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<aside> 🗣 Just as everything else, online acquisition costs continue to rise every year. Part of the reason why modern online advertising is so effective is that it allows new brands to quickly reach “in-market” audiences, or those that are already shopping for your product category and are ready to buy. However, as a brand continues to seek top line expansion, it must start advertising to less qualified, out-of-market audiences.

These audiences need more education, convincing, and brand imprinting to make a purchase. This added effort equates to more dollars spent on each marginal customer and leads to a loss of advertising efficacy and increased customer acquisition costs, or CAC, as it’s often referred to. Eventually, this environment of ever-increasing costs and declining efficiency becomes unsustainable.

Because of this, many brands become motivated to explore distribution & discovery channels outside of traditional paid media. Wholesale partners are a logical next step. They provide brands with something paid media cannot: an influx of potential customers seeing their products without additional dollars spent on advertising. Large retailers like Nordstrom, Saks Fifth Avenue, and Revolve, have curated years of brand equity and trust and are rewarded with large swaths of customers coming both to their physical stores and websites to find new products every day.

Wholesale partners are a source of discovery for the brands that occupy their shelves. When going into wholesale, brands must understand that these retail partners are not only an additional revenue channel for the wholesale side of their business, but also an added online customer acquisition channel with spillover effects on their online DTC business.

Let’s examine just how much of an impact wholesale discoverability has on online direct ecommerce sales using real data Part and Sum collected for a long time client and partner.

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Lizzie Fortunato is a New York city based women’s jewelry and accessories brand with strong wholesale distribution (both brick & mortar and online) in outlets like Nordstrom, Revolve, and ShopBop. While long suspected, it was only recently proven that these wholesale partners have the added benefit of driving quite a bit of sales volume directly through lizziefortunato.com.

In a separate effort to better understand sources of new customer acquisition, Part and Sum advised Lizzie Fortunato to install a post purchase survey Shopify app on their checkout page to ask new customers “Where did you FIRST hear about us?” In addition to getting clearer data on the impact that online advertising channels drive for the brand, it also became apparent that 12.8% of all new customers self-report discovering the brand through wholesale partners.

https://lh6.googleusercontent.com/Cg7UHOQT28WxvDjmg0BWY9h86r5zVKV46Mkx5d4kipLkMgS-uRxnGWokjohtvniIQxK8dZG2hffJYP-RNMkR5_FhWgQtexdUnab6QEnO8rfzInp0mjO3ChPw_oWq0ZWrblkPxVfROnclNc-dt8JXqrY

However, when digging into the “other” bucket of responses, the post purchase survey reveals that the percentage is actually higher than initially reported. Many self-provided-responses refer to wholesale partners the brand sells through and therefore should be categorized under the “boutique/retail” bucket of responses.

https://lh5.googleusercontent.com/WQb9ZLIWVcN-z8o5cZIYrXxcS6r9gOlq6BN-zU525H39UlC2_VZFjF7ASA7vkNpR-YPRTTesgsJVnrgeHsS0BnCCS5f5AQhCjlpx4fAb79Hzbne5rgoiwXgmLo9nIRV7bAzQ3hDctsOV8sLMRxjSZVM

Using Fairing’s new Response Data Reclassification, which allows for manual recategorization of open ended responses, we reassigned these uncategorized long-form answers into the appropriate categories and discovered that over the last few days, 18.01% of new customers that purchased directly from the lizziefortunato.com website first found the brand through a wholesale partner!

https://lh4.googleusercontent.com/gGwjeoHhepc0uLxmZymelX0Tc-8fk1BUmeKKnFWKzc_Tb849Lbv0uyarfcIZHefohjoUQQBmIfMhd_DtU93JG1K-_JlHzEP7NLWafVbIJNXu00cGdHJ_rFWqnqADudNLvidjhRfm9-CflAV6C1_TDrI

https://lh5.googleusercontent.com/gLxndXW2mAqzuobI5Ih8tVl0C_gRL8tJwX6b0KLrjmKk__ih13wl4V58BiRsrik0RAI4Qjmel8ajL_m_9_3hxAfF0_FpbT5dkl9RKXo8bJxrYFcMDZZfHDMafLO-B-dNe62-CjBZs0Zzz3VnawQuLnM

Having access to this data when entering wholesale is critical. As a marketer, it helps rectify an influx of previously undetectable and miscategorized conversions on a last click basis. Brands fortunate enough to score a large wholesale account may experience a large spillover effect of sales to their ecommerce site as a result of the additional discoverability and awareness that physical and online retailers provide.

If a brand is stocked in a physical store, the discrepancy in conversion tracking is obvious - one cannot “click through” from a physical shopping experience to the brand’s ecommerce site.  Similarly, there’s a lack of direct click through data from an online wholesale partner. A brand’s wholesale partner will not externally link to the brand’s own ecommerce site for an obvious reason: they want to claim that revenue for themselves. Any traffic and conversions generated from these points of discovery will come through reports that emanate directly - ie. a user types the brand’s URL directly into the address bar, or through organic / paid branded search.