CX - Difference between Up- & Cross-Selling

In today's market, almost all large brick-and-mortar retailers also have a strong online presence.

For small brick-and-mortar businesses, deciding whether or not to spend the time and effort to expand into online sales is less clear - as so often in life, the answer is 'it depends on'

The main difference between ecommerce and retail is that ecommerce is the buying and selling of goods and services online, run up by digital systems, getting better and better, reacting and pro-acting by AI for example.
While retail is the buying and selling of goods and services in physical stores, run by sales person who know (in best case their business) and see and feel how consumers behave or behaved during their last visit - almost similar what we are aiming to do with AI, ML and DL.
Ecommerce offers the convenience of shopping from home, while retail offers the experience of shopping in a physical store with a human touch in best case.

Difference between up- & cross-selling

Whether we talk about ecommerce or retail so many people often don't know the difference between upselling and cross-selling. Sales person in retail do it because they did it and do it because it is self-explaining and natural or mainly because they know they will get a higher bonus and increase the share of wallet. And in digital commerce we do it for the same reasons but as it is virtual it is even more important to understand the difference.
Both strategies are about getting customers to add value to their order. They are similar but differ in what types of products are recommended and how they affect order size and profitability.

What is Cross-selling?

Cross-selling is about getting customers to buy other products or services in addition to the product or service the customer intended to buy. The items offered in cross-selling step or moment often complement each other - a reason to buy both items.

When a customer adds a product to their cart or starts the checkout process, these customer are more or less 'telling' / signaling readiness that they are an active customer and have real interest and an intention to buy. This is where and when cross-selling comes into play - by recommending a complementary product or service - or offering a discount if the customer would buy both products together.

As the customer is already ready to make a purchase at this point, s/he are already passed the biggest hurdle and it is more than logical and easy to understand offering them a compelling offer - as it will be more likely to make a purchase of the complementary product.

For example, if a customer is about to buy a burger, they are significantly more likely to also buy a drink or fries if they get a good deal on those items.

What is Upselling?

Upselling involves persuading customers to upgrade or purchase additional options for the product or service they are purchasing. The advertised product or service usually consists of a more expensive product or additional options that increase the order value - if we take the burger - more tasty, more delicious. 

Similar to cross-selling, upselling usually occurs in the part of the purchase process where customers have added items to their shopping cart or started the checkout process. Because customers have likely already gathered information about the product (the burger), they may have already considered the upgrade or additional offerings (like extra bacon or extra cheese). This should increase the likelihood that customers will opt for the upgrade or add-on product.

Summary

Cross-selling and upselling are typically used in the middle to later stages of the purchasing / conversion funnel, where customers have already shown they are likely to make a purchase. Additionally, both strategies promote products or services that are similar to the original item a customer intended to purchase.

Ultimately, a company's / seller's / brand business model decides whether cross-selling or upselling makes more sense. 

And by the way you will see mixtures of both - but you should know the differences.

Enjoy customer experience :-)