As e-commerce marketplaces and brands look to stand out in the crowded landscape, offering complementary products through cross-selling is an effective strategy that enhances customers’ shopping experiences and drives growth.
According to McKinsey research, targeted cross-selling can increase sales by 20%.
Additionally, 80% of a brand’s revenue comes from about 20% of its customers while it costs 7x more to acquire a new customer than retain one.
“Cross-selling allows brands to activate any revenue channel in a low-stakes way because it allows them to, ultimately, increase their customer lifetime value,” said Kal Stephen, head of enterprise, lifestyle vertical at Shopify. “The pinnacle of retailing is being able to sell things that are complementary to your brand to build a relationship with a customer that goes beyond the transaction of a one-and-done purchase.”
Although valuable, cross-selling can also be time-consuming and costly, as brands rely on manual processes and invest in inventory from other suppliers.
However, by streamlining parts of the cross-selling process and working with direct-shipping suppliers, brands are expanding product offerings, reducing overhead and finding new customers. These strategies allow brands to build brand awareness for themselves and their partners and improve the customer experience — all while keeping customer acquisition costs low.
“When you look at the overall e-commerce landscape, the brands that are going to thrive are the ones taking advantage of all the avenues available to them, including cross-selling,” Stephen said. “Being able to sell something that is complementary to your brand and capturing that buyer intent is a valuable opportunity.”
How cross-selling facilitated co-branding for Cozy Earth and its sister company
E-commerce brands use cross-selling for long-term full-funnel outcomes, from brand awareness to conversions and retention. For instance, premium bedding and loungewear brand Cozy Earth turned to cross-selling to amplify awareness of its sister company, the skincare and body care label Fount Society.
Leveraging Cozy Earth’s existing web traffic and loyal customer base was an opportunity for Fount Society to build credibility and awareness in the market. While the two brands operate as separate entities under the Cozy Earth umbrella, offering a seamless customer experience that allows shoppers to build a singular cart with complementary products from the two brands helped boost their sales.
Cozy Earth and Fount Society used Shopify Collective to easily sync products, manage inventory across brand umbrellas and have payments automatically sent to the respective storefront. These functionalities meant SKUs, inventory and payments did not need to be manually reconciled across stores and teams.
By cross-selling Fount Society products on the Cozy Earth e-commerce site and vice versa, each brand offers new products to its customers without hampering its existing offerings. The visibility from Cozy Earth’s website boosted brand awareness and credibility for Fount Society in the wellness space. More than 60% of web traffic to Fount Society’s site was driven by co-branding with Cozy Earth.
The co-branding and cross-selling strategy also impacted lower-funnel outcomes for the two brands. Nearly half (46%) of Fount Society revenue originated from Shopify Collective purchases, while 36% of Fount Society sales on Cozy Earth’s site were attributed to new customers.
“By syndicating your product on multiple sites, you’re getting more customer data to understand where your customers are showing up,” Stephen said. “That level of detail is really unique to Shopify and with the data from new customers, brands can remarket and retarget those buyers to increase customer lifetime value.”
How Larroude grew revenue by expanding product categories through cross-selling
Cross-selling does not have to be limited to brands under the same ownership, as demonstrated by the footwear and accessories brand Larroude.
To celebrate its third anniversary, Larroude wanted to diversify its online product range by creating a new shopping destination on its e-commerce site. This new offering, called Colléct, spanned six new product categories — including apparel, accessories, home decor and luxury jewelry — and featured brands that complement Larroude’s shoes.
With Shopify Collective, Larroude sourced pieces from new partner suppliers without investing money upfront on inventory.
The process began with Larroude selecting items from individual brands, followed by the brands creating and sharing a price list featuring the selected items with Larroude. Once the price list was available, the Collective tool automatically synced all product data — including descriptions, variants and inventory — that lived in the suppliers’ Shopify admin page to Larroude’s Shopify admin page. Larroude then added relevant tags and meta fields, as well as assigned the new products to the proper Colléct categories.
Using Collective automations meant that a single business solutions specialist at Larroude successfully managed the marketplace implementation and onboarding for more than 17 brands to launch Colléct. The onboarding includes walking the suppliers through the steps of sharing the handpicked SKUs. To create a visually cohesive shopping experience, Larroude also photographed each item that was added to Colléct.
In the first month after launching Colléct, Larroude saw a 21% revenue increase. Additionally, 82% of Colléct sales were attributed to first-time customers and Larroude saw a 5% boost in average order value.
For Larroude, the success of Colléct created a strong, scalable foundation for the shopping destination and paved the way for new sitewide features and marketing campaigns.
“Selling related products on your site helps you capture buyer intent at the moment of purchase, instead of having the buyer track down the products they want and stitch together multiple experiences,” Shopify’s Stephen said. “The opportunity for brands is to create an elevated customer experience, where all the products that a customer wants are represented in that experience. This gives the customer control over how they want to purchase those products, but also gives a brand the ability to better connect with the customer.”
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