The DNA of Winning in eCommerce: Lessons from Profitero’s 2025 Benchmark Study with Mike Black, Chief Growth Officer at Profitero

Transcript

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Link to Profitero's 2025 E-commerce organizational Benchmark report

Lauren Livak Gilbert (00:00):

Welcome to unpacking the Digital Shelf, where industry leaders share insights, strategies and stories to help brands win in the ever-changing world of commerce. Hello everyone. Lauren Livak Gilbert here and welcome back to Unpacking the Digital Shelf. Today we're digging into PROFITERO'S 2025 E-commerce organizational Benchmark report. This is the ninth year running and the theme of this year's report is the DNA of winning in E-commerce. We talk about what sets leaders apart while trying to build out an omnichannel organization. Joining me today is Mike Black, chief Growth Officer from Profitero, and we dive into insights such as e category management, private label, and agentic commerce, and what it takes to truly embed e-commerce into your organization's DNA. Hey Mike, welcome back to the podcast.

Mike Black (01:05):

Hey Lauren, glad to be here.

Lauren Livak Gilbert (01:08):

We just saw each other in Europe and now we're remote in Boston, so all over the world.

Mike Black (01:14):

Yes, the digital shelf travels.

Lauren Livak Gilbert (01:16):

It does, it does. And now you and your team have put out your famous benchmarking report. I can't believe it's the ninth time. That's awesome.

Mike Black (01:26):

And

Lauren Livak Gilbert (01:26):

This one is called the DNA of winning in E-commerce, and you always have some really great insights and themes and takeaways. So before we get into those, can you just kind of set the stage about the report, who you interviewed, where the data came from, all of that?

Mike Black (01:42):

Yeah, so like you said, this is the ninth time we've done this, but the goal of this report and why we launched this, so you imagine nine years ago, where was econ? God that feels like 25, where eCommerce, right. It was a stage where no one had any information on how brands were organizing, how brands were incentivizing, budgeting, and it was sort of a black hole. And so what we launched was this benchmark to start to get our pulse on what are brands doing, how are they budgeting, how are they resourcing, where does e-commerce sit? All those fun questions. And then over time we started, as people became more mature, we said, oh, that was all good. What if we start to look at what leaders do differently? And so a couple years ago we started segmenting out all these responses based on leaders and leaders are defined as having 26% sales growth, 20% market share. And we started to get a good separator. But the key of this whole report is understanding what are leaders doing differently to organize and win on e-commerce. And we get responses from 460 e-com leaders globally. So it's a very robust sample and very representative of maturity and market.

Lauren Livak Gilbert (03:02):

That's awesome. I love that it's global too, because you get a good perspective across multiple teams and it just gives a good, well-rounded approach. So Mike, what is the biggest takeaway from the report this year? Or what is the number one thing that surprised you?

Mike Black (03:21):

I'll give you the biggest takeaway and then I'll give you the biggest surprise. They're a little bit different. There's

Lauren Livak Gilbert (03:26):

Both.

Mike Black (03:27):

There's two here. So the biggest takeaway here is that leaders, as we've identified them, really do a better job into integrating omnichannel into their DNA. That's why we've called the report the DNA of E-commerce because that really is what's happening. And so you ask yourself, well what does that mean? Well, integrating isn't about structure, right? We'll talk about structure, but it isn't about behavior. And there are really three things that stand out to me in this report from what leaders do differently. Number one is they incentivize omnichannel behavior. So we know that humans follow incentives. And even if you structure things differently, it won't change if you don't create incentives. So what we found key highlight for me was that leaders are two times more likely to incentivize cross-functional teams both on sales and digital shelf targets. So things like share of search, digital availability, ranges of reviews, they're building that into personal accountability incentives.

(04:24):

The second thing we found is that leaders are more likely to have mature category management teams that are having omnichannel conversations. So partnership is a real big part of this. The integration is not just happening in the company, but in the relationship with the retailer. And they're working with retailers to collaboratively define things like what does the best in class digital shelf look like? And also they're more likely to be bringing omnichannel insights into the JBP conversation. And then the last thing that stood up is when we think about integration, it's also about flexibility. And leaders are way more flexible in terms of being able to source incremental budget from anywhere for retail media, right? They're less likely to have sacred cows. You can't touch trade, you can't touch brand spend. If it performs, you can get it. And they're actually using the models to self-fund retail media based on an ROI.

(05:18):

So those were kind of the big takeaways. And I'll say the last, the surprise to me is that a small percentage of brands we asked this have tested and proven out ai. I really would've expected that there'd be a big gap between leaders and the wrestling. Yeah, we have tested ai, we've applied it, but it's only about 20%. And what I mean is not that there're just widespread adoption, it's more like they haven't even really tested or proven out much yet. So there's upside here. We can see that there's big room for everyone to build on just leveraging AI more, do all these things much better.

Lauren Livak Gilbert (05:59):

Gosh, I feel like there's so much to unpack in that sentence that you just shared. So the first one, I really love what gets measured, gets managed, right? Shared goals across the board help you marching towards the same thing. I think the call out, and we've talked about this before Mike, around omnichannel category management is really interesting. And I'm wondering were there any insights around, do teams have an e category management team or is their digital team leading the charge around omnichannel category management? Was there any insight around that?

Mike Black (06:30):

Yeah, we did. We had some insights in terms of where e-com category strategy sits. So about 45% of our brands that we surveyed or so had e-commerce category management in their center of excellence basically. So there's a little bit of this kind of shift where brands tend to bring ECAP management into their center and then eventually over time it starts to get dispersed out. And that's something that we see as one of the first, I think, center led activities for a really maturing brand is because there's usually this learning curve gap with traditional category management to pick up. So it's one of the great examples of why centers of excellence are so valued where you may start to get that best practice and content you may say, or retail media say, well, we have that down. I think E category manages now where a lot of center of excellence teams are looking and saying, what is success look like and how do we build it and mirror it and scale it across the organization?

Lauren Livak Gilbert (07:51):

I think one of the callouts for category management or omnichannel category management is that you're then your retailer's best partner, you're partnering with them. That's the why behind this, right? You can't lift and shift what's happening on the shelf online. You need to have different taxonomy, different categorization, different ways of selling. But what that does is it makes you the go-to partner on the retailer side. So I always like to hit on that. Why? Because sometimes people are like, well, why do I need eCom? And I'm like, well, here's an example.

Mike Black (08:20):

Yeah, it's true. And we'll talk a little bit about this later with private label, but it's also like your e category management. When they earn that trust, they can do things defensively to help you, and I think there's benefit for that.

Lauren Livak Gilbert (08:35):

Let's just quickly before we move on, talk about the AI piece. I feel like that's a common sentiment I'm hearing across the brands. There's a lot of noise. Everybody knows it's important, everybody knows that they should be using it, but there's not a lot of understanding of the problems that it can actually solve right now or what they're doing with it. So that is a surprising fact. But also I feel like I'm hearing that from brands. Their legal teams might not be clear, they're unsure what they should be doing. There's a little bit of fear. I don't know, what are you hearing?

Mike Black (09:07):

It is all of those things. It's all of those things. I think if you look at it is things don't seem to get past test and learns. Everybody does test and learns. I've kind of become very skeptical of the term test and learn because you almost have to test and learn knowing that you can scale and what scaling looks like. And I think that's where, so to your point, I think a lot of times there's legal things, but also you think about ai, right? Right now everybody's like, well, we need to be more discoverable in ai. We need to do everything on chat, GBT, we have to do everything. Okay, true. Well, here's what I'll tell you is most companies don't even, they don't have the operational processes, the teams to execute past the test and learn. So you get a test and learn team that comes in and they're like, Hey, I want to try out this new cool.

(09:59):

And then they kick it over and say, okay, I'm kicking it over the fence. While those people have 800 other things they're doing and they're still trying to just syndicate content out. And this is the challenge. So that's why I think the opportunity here is where brands need to, and we'll take a step back and say, alright, let's look at this from a strategy perspective. What must be true for us to do these things? At what point and what must be true about our organization and who will do the work? It gets back to operationalizing and we're seeing, it's like even e-commerce itself is not fully operationalized, nor people are incentivized fully yet. So you can just add AI in it magically is fixed. Yeah, I could talk about this all day.

Lauren Livak Gilbert (10:47):

Yes, a hundred percent. Okay, so let's talk a bit about the democratization of e-commerce. That's always been kind of a key finding. How do you push it back into the organization and integrated into the structure? We were just talking about that. So e-comm can be embedded in the functions. It can be a COE. I'm interested in terms of this year's report. Did you see any new structures come out? I wrote a paper about this, so I'm really passionate about this topic. Or did you see people lean more towards COE or what do you see as the future from an org structure perspective?

Mike Black (11:24):

Yeah, so I think one thing that's very clear in this year's report is that there is no perfect structure. And how do we know that is because about 76% of brands we survey have restructured in the last two years in fact, and 90% of leaders have. So the leaders themselves have restructured and every time we ask this question, they've restructured before. So they're all the time, what does that tell me? There is no perfect structure. It's very iterative. Things are changing, things are fluid, and I actually don't, I think restructuring can be a negative when it's moving the deck chairs around, but I do think there's, as companies democratized, there is a true sense that we're restructuring because we're really starting to figure it out. Maybe we're starting to figure out. So I think nobody's figured it out. That said, we've seen this trend for a while that there was a clear progression in this evolution from the sidecar e-commerce team that's on their own little island reporting to sales or marketing one week to this idea of integrated, where you have the sort of e-commerce sitting in little pieces in every function.

(12:38):

Marketing has got a e-commerce hat on and supply chain, and that's our model. I think your model is awesome for how it points to the future, but just based on every year we just like to see where people are. That's what we did. What really stands out to me and is no matter what has happened, the center of excellence still remains important in all this. And I've always thought that, well, as people integrate, the center of excellence will just go away. And that's not true because leaders, 63% of leaders have A COE and they find it valuable. So what's happening? Well, I think the COE is just transforming into what, almost like not a center of excellence. What we say is center of enablement. As the company branches out, you really need someone sitting in the center saying, what are the right tools? How do we scale this? How do we upskill this? Hey, we haven't figured out catman. Who's going to figure that out and teach it to the catman? That's why it stays. And I think some organizations could make a big mistake and thinking that democratization means, let's cut the COE. You probably heard some companies that have taken steps backwards because they've done that.

Lauren Livak Gilbert (13:54):

Yes, a hundred percent. I think the key point here is no matter your level of maturity, there are some things in commerce that need to remain central. If you don't want to call it a COE, don't call it an enablement hub, whatever you want to call it, but you have to have things like data governance needs to be centralized. If you have multiple countries doing different things with data, you're never going to have one structure depending on the type of business you have. Content needs to be centralized. So I think it's important for the organizations to identify what is it that needs to stay centralized in order to be successful. And that's okay. It doesn't all have to go back into the business. It can.

Mike Black (14:33):

Yeah. And I want to give you, Craig, is what I love about what you did in your awesome research and this idea of evolved integration really starts to get into, let's double click into what we mean by integration because how those cross-functional pieces work together and what enables them is really what's important. And I think you added a ton of value to the conversation by starting to dig into that and seeing all the different ways companies are doing and all the ways they could be doing with AI in the future at the course. So I just want to make sure you get credit for that. Great work.

Lauren Livak Gilbert (15:07):

Thanks, Mike. I appreciate it. I like to say we don't have a line in box problem. We have a how problem, start thinking about the how and that will help solve a lot of the lines in boxes. Okay. Let's talk about data. One of your favorite things, Mike, so it's really hard when it comes to brands figuring out where their data lives. It's mostly siloed. They don't know how to connect it, they don't know how to bring it together. How are you seeing brands evolving their data and analytics strategies and having them be more omnichannel focused to give them insights for action?

Mike Black (15:41):

Yeah, well, so data technology now, it's the number one business challenge after growth. So that's how important it is and how hard it is for brands to figure out. And I think the theme is unification. I think what we see in the survey was about 61% of leaders have implemented data lakes versus 36 of others. So leaders are really thinking about how do we get our data in a centralized place, how we start to harmonize that data. 57% of leaders unify e-comm and brick and mortar reporting versus 35%. So you see this coming together of, well, how do we get our e-com sales and brick and mortar sales together and how do we get our online causals and offline causals? So distribution offline, online might be shared search, how we bring it all together. And they're also using dashboards. So really it's a little bit of a, I'd say a separation of the HASS and the has nots, right?

(16:43):

And the HASS are the ones, the big companies that have a lot of that deep data knowledge, those analysts, those kind of competencies that are able to bring all those data to sets together, harmonize them, and that creates competitive differentiation. And I think what the rest, I'm not saying the rest don't have competitive differentiation, it's just that they're going to have to go about that journey a little bit differently. And I think that's where you still need to have a good ecosystem of tools and technologies that integrate together. So if you can't integrate yourself because you don't have the big analyst team and data science teams, it just means that the tools you do have and the things you lean on should integrate for you on your behalf and really leaning into your partner ecosystem, have some of those integrations that work really well so that if you are in a data asset management system, you can see insights from other tools and vice versa. And I think that's still where the opportunity of unification integration could come even for the ones that don't have those big data science teams.

Lauren Livak Gilbert (17:55):

Do you see that this is an opportunity where AI can really step in and help brands or not just curious?

Mike Black (18:03):

I do. I do. We had a really interesting, a client advisory board last week and we asked them and we said, Hey, do you your, what's your company's strategy for ai? Do you want to build your own AI and just have your partners come get their data AI ready? Or do you want your partners to bring AI in their tool? And they're like, we want both. Of course they do. We want both. And I think part of it is because I do think it really comes down to sort of maturity. The ones that are more mature are like, yeah, we're going to do it our own way, but the others please help bring AI to the table for your own tools. But generally speaking, I do think that AI will make the task of harmonizing data, which is the hardest part, a lot easier. So getting things to match in category branding and then being able to get that data action, it will be a big, but the data harmonization is a big hurdle for most brands,

Lauren Livak Gilbert (19:08):

And you can't even get to the accessibility part until you have the right data. But I do think that AI can help with accessibility across the org too. If you just have one person who's doing data and analytics, they can't be bombarded with 50 different requests. But if you have a data agent that you can ask questions and have a conversation, that totally changes the game. So Mike, you already mentioned private label, and I think this is a really important topic and let's talk about it. It came up several times in the report. I feel like it's a challenge for a lot of brands right now, especially due to price and some of the economic pressures. What are you seeing leaders doing differently to address the challenge of private label?

Mike Black (19:51):

Yeah, so I mean, leaders feel the challenge in a big way. They're twice as likely to see private label as a major threat. Makes sense when you think of our definition of leaders, of brands that are growing but also have big share size, but they're really fighting back in two ways. One is enhanced content. So really using storytelling, trying to control what they can control, which is the content, how they're differentiating through their content, making sure that the worst thing you could do is look like private label because private label tries to look like you, and if you look like private label, that's bad. So they're doing a lot to enhance that. Also, really trying to up their game in terms of SEO to make sure that they're using all the right terms. And you think about that, that's a good way to win against private label because private label brands don't have big teams that are marketing private label or doing that content.

(20:48):

So that should be in the brand's Sprite to win. But there are trickier things. And the other thing that we see them doing is this collaborative conversation with retailers. This gets back to what we were talking about earlier about the power of category management and the power of those JVPs that are omnichannel. So we see that leaders are bringing these insights into the discussions with the retailers and talking openly about what's happening in search. Why is private label getting sort of what we might say, an unfair share of organic search relative to physical store? Is that the right thing for the category? Is that dilutive to the category and actually bring some data to the table to show them that it might not be the best thing for the category. So we have had a couple clients who are doing some really cool things with using share of search in JVPs, showing how the retailer might be flat, like pinning products and organic doesn't change and having open conversations. And when you're spending that much on retail media, those are good conversations to have. And so that's where I think the biggest change. And it gets back to that competency of category management, trying to represent the best interest of the category for the retailer, but also just being an educator for the retailer.

Lauren Livak Gilbert (22:14):

And were the retailers receptive to those conversations when the brands shared that they did that? What was their reaction?

Mike Black (22:21):

Yeah, it's going to vary by some retailer, but retailers, but I would say a couple anecdotes I can tell you is that these kinds of conversations can unlock in terms of the trade is more organic placement, merchandising, placement. So we had a client that was able to have this conversation with the retailer and basically walk away with almost a million dollars of organic merchandising, placement, placement on category pages, on special pages, and really just have an open dialogue to say, alright, we can do things to make sure that we agree with you, your product's essential to the category. We can't overwhelm shoppers with a private labels story only. Let's find a way to make sure that you could be a hero in the category. You guys help us. So there have been examples of that

Lauren Livak Gilbert (23:20):

And those conversations happen during joint business planning. So we've already probably passed that, but get ready for next year and make sure you include them.

Mike Black (23:27):

Yes.

Lauren Livak Gilbert (23:29):

Well, so when I think about private label, I also think about smaller digitally native brands. And I think for a lot of the larger brands that have been around for a while, there's a lot of little ankle biters that are coming in and stealing share. I'm curious from your perspective in the research and your conversations, what are things that some of these bigger, more established brands have that can differentiate them from some of these smaller players who maybe can move faster than some of the big CPG companies of the world?

Mike Black (24:01):

Yeah, I mean I think what they do have is obviously they have relationships with retailers. I think they have an omnichannel way. A lot of the ankle biters are trying to get in retail. They win because there's, so they only have to focus on one thing, winning online, winning in a very niche part of the category and winning online. And they can just focus on those things. Whereas the bigger brands have the luxury of saying, Hey, we have a whole partnership with your retailer. Look at where all the things we invest in here, here, here, by the way, retail media. And we are very important to you winning in an omnichannel world. So I think that does change it. And I think what kind of hurts those big brands is when the retailers aren't willing to have those combined conversations sort of when retailers are fragmented and they're like, well, you got to talk to online person here and the brick and mortar person here, and we don't talk.

(25:07):

They're actually creating fragmentation in a way that is against the advantage of these big brands. So they're not able to bring all these pieces together. And so that's why I think this movement towards omnichannel category management, it can't just be fought by the junior level people I think at the C level, CEOs, heads of sales have to identify retailers and start going to them and saying, Hey, we want to have a different type of conversation with you, and here's on the table, and if you're not willing to do these things, we're not willing to do these things. And that's my kind of call to action to leaders here in this is I think for strategic retailers, CEOs and C-Suites got to have a bigger presence in helping to move the retailers to a certain level.

Lauren Livak Gilbert (26:02):

And it's a true partnership the retailers and brands need to each other to be successful. So remember that when coming to the table.

Mike Black (26:09):

Yep.

Lauren Livak Gilbert (26:10):

Okay. So I feel like we have a e-comm bingo card and we've hit all the buzzwords, we've hit omnichannel, we've hit AI, and we have to talk about retail media. So let's talk about retail media. Any interesting findings around what brands we're focusing on for retail media, social media advertising is definitely an opportunity. Tell us a little bit more about

Mike Black (26:30):

That. Yeah, so I talked a little bit earlier about one of the key characteristics that separate leaders, one thing that doesn't is where does retail media budget set? It's sort of the same story sometimes it's in sales, it's marketing, but what's really different I think is how retailers are able to get funding. And what we found is they're more likely to be able to source incremental dollars from any of the areas, whether it's trade brand marketing, but they're multiple times more likely just to see retail media as a self-funding thing. So if retail media is working, if it's delivering ROI, there's more capacity to get budget. And I think that's where why measurement's becoming so important, having better retailer measurement, having incrementality measurement, having common sources. Measurement is so important for the retail media industry because brands will spend more on that and they will see that as a self-funding program if they can show the ROI, so we call this budget fluidity, being able to say a leaders are more likely to say, Hey, a retailer just launched a new pilot program, we want to test it out. Let's move some money there. Versus other companies that are sort of locked in and they can't be as fluid and they can't test and they can't do new things because their budget's locked in. And I think that's a big competitive advantage for these leaders.

Lauren Livak Gilbert (28:02):

I was just going to say, think about chat GPT. They announced instant checkout, now they have atlas the browser, we know that they're going to be investing in retail media or in media like in ads. What if that happens in, I don't know, let's say June and you've only planned for the year and you can adjust your budget. I just use that as an example because we know this is coming. And if you don't build this out as having flexible iterative planning, budgeting, whether it's retail media, whether it's resources, whether it's content creation, that's not how our industry works, right? Things happen and you have to pivot. So set yourself up for the pivot basically.

Mike Black (28:42):

Exactly. Absolutely. I will say the thing you made too, one kind of interesting thing is I think the other we saw leaders do is retail media, yes, is important. But they did mention that social commerce advertising, social advertising is really, really important more so than others. And I think that just falls this line where I think a lot of brands are looking at how do we influence more of the upper funnel and make sure that we're not going too far down funnel, the point of transaction that we're not building that brand awareness so that people search by brand and come looking for us at the very start. And I think you see this in a lot with a lot of leaders try to think bigger and broader about this ecosystem than just retail media as search transaction.

Lauren Livak Gilbert (29:33):

All right. Well Mike, so many great insights in this report. I really encourage everyone to download it. If you go to profitero.com/resources, you can get access to the report. Also a huge shout out, follow Mike on LinkedIn. He shares all these great insights from the report, from all of his conversations. There's definitely some things you can use to action and go back to your organization and say, Hey, we need to rethink this. So definitely a great read. Such a fascinating conversation, Mike, and thank you so much for coming on the show to share all of the insights from the report. It is a great read and I encourage everyone to download it and go to profitero.com/resources. And as always, don't forget to follow unpacking the digital shelf and thank you for being a member of our community.