concept to a whole new level, offering low-risk post-purchase opportunities to upsell a customer. (I have no relationship with Co-Op Commerce.)

These platforms make it super easy to operationalize co-selling, and ultimately build a marketplace. They offer machine learning workflows to help find compatible brands. They also eliminate the distractions that give most e-commerce retailers pause when they consider the wisdom of inviting other brands onto their sites. New brands are presented after the purchase. It’s kind of a brilliant way for brands to earn incremental revenue from referrals, and have their brand exposed to the customers of their affiliates.

And because this is an emerging strategy, early movers can acquire new customers more cost effectively than buying paid search ads or launching a social media display campaign.

In the Future, All Brands Will Be Marketplaces

Most e-commerce executives I speak with aren’t thinking of incremental sales and revenue in terms of co-selling, but within five years that will change. Every successful brand will be a marketplace. The consumer will demand it.

Shopping itself is now many different things to a consumer. Social commerce has shown that shopping is entertainment. Amazon is still the go-to brand for consumers who want to purchase something very specific, say Affresh Dishwasher Cleaner tablets. But it’s not where we go when we’re keen to discover new brands or lose ourselves in an Amazon hole.

Consumers need a mechanism for brand discovery and delight. If I’m shopping for perennials for a new flower bed on the site of an organic, eco-centric grower, it’s kind of thrilling to see beautiful containers or statuary from like-minded brands. I’m engaged in a happy experience — planning my gardens — and the “marketplace” enhances that experience. That’s why I say that in the not-too-distant future, consumers will expect all brands to be marketplaces, and will gravitate towards those that live up to those expectations.

Pitfalls to Avoid

I have full confidence that additional tech platforms will emerge that will streamline the marketplace-building process even further. The real work for brands will lie in deciding which brands to include in theirs.

Don’t dilute your brand experience by seeking to become an Amazon-like general retailer.  Amazon has been so optimized from every angle that for many, it lacks inspiration. As I mentioned earlier, to many consumers (admittedly not all), Amazon is for spearfishing exact products they need because it’s reliable, cheap and friction free. Co-selling works best when discovery (and dopamine) are present.

The automated optimization of platforms like Co-Op Commerce are fine when the co-selling occurs in the lowest stages of the purchase journey, such as the order confirmation page. You’ll need a lot more human thought and contemplation if you opt to move co-selling higher up in the sales funnel (e.g., including another brand’s products in your search results and product pages). You’ll need to consider: Will the co-sold product, say moisturizer, enhance the experience of a consumer who is looking at a hoodie? If you stray too far out of the product category, you can take the consumer on a completely different journey and lose the sale.

However, don’t let these issues steer you away from co-selling. It’s an important trend that will heat up over the next 18 months, and put us on the path to what I’ve been predicting for the past three years: every brand will be a marketplace.

Phillip Jackson is the chief commerce officer at Rightpoint, a digital consultancy with technology at its core.