How Hearst Magazines leverages a digital membership model to grow its e-commerce marketplace business

Hearst's affiliate and commerce revenue increased year-over-year in 2023, but Shah said the hobbyist and wellness portfolio had the highest growth rate, although he declined to provide exact amounts. He specifically pointed to Popular Mechanics, whose commerce revenue grew 25% last year compared to the previous year. The brands in this portfolio are therefore responsible for continuing to build their market.

Although Hearst sells its products on the market, Shah said there are only about 10 products of this quality and likely to remain within that range. Shah's focus on entering the marketplace is dropship deals with third-party retailers, of which the marketplace currently has 35 deals and thousands of products on a lopsided basis. Masu.

Shah said affiliate commerce deals give publishers an average commission of only 8-10%, compared to 100% for their own products, which Hearst manufactures, sells and ships, while dropshipping deals with third-party brands are satisfying. He said that it is considered as something that can be used as a weapon. Moderate. On a typical dropship deal, Hearst's commission rate reaches his 25-30%, and for high-end items he can earn a little more.

Take Oprah's Daily Shop, for example, which has dropship agreements with some of the brands regularly featured in Oprah's Favorites, the annual holiday shopping guide. Currently, four to five of the top 10 products sold in the store are from third-party retailers, including high-end joggers that retail for more than $150.

“Not only does this increase average order value, but it also makes the catalog feel richer to users accessing our commerce platform, rather than just seeing 10 or 20 products.

Narrowing down to enthusiast brands, which necessarily have a smaller audience than consumer or lifestyle titles, Hearst's conversion rate is slightly down from Hearst's average of 3.5-4% in 2022. But as the product catalog expanded, Shah said, It is no surprise that the market, especially the more expensive products, is included.

But at the same time, the fact that there are higher-priced products on the market (such as the $800 adjustable dumbbell set, which is the best-selling product in the Men's Health market) means that even if the conversion rate is lower, the average order value means that it has increased. Hearst's dumbbell set is a drop-shipped product on its home market, and a single purchase can earn about $250 in profit, while if sold through an Amazon affiliate link, Hearst's profit will be closer to $80, according to Scherer. he said.

“While we can accept a slight reduction in conversion rates, [higher commission rate] Add to that all the other benefits of generating transactions on the platform… You are now starting to build a larger first-party audience. “He has an email address to send newsletters… You can keep them within the ecosystem and you're less reliant on traffic sources like Google,” says Shah.

The power to drive commerce success is also a key driver of Hearst's member services, and finding ways to overlap these businesses has also increased marketplace volume. For example, if you try to sign up for a digital membership, you will now be redirected to Hearst's e-commerce platform.

“That was the main factor in bringing in more traffic, but more importantly, bringing in higher purpose traffic,” Shah said. And even if a portion of your audience eventually abandons the membership journey, they're now seeing all the products in your brand's shop.

Shah said the membership base, which grew 50% year-on-year in 2023, also contributed to the increase in e-commerce revenue, as members' average order value is 50% higher than non-members. Additionally, members may also purchase from the Marketplace more frequently than non-members throughout the year, as members receive exclusive discounts, free shipping, and other perks that incentivize them to purchase from the Marketplace.