December 13, 2023

Why A Mobile App Won't Cause Channel Cannibalization

When built for your customers, a mobile app helps nurture VIP customers… not cause channel cannibalization.

Alex Rosas

Marketing Manager at Tapcart

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When an ecommerce company considers adding a mobile app to its brand’s sales channels, cannibalization is one of the most frequent concerns. In other words, there is sometimes a fear that new sales on the app will negatively affect sales on existing channels, namely the website. 

In this article, we’ll tell you everything you need to know about channel cannibalization, including what it is, whether it's worth stressing about, and why companies dedicated to engaging with customers wherever they are don't lose a wink of sleep over cannibalization.

What is channel cannibalization?

Channel cannibalization, also known as channel conflict, happens when a company’s multiple sales, distribution, and communication channels compete against each other for the same customers’ purchases. 

The result many companies are afraid of? When a new sales channel — like a mobile app — is introduced, it will simply shift the same customers to a different platform without attracting new shoppers or revenue. This would lead to reduced profitability since more channels are doing more work to generate the same income from the same customers.

Fortunately, your company doesn't live in a scary business-school vacuum… and introducing a truly excellent mobile app won’t cause your company to literally feast on its own profit margin. 

Here’s the truth.

When executed correctly, a mobile app should bring a company's customers even closer to the brand, boosting engagement and increasing lifetime value (LTV) day after day and year after year. Besides, according to a Pew Research Center survey, about 75% of Americans shop on their smartphones, which is even higher for shoppers under fifty. 

According to Cale Suesskow, Co-CEO of VRG GRL, his team saw a mobile app as an excellent opportunity to bring the brand to its customers' home screens, where VRG GRL could engage with them more frequently. In return, those customers could access exclusive content, discounts, and early drops. Best of all, all that brand-building and engagement could happen in the app and via push notifications, which means the brand did not have to spend a dime on SMS or social media advertising.

In Cale's words: “We thought it would be good to allow our customers to have a way of experiencing the brand a little bit closer. You know, having a brand that you love on your home screen where you can engage with them more frequently and get access to content that might be more exclusive.”

What are the benefits of channel diversification?

In marketing, channel diversification refers to strategically using several platforms to engage with customers. For modern ecommerce brands, this almost always includes a website, email, social media, in-person events and experiential marketing, online advertising, and--more and more frequently--a mobile app.

When leveraged correctly, channel diversification creates a cohesive and integrated approach to connecting with customers that feels seamless, authentic, and always on brand. This consistent customer experience can be tailored so that companies deploy the right marketing strategies to the right customers on the right platforms at the right time. 

Of course, Tapcart customers are no strangers to the perks of channel diversification. Even our most app-happy customers understand the importance of an omnichannel approach to customer retention. For example, Tapcart customer Obvi consistently praises push notifications. Still, its CEO and co-founder, Ron Shah, also understands the importance of creating a cohesive customer retention strategy across multiple channels. After all, together, SMS, email, and push notifications form a customer retention flywheel.

According to Ron, “When you're asking someone or reminding someone to rebuy something, you can't just fire up one email and then expect them to open it and say, ‘Oh yeah, well I need this’ and click buy, right? You need to look at [the communication pillars] as an ecosystem of reminders. At the end of the day, if a customer has placed an order, it's probably a combination of all those [reminders] working together.”

Discover why BÉIS doesn't worry about cannibalization.

Chances are, you've seen stylish luggage and travel accessories company BÉIS all over social media lately. The booming brand is also a Tapcart customer with tons of success on its mobile app. When we sat down to talk to the company’s Director of Ecommerce, Julie Chalker, we learned more about why BÉIS moved forward with a mobile app without stressing about channel cannibalization.

The first thing Julie said? If an app is right for your company, you should do it.

“I think you really have to be confident in your consumers and understand what it is they want. And if [a mobile app] is right for your consumer, ultimately, it will be right for your business.”

And honestly, we agree. 

Yes, we're in the business of selling apps--but before you build one, come talk to us. We can show you what types of brands are seeing the best results with mobile apps and what they're doing to make that success happen.

Oh, and if that sounds like a lot of work, don't worry. It's not. The average Tapcart app takes just a couple of weeks to engineer. After that, it's a plug-and-play situation that’s available right in your Shopify dashboard. What's more, the app is virtually no lift. Our customers can manage their app and customize push notifications in about an hour each week.

Once you decide that a mobile app is right for your business, there's no reason to fear cannibalization. Instead, keep an eye on your numbers. Understand where customers are choosing to make purchases and why. And don't worry. You won't be figuring this all out alone. Tapcart can prepare you for the change that occurs in those first few months when existing website customers become app customers. 

“We worked with [Tapcart] to come up with what we thought our forecast was going to be over the first 90 days. But we also internally looked at the split between new versus return on our site. You know, looking at order volume, we don't want to see any deterioration from that. How can we really measure the incremental value of what this app is bringing in? And during the first 30 days, we obviously saw a big wave of consumers leaving the site and going to the app, which we had expected and planned for.”

Here's the thing, though. Website customers defecting to the app, just like Julie said, is something you should expect. And honestly, it's good news for your business. After all, app customers spend more at checkout on an app than on a website or a mobile website. This is true for BÉIS, too. Its app converts 67% higher and boasts a 19% higher average order value.

“You also have to take into account,” Julie said, “that the value of the consumer increases; even if you steal them from the site and you put them on the app, the value of that consumer increases. And so you're making it up, right? So I don't care if I'm putting them on the app if that's the experience they want and that's going to encourage them to spend more with us, that's the route we'll go.”

TLDR: Shifting customers to a sales channel where they shop more frequently and spend more money? Kinda sounds like a good idea. 🤔

So the point here is if you know your customers and are committed to building a platform that speaks to them, channel cannibalization isn’t something you need to stress about. Make an informed decision about whether a mobile app is right for your business, then move forward. After all, you know what will be right for your consumer. 

And besides, the “worst-case” scenario is you build an app with CX so in tune with your customers; some may never shop on the website again. But, as you already know, that’s a good thing. These customers will likely spend more time on your channel, convert at higher rates, and make more purchases with higher AOVs. 

Instead of looking at every channel separately, consider how they work together. So long as cumulative sales are up, an app perfect for your customers makes sense.

As long as you make good choices that align with their wants and needs, channel cannibalization won’t come back to bite you.

Want to see how an app could boost your cumulative sales? Set up a Tapcart demo today.

Your brand’s mobile growth starts today.

Why A Mobile App Won't Cause Channel Cannibalization

When built for your customers, a mobile app helps nurture VIP customers… not cause channel cannibalization.

Alex Rosas

Marketing Manager at Tapcart

Table of contents

Subscribe to On Tap

The best source of information for mobile commerce, sales tips, guides and industry best practices. Subscribe to our newsletter below.
Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.

When an ecommerce company considers adding a mobile app to its brand’s sales channels, cannibalization is one of the most frequent concerns. In other words, there is sometimes a fear that new sales on the app will negatively affect sales on existing channels, namely the website. 

In this article, we’ll tell you everything you need to know about channel cannibalization, including what it is, whether it's worth stressing about, and why companies dedicated to engaging with customers wherever they are don't lose a wink of sleep over cannibalization.

What is channel cannibalization?

Channel cannibalization, also known as channel conflict, happens when a company’s multiple sales, distribution, and communication channels compete against each other for the same customers’ purchases. 

The result many companies are afraid of? When a new sales channel — like a mobile app — is introduced, it will simply shift the same customers to a different platform without attracting new shoppers or revenue. This would lead to reduced profitability since more channels are doing more work to generate the same income from the same customers.

Fortunately, your company doesn't live in a scary business-school vacuum… and introducing a truly excellent mobile app won’t cause your company to literally feast on its own profit margin. 

Here’s the truth.

When executed correctly, a mobile app should bring a company's customers even closer to the brand, boosting engagement and increasing lifetime value (LTV) day after day and year after year. Besides, according to a Pew Research Center survey, about 75% of Americans shop on their smartphones, which is even higher for shoppers under fifty. 

According to Cale Suesskow, Co-CEO of VRG GRL, his team saw a mobile app as an excellent opportunity to bring the brand to its customers' home screens, where VRG GRL could engage with them more frequently. In return, those customers could access exclusive content, discounts, and early drops. Best of all, all that brand-building and engagement could happen in the app and via push notifications, which means the brand did not have to spend a dime on SMS or social media advertising.

In Cale's words: “We thought it would be good to allow our customers to have a way of experiencing the brand a little bit closer. You know, having a brand that you love on your home screen where you can engage with them more frequently and get access to content that might be more exclusive.”

What are the benefits of channel diversification?

In marketing, channel diversification refers to strategically using several platforms to engage with customers. For modern ecommerce brands, this almost always includes a website, email, social media, in-person events and experiential marketing, online advertising, and--more and more frequently--a mobile app.

When leveraged correctly, channel diversification creates a cohesive and integrated approach to connecting with customers that feels seamless, authentic, and always on brand. This consistent customer experience can be tailored so that companies deploy the right marketing strategies to the right customers on the right platforms at the right time. 

Of course, Tapcart customers are no strangers to the perks of channel diversification. Even our most app-happy customers understand the importance of an omnichannel approach to customer retention. For example, Tapcart customer Obvi consistently praises push notifications. Still, its CEO and co-founder, Ron Shah, also understands the importance of creating a cohesive customer retention strategy across multiple channels. After all, together, SMS, email, and push notifications form a customer retention flywheel.

According to Ron, “When you're asking someone or reminding someone to rebuy something, you can't just fire up one email and then expect them to open it and say, ‘Oh yeah, well I need this’ and click buy, right? You need to look at [the communication pillars] as an ecosystem of reminders. At the end of the day, if a customer has placed an order, it's probably a combination of all those [reminders] working together.”

Discover why BÉIS doesn't worry about cannibalization.

Chances are, you've seen stylish luggage and travel accessories company BÉIS all over social media lately. The booming brand is also a Tapcart customer with tons of success on its mobile app. When we sat down to talk to the company’s Director of Ecommerce, Julie Chalker, we learned more about why BÉIS moved forward with a mobile app without stressing about channel cannibalization.

The first thing Julie said? If an app is right for your company, you should do it.

“I think you really have to be confident in your consumers and understand what it is they want. And if [a mobile app] is right for your consumer, ultimately, it will be right for your business.”

And honestly, we agree. 

Yes, we're in the business of selling apps--but before you build one, come talk to us. We can show you what types of brands are seeing the best results with mobile apps and what they're doing to make that success happen.

Oh, and if that sounds like a lot of work, don't worry. It's not. The average Tapcart app takes just a couple of weeks to engineer. After that, it's a plug-and-play situation that’s available right in your Shopify dashboard. What's more, the app is virtually no lift. Our customers can manage their app and customize push notifications in about an hour each week.

Once you decide that a mobile app is right for your business, there's no reason to fear cannibalization. Instead, keep an eye on your numbers. Understand where customers are choosing to make purchases and why. And don't worry. You won't be figuring this all out alone. Tapcart can prepare you for the change that occurs in those first few months when existing website customers become app customers. 

“We worked with [Tapcart] to come up with what we thought our forecast was going to be over the first 90 days. But we also internally looked at the split between new versus return on our site. You know, looking at order volume, we don't want to see any deterioration from that. How can we really measure the incremental value of what this app is bringing in? And during the first 30 days, we obviously saw a big wave of consumers leaving the site and going to the app, which we had expected and planned for.”

Here's the thing, though. Website customers defecting to the app, just like Julie said, is something you should expect. And honestly, it's good news for your business. After all, app customers spend more at checkout on an app than on a website or a mobile website. This is true for BÉIS, too. Its app converts 67% higher and boasts a 19% higher average order value.

“You also have to take into account,” Julie said, “that the value of the consumer increases; even if you steal them from the site and you put them on the app, the value of that consumer increases. And so you're making it up, right? So I don't care if I'm putting them on the app if that's the experience they want and that's going to encourage them to spend more with us, that's the route we'll go.”

TLDR: Shifting customers to a sales channel where they shop more frequently and spend more money? Kinda sounds like a good idea. 🤔

So the point here is if you know your customers and are committed to building a platform that speaks to them, channel cannibalization isn’t something you need to stress about. Make an informed decision about whether a mobile app is right for your business, then move forward. After all, you know what will be right for your consumer. 

And besides, the “worst-case” scenario is you build an app with CX so in tune with your customers; some may never shop on the website again. But, as you already know, that’s a good thing. These customers will likely spend more time on your channel, convert at higher rates, and make more purchases with higher AOVs. 

Instead of looking at every channel separately, consider how they work together. So long as cumulative sales are up, an app perfect for your customers makes sense.

As long as you make good choices that align with their wants and needs, channel cannibalization won’t come back to bite you.

Want to see how an app could boost your cumulative sales? Set up a Tapcart demo today.

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Your brand’s mobile growth starts today.