How The “Cookiepocalypse” Forced E-Retailers to Pivot Their Business Models

What is a “Cookiepocalypse”?

The initial purpose of “cookies” was to serve you (the consumer) better by way of tracking and understanding user behaviour. One of the challenges faced by e-retailers was fighting through “the noise” of endless recommendations and options on the World Wide Web and thus, cookies delivered a personalised curation of content and recommendations. In January 2024, Google began introducing a new feature known as “Tracking Protection” to 1 percent of Chrome users as a trial run. This initial rollout was intended to test their strategy before the complete removal of third-party cookies later in the year. The onset of the “cookiepocalypse” however, has forced many e-retailers to shift toward the wholesale retailer business model. This shift allows them to bypass some of the limitations imposed by the loss of cookie-based tracking by focusing on bulk sales to other businesses rather than direct consumer sales.

The Marketing Monster

The “Ask App Not To Track” function

For years, the fashion industry has been scrambling to adapt to the new reality of data privacy regulations and the phasing out of third-party cookies. These changes have upended traditional marketing strategies, leaving many retailers grappling with how to connect with consumers in an increasingly restricted digital environment. With the decline of third-party cookies, audience segmentation becomes more challenging, making wholesale a viable alternative for brands looking to maintain effective customer engagement without relying on cookies. However, while some e-retailers have circumvented the “cookiepocalypse” by curating their own brand, it is ultimately a strategy that has backfired because their attempts to bypass the system often leads to less effective marketing and reduced customer engagement. This results in e-commerce brands becoming something akin to an online catalogue.

With the decline of third-party cookies due to stricter privacy regulations and changing data policies, wholesale retailers are facing new challenges in understanding and engaging with their audiences. To adapt to these changes, many are turning to social media sign-ins, such as Facebook login, to maintain consumer connections and gather valuable data.

Return to Physical Retail

Roger Vivier Pop-Up at Singapore’s Marina Bay Sands

As a consumer, when you spend big money you expect some kind of luxury service. Luxury brands have finessed the art of consumer experiences and how to provide the best service for clients. Luxury consumers have come to expect a personalised and immersive shopping experience when visiting a physical boutique. E-retailers like Mytheresa have embraced digital innovations, such as virtual styling consultations and exclusive online events, to create a tailored and engaging shopping environment for their customers. However, until augmentation reality and virtual dressing rooms are properly designed, these online platforms will inevitably open themselves to the risk of high return rates of returns that would also lead to a loss in profits

New Dawn For Digital Advertising

Digital publishers are leading the way in cookie-free targeting and audience segmentation. Many are now offering advanced media planning, buying, and measurement tools, bolstered by the valuable first-party data collected through subscriptions and registrations. Advertisers can access these curated audiences through specialised marketplaces or direct partnerships.

Retail media is also emerging as a major player in advertising. Retailers like Amazon, Walmart, and Target are leveraging their first-party data to offer advertising platforms that provide exclusive audience access. This trend is likely to continue, with a potential shift towards off-site targeting to rival the reach of major players like Google and Meta. However, advertisers should approach retail media with caution to avoid over-reliance and ensure they are not limited by the constraints of these platforms.

The Cookie Crumble

Many brands are shifting to a wholesale model due to changes in the e-commerce market platforms. This shift is driven by the decline of cookies and the increased importance of first-party data. With the end of the cookie era, disabling cookies limits the ability to perform audience segmentation effectively.

In parallel, contextual advertising has gained traction as a viable alternative to third-party cookies. This method, which does not rely on identity tracking, benefits from advancements in AI, enabling more sophisticated semantic understanding and image classification. As technology progresses, contextual advertising offers a robust solution for targeted campaigns, complementing behavioral advertising and addressing gaps left by traditional methods.

As the industry moves away from third-party cookies, embracing these innovative approaches will be crucial. The shift presents new opportunities and promises a more effective advertising landscape, free from the limitations of outdated practices.

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