Secondary revenue streams are no longer a choice… but a necessity.
As we navigate our way through this pandemic, we can see retailers adapting to new models to safeguard their future within incoming cash. Where alternative revenue streams may have been overlooked previously, retailers are looking to all possible options to generate new revenue.
At the IRX in 2018 I saw Caroline Hazlehurst, of Deliveroo talk about how Deliveroo defined themselves as a provider of Secondary revenue for the restaurants they partnered with. 2 years later and we can see how those Secondary streams are becoming primary streams in the face of very testing circumstances.
There is further evidence of this as we see that Just Eat have added over 8,000 new takeaway partners since the end of February.
Back in 2018, The ‘Beyond The Core’ research commissioned by Webloyalty and the British Retail Consortium (BRC), showed that 67% of UK retail businesses were driving at least a portion of their revenues from secondary sources. The more progressive 18% of players they are deriving at least 20% of their turnover from this non-core source.
While this practice isn’t new, the volatility and uncertainty we are now presented with adds urgency to finding a suitable strategy for secondary revenue. Every retailer should have an online strategy to expand their business and secondary revenue is an obvious way to branch out into other revenue streams. It could also be the way to mitigate firstly against the loss of earnings from the closing of stores and websites amongst safety concerns and secondly the cost of the new normal and the measures that will need to be introduced.
The most obvious, and high-profile, beneficiaries of secondary revenue are the budget airlines whereby ancillary product and services (speedy boarding, seat selection, car parking, insurance, car hire, hotels, lounge passes etc.) contributed between 20-25% of total revenue.
However, we have seen retail catching up with more recent, secondary revenue initiatives having centred on personalising the online experience of the customer, driven through loyalty and reward programmes. Online retailers have been leveraging data to increase the value of customer interactions. Tesco, for example, plans to bundle its grocery, mobile and bank offerings under a new £7.99 monthly scheme called Clubcard Plus, in efforts to drive more loyalty from its most important shoppers.
Clearly much care has to be taken with how retailers introduce any form of secondary revenue-generating initiatives. But if the mounting evidence before suggested that retailers should be looking to expand their sources of revenue, the complexity of the future landscape is now demanding it.
Richard Piper currently heads up Webloyalty’s business development. His responsibility is the company’s territorial growth, attracting and developing key ecommerce partnerships across Europe.