Most retailers are worried about the impact of the new tariff regulations on sales in 2025.
Even for products made in America, many rely on components sourced internationally. This means that many products assembled in American factories will still cost more due to the tariffs on imported components. And for components that have been imported for the last 40 years, it will take years, if not decades, to return manufacturing to the USA, if at all.
At present, one way to reduce the impact of tariffs is by adding digital goods.
If digital goods were historically purchased by shoppers who waited for the last minute to buy their gifts, since COVID-19, and thanks to technological advancements, that is no longer the case. According to research from global branded payments provider Blackhawk Networks, for the 2024 Q4 holidays, 49% of surveyed consumers purchased gift cards, an increase of 5% from 2023. With 56% purchasing digital gift cards, it’s clear that most of the market has gone digital.
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So how can retailers turn to digital gifts in the current economic environment?
Offer Subscriptions to Customers
One way for retailers to profit from digital merchandising is by offering subscriptions to their loyal customers. From Netflix and Hulu to online courses, retailers can profit from the commissions they’ll earn by offering subscriptions to their users. While the streaming companies might face tariffs based on where their content is produced, which might impact what content can be accessed in each country, these tariffs should be smaller than those faced by manufacturers importing physical goods.
For larger retailers, subscription partners also can provide opportunities for broader marketing partnerships. For example, a supermarket chain can partner with an online cooking course to feature in-store products and personnel featured in the online cooking course, or a sporting goods retailer can partner with an online fitness show to also include store products and staff.
Make it About the Experience
Since COVID-19, a lot of experiences have migrated to digital platforms. Instead of going to a cooking class, an art lesson or a lecture, one can now attend these online. The migration of these experiences online means that many more people can attend courses at any time, regardless of their location.
The connection that customers receive from participating in these experiences enhances their relationship with the retailer who facilitated them. After attending an online cooking course sponsored by a local supermarket, most participants would be more likely to shop at that supermarket as long as the course experience was positive. And they’d then be more likely to participate in other online courses offered by that retailer, enhancing their affinity towards it and ultimately increasing the time and the amount that they spend at their brick-and-mortar and online stores.
All retailers can find online experiences to support their business while improving users’ retail experience and engagement. Whether it’s an online reading of a book available digitally, an online fashion event on how to mix and match clothes or an online course with home improvement advice for preparing one’s home for winter, these online experiences will make participants more likely to consider your retail store for their next purchase.
While podcasting generated buzz as a tactic in the recent presidential elections, audiobooks are actually a much larger business. In 2024, global audiobook revenue was estimated to be $7.93 billion vs. $4.02 billion for podcasting, according to research from Statista. In the coming years, the gap in revenue between these two types of audio media is only expected to grow in audiobooks’ favor. Audiobooks are a great example of the value of digital experiences from a product – books – that originally was physical and not digital.
A practical strategy for retailers is to create a bundled offering that combines both physical goods with a digital experience at a fixed price point. For example, a home goods retailer could bundle a kitchen appliance with a year-long subscription to cooking classes, or a bookstore could package bestsellers with exclusive author interviews and audiobook credits. This approach not only helps offset tariff-driven price increases by spreading costs across both physical and digital offerings but also increases customer lifetime value and creates stickier relationships that are harder for competitors to replicate.
Another idea is to identify the top 20% of customers and survey them regarding which digital experiences would complement their most frequent purchases, and then pilot these bundled offerings during the year.
For many product categories, if tariffs are high and customers stop buying, digital goods won’t be able to replace the revenue lost. But given the uncertainty in the market, digital goods can provide a revenue stream that will improve retail performance in 2025.
With over a decade of experience in digital marketing, Daniel Avshalom, VP Media at Zoomd Technologies, is a mobile advertising expert and performance marketing specialist dedicated to enhancing cross-channel campaign efficiency. Combining visionary leadership with creative strategy, he specializes in mobile growth marketing and data-driven decision-making, continuously driving outstanding ROI, user acquisition and growth outcomes for Zoomd Technologies Ltd. (TSXV: ZOMD) (OTC: ZMDTF).
