Category: Ecommerce

7 Ways to Scale Up Your Fashion Business

7 Signs You Need a New Business Model to Scale

Do you feel like you really have a handle on things and that you’re ready to take your fashion business to the next level? Before you develop any growth stage plans, find out if you’re actually ready to scale and seven ways to make it happen!

It seems simple enough- implement new strategies or build out your team and watch the additional revenue pour in. In reality, that can’t be farther from the truth. You have to have a solid, healthy business foundation in place or your brand and bottom line can suffer in a big way.

Your fashion business may be ready for the next level if you’ve been seeing success in all of your current sales channels and you know for a fact that you have a compatible (and profitable) product-market fit. That means you’ve proven your products are wanted by consumers and that there’s a sizable enough market to grow your business (i.e. as opposed to a niche that is too small, certain handcrafted goods…).

It’s also time to think about growth when you need support. Maybe you’re a solopreneur and you’re unable to do more with your sales and  because there simply isn’t enough time. This is when you reach the point where doing it all on your own becomes a major obstacle to your success. Maybe you have a small team of 2-3 people but you’re not able to keep up with all of your business’ needs – and forget about outside opportunities!

In both of these scenarios, you’re preventing your business from taking off and you’re actually losing money by not investing in expanding your team. If you can secure the resources and know-how to do it (capacity building, infrastructure, etc.), scale up by hiring a professional team or by taking on a few additional team members. If that isn’t an option for you right now, scale up by hiring outside help from freelance professionals.

Speaking of resources, what are your finances like these days? If you have the cash flow to invest in building out another revenue stream, go for it! But you don’t necessarily need to have tons of cash on hand to be able to grow to scale. You can also scale up with the help of investments from outside investors.

And finally, it may be the right time to scale up if you dream of creating something even bigger than what you’ve already established. So go ahead and chase those dreams (with the proper planning and preparation of course).

7 Ways to Scale Up

1. Expand Your Market Geographically.

Once you’ve reached a certain level of business in your geographical target market, it could be time to move forward into a new region. This can be done through exploring new wholesale accounts in other regions as well as via expanding internationally online. If you do go the digital route, keep in mind that this isn’t as easy as turning on your shopping cart for worldwide shipping. You’ll have to really dive into everything it takes- including regional-specific marketing and advertising, payment types and currencies.

2. Venture into E-Commerce.

After you’ve achieved a strong wholesale business, it’s  a good time to start thinking about selling direct-to-consumer online. A successful e-commerce shop of your own means you’ll be able to enjoy your own well of customer data, more precise branding and increased profit margins.

3. Launch Your Wholesale Business.

The same is true the other way around. If your e-commerce business is solidly established, this may be the time to explore potential wholesale accounts. Think strategically, be selective and remember that it’s better to be in the right stores than in the most stores- maintain exclusivity.

4. Open a Retail Store.

Ignore the news reports insisting “retail is dead” because the industry is only transforming for the better. In fact, for the most part, it’s the bigger brands and big box retailers who are suffering most. Why? Because they continue to present more of the same and they lack a sense of “newness”. If you’re ready to open your own store, by all means go for it. Choose from a single brand or multi-brand shop and think outside of the confines of what already exists. We love what Apolis is doing with their NYC shop. They’ve based their brand and entire business model on social enterprise with production in L.A. as well as places as diverse as Uganda and Peru via advocacy projects.

5. Create a Lifestyle Brand.

You can also scale up via product extensions. Look at your business strategically and assess what should come next. Jason Wu just launched an adjacent product line at New York Fashion Week – branded phone chargers, headphones, Moleskine notebooks and Sharpies!

6. Develop a Diffusion Line.

Target another price point for the chance to reach another group of customers.

7. Get Vertically Integrated.

Start to bring elements of your supply chain in-house to gain short-term and long-term benefits such as greater control over your brand and sourcing and producing for less. You can also create a new revenue stream by manufacturing for other brands!

Need help scaling up? Contact us for personalized support for everything from team building and market entry strategy to brand extensions and CEO advice. Schedule a consultation session today. For DIY international growth strategies and support, check out our e-book, Going Global.

 

 

Why Retail Needs Brick-and-Mortar and E-Commerce to Survive

Why Retail Needs Brick-and-Mortar and E-Commerce to Survive

Whether you rely on your own retail shop or wholesale fashion accounts to thrive, it’s time to stop choosing between brick-and-mortar and e-commerce strategies. At the end of the day, it’s all simply retail and shoppers respond best to a healthy mix of the physical and digital worlds.

Alibaba Makes a Case for Merging Physical and Digital Commerce

Alibaba is probably the largest retailer who has tossed the idea of “omnichannel” right out of the window. And they continue to grow at an impressive speed. They started with the purchase of a major retail brand in China in 2015 followed by a recent $2.6 billion purchase of a Chinese mall operator – complete with 29 department stores and 17 shopping malls across various cities.

Their CEO, Daniel Zhang, has made their plans clear: transform physical stores to reach modern shoppers’ standards using their digital cache of resources (improved inventory management, real-time customer insights and data, digital payments, et al.). The plan is to introduce new customers to the offline shops, while strengthening their overall business. Zhang says: “We don’t divide the world into real or virtual economies, only the old and the new”.

And really, shouldn’t that be the accepted idea of retail strategy across the industry? Brick-and-mortar shops hanging on to old business models and old ways of doing business are really feeling the burn. The same goes for digital businesses that don’t consider what actually happens with customers when they shop offline.

E-Commerce Stores are Opening Brick-and-Mortar Businesses

Don’t let headlines about struggling retailers fool you. Brick-and-mortar still works. Just look at the number of e-commerce shops arriving offline. We’re seeing fully operational stores, short and long-term pop-ups and even offline showrooms all over the country. These brands include Bonobos, MM. LaFleur, Reformation, and Warby Parker.

Bonobos’ Guideshops don’t sell any physical products but they’re the hubs to place online orders, confirm fit, receive style advice, and make easy, in-person returns. MM. LaFleur takes advantage of the best aspects of traditional stores but with a contemporary and digital twist. Their showrooms offer pre-pulled, personalized looks, styling sessions, and accompanying glasses of champagne – an excellent way to bridge shopping with experience. Reformation’s concept is more like a hybrid of both worlds with limited quantities of merchandise and digital screens for online shopping in store. As for Warby Parker, they plan to open at least another 25 shops this year!

Touch Is Only Human

As a species, we’re totally wired for physical touch. Touch is linked to our behavior, emotions, and crucial development. There’s a study that’s widely referenced in retail to translate the science. It was published in the Journal of Consumer Psychology in 2014 and it explains how using a touchscreen interface emphasizes the benefits we experience when we get something new. We psychologically perceive that we own whatever we touch! That means we get the benefits of retail therapy – even before we buy!

The great news is the same research has been correlated to touching other physical objects in stores so every brand has the chance to benefit. Since touch is a natural instinct that brings on positive emotions, it’d be totally irrational to move all of our sales online. We have to embrace technology and the physical world to really maximize the potential rewards. And there are really so many possibilities.

Brick-and-mortar isn’t dead. And e-commerce sales are only one slice of the retail pie. We have about 19 hours a day to create valuable, offline engagement so let’s leverage what we’ve learned to ramp up the real-world retail experience.

Innovation has changed everything and at the same time, nothing at all. Technology, marketing, and shopping habits have changed but we still crave a social experience. Our desire to connect as a community is just as powerful as it was in the height of the department store heyday. Shops got their start as places to gossip, socialize, and relax and today’s stores are still great places to congregate. Digital has only expanded the size of this community, taking it to a worldwide scale.

We still need human touch and in-person interaction… physical stores will always be around. The shops that will survive will use digital to stay connected and improve the ways they engage. They’ll use digital to offer additional brand touchpoints and to deepen relationships with their customers through increased “face time” and additional outlets to share their stories.

You have to be where your customers are. Shoppers may not always make the sale offline but that doesn’t mean their in-store experiences won’t lead them to online sales or digital brand advocacy later on. We have to see retail with a much more holistic view.

Be open to change and nimble to react because if there’s one constant in fashion, it’s CHANGE.

Innovation in Retail: How a CO-OP Website Can Boost Online Sales

Innovation in Retail: How a CO-OP Website Can Boost Online Sales

I was writing a blog post for StartUp Fashion on “How to Launch an E-commerce Shop Selling Your Own Brand and Others” (will update with link when its live), and I had an idea that I never saw in practice, the CO-OP website. We’ve all heard of CO-OPs, like the Park Slope CO-OP where you donate time and get a discount on food, or CO-OP apartments, where everyone in the building owns the building together. And in the last 5 years CO-OP fashion retail stores have become more popular. But, what about the idea of a CO-OP fashion retail e-commerce site?  A place where each brand owned a part of the site and contributed to its growth.

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7 Days to Launching Your First Great Facebook Ad

Facebook is such a powerful advertising tool. It is effective for both fashion retail brands with robust Facebook pages and those who do not have active Facebook pages- as you can drive traffic to your site and bypass the Facebook page engagement. Facebook for fashion startups and growth stage ecommerce businesses can be especially confusing and overwhelming. I’m not sure why the user interface is still so complicated.

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Amazon & Rebecca Minkoff Ditch Cashiers and Sales Associates For New Types of Technology

I’ve always enjoyed walking into a Whole Foods and being able to ask a sales associate to give me qualitative information about products. In fact their experience can largely sway an opinion. Think about ordering food at a restaurant- ever asked the waiter what’s the best on the menu and order that? What if the waiter wasn’t there and every time you ordered something you had to guess what to order? Or have you ever wanted to buy something that went with your outfit, but no one was there to give an opinion? How frustrating.

Taking away key decision making drivers in the sales process leaves a vacuum for a new types of technology to enter. One new technology would aggregate customer feedback and experiences per product and segment based on your friends and similar interest groups. Your friends become the curators. This would go beyond a Yelp or Amazon review system and be curated by similar interest groups.

Another type of technology that will gain traction will be interactive mirrors and social selling apps that allow the customer to take photographs of themselves and share with friends to get instant feedback- these already exist but have yet to take off. In essence, the role of the sales associates preference would be replaced with that of friends and social groups.

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So then what does the role of the store play? I’ve written in the past that customers are looking for a more interactive in store experience (see the article on my talk at the SAP Retail Forum). They want events, curation, and customization. They crave an experience that is personal and tailored to them.

This is the age of individualization not normalization.

The question remains-will these new types of stores gain traction? If it works in tandem with technology that fulfills the social needs and information needs of a cashier or sales associated then yes. If it leaves the customer hanging, then these stores become showrooms where people will go to look and buy at home- a trend we started to see back in 2012.

As we wait to see what happens with in store trends my advice is to continue to think about your customer value proposition. What value do you offer besides selling products on a shelf? Rebecca Minkoff is first to market in her space selling products up to $1,500 in this new concept store. The novelty of it will drive in store traffic- but will it correlate to sales?

Amazon might see a correlation between in app searches and in store buying- leveraging its app as an information hub and who knows, maybe they will be integrating your in store purchase with the nutrition count and syncing it up with your health data. Scary, but totally possible! Lots of possibilities here, but at the end of the day customer purchasing power is king and will dictate if this new concept store experience will last.

Syama Meagher is the CEO of Scaling Retail, a retail strategy firm that offers insight and strategic consulting to fashion and retail brands. To get insight on sales, marketing and merchandising for your business email: hello@scalingretail.com.

Driving Sales this Holiday Season: Black Friday to Christmas

Black Friday is upon us, and as a business that may not have $50,000 for an advertising budget you may want to re-consider what options you have. Not all businesses HAVE to participate in Black Friday or the sales leading to Cyber Monday. Your business is only responsible for catering to your audience. This is not the time to go all out on big campaigns if you are going to be bidding against big retailer budgets. This is time to communicate with your customers and take the time to reinforce your existing relationships.

If you will be participating in Black Friday and other sales this quarter then follow these marketing steps to create cohesive campaigns and see results.

Step 1: Research

Digital Marketing

You are no stranger at evaluating your own digital platforms, but have you really analyzed it? Spend some time looking into your own platforms to see what people are engaging with. Make note of that content. Is there a core user base of followers on your platforms? These people will come in handy. The more organic your engagement the less your digital advertising spend needs are. If you don’t have much organic engagement then you will want to increase your budget for paid marketing and read on.

Facebook Ads:

I’m not a huge fan of Facebook for Facebook pages, but I do think their digital advertising is really smart. Leverage hypertargeting ad placements to get specific with who ends up seeing your ad. Remember: It’s not about the number of people who come to your site, but the number of people who convert (a.k.a. buy things). Since you may not have a lot of time to test advertising to hone in on your Facebook target market, take an educated guess.

As you monitor and pivot your campaigns you may be able to make some tweaks based on what you find. For these ads you will be creating graphic assets to support it. If you need to hire someone fast to do it I suggest Upwork, TaskRabbit and 99designs. Make sure your ad lands on the right shop pages and that you have supporting banner ads to echo your messaging.

Example messages: Free 2 Day shipping Over $50, BOGO (buy one get one free), Free Shipping with Code HOL15.

Twitter Ads:

Twitter has updated their advertising platform to allow for more dynamic product advertising. If you have an active Twitter account then this is a good option for you. If you don’t then I wouldn’t suggest hopping on Twitter right away just to do these ads. The cool thing about Twitter ads is that they allow you to target your competitor’s handles directly. This will allow you to market to your competitor’s audience. If this is a good fit for you, you will need to reformat and change your ad specs to accommodate this platform.

Pinterest:

This is a good platform to use for selling. If you have been on this platform for a while I do suggest taking advantage of dynamic pins. At this moment Pinterest is getting ready to open up promoted pins, so you will have to join the waitlist to be notified when it opens up. When you do engage with dynamic pins and change pricing on your products it will bubble to the top of the feed for your followers.

Tip: Do price changes just for the weekend just to get the visibility.

Instagram:

Until they open up their platform to allow smaller brands to engage in advertising this will remain an organic channel for our purposes. The best way to leverage your organic audience will be through giveaways that generate likes, reposts and tagging.

If you have some time to do research into influencer marketing you may be able to get on the radar of high ranking influencers, but be cautious of high ranking influencers who don’t have much engagement on their platforms. Its too easy to buy followers these days, so if you get awed by an influencers 45k followers see if they have a 5% conversion rate (2,250 likes). To track your sales generated by Instagram use Google short links and alternate the products promoted on your channels by day.

YouTube:

Does your brand have a YouTube channel? Have you thought about partnering with a V-logger (video blogger)? If you have a YouTube channel, you may want to create a short promo video about the holiday season. Maybe it’s a sneak peak into the office and talks about your best selling holiday products. Maybe you are offering ideas on what to give for the holiday. These can be free to produce and be edited very fast. On YouTube make sure you connect the links to your product pages! If you couple this with an ad it could become a place to drive sales for your brand.

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Banner Ads:

Creating a banner ad on your site is a great way to harness your own traffic to convert. Keep your messaging consistent, especially if you have different ad promos running. Purchasing banner advertising on niche market websites is also a great option. Smaller, more targeted publications will also be speaking directly to your customer and they won’t be targeted by larger brands- so do some digging you might find some jewels.

Dedicated Blog Posts/Dedicated Newsletters/:

Similar to the Banner Ads, if you are looking for placement on another parties channel it takes a little time. Do some research into niche markets and find potential partners that your product will make a great fit for. It should be a natural fit, as if their audiences were to say “but of course this product/brand would go in my closet/shelf”. If you do find a great opportunity make sure that you find out the number of people your placement will reach, and what similar advertisements have converted.

Direct Marketing

Getting in front of your customer has to take on a 360o approach. It’s not enough to rely on digital to get the word out. It does take time to create direct marketing assets, find the right outlets, negotiate pricing and get placed. Long-lead publications take 3 months and smaller ones take about 1 month. Keep in mind that the holiday season is the biggest time for ad spending, next to the Super Bowl. The earlier you plan this- the better. While your timing and budget may be limited there are a few things you can do to generate sales.

Pop-up Shops:

Putting together a multi-brand pop up shop can happen very quickly if you already know whom you want to work with. Think about the brands that currently target your same demographic but are selling different kinds of products. Make sure your pricing is aligned, doesn’t make sense to have a luxury brand trying to sell to an entry-level price brand. Check out resources like thestorefront.com to get a read on what spaces are available in your target area. You will need to make sure you have inventory to sell and to make it a cohesive campaign will want to have postcards, stickers for shopping bags and back it all up with some placement on your digital channels.

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Postcards:

Having postcards handy are great for passing out at events, leaving them at local coffee shops, mailing out to your existing customer base and to your trusty list of bloggers and editors. Use a beautiful image of your product and include all of your relevant contact details plus a few key words or sentences about your brand. To get extra oomph out of it have small stickers printed up with a few targeted coupon codes. You can stick them on before an event or marketing opportunity to track effectiveness of bounce back to your site.

Print Advertising: Magazines, Newspapers, and Periodicals:

For a last minute strategy this type of outlet can be the toughest to target. I only suggest using these channels as a supporting campaign to your digital or live events. It’s tough to track the conversions on these ads, and even with bounce back codes the conversions can be quite low. Heads up: most print advertising will have longer lead times for deadlines. If you are running out of time but want to include this type of channel then look to weekly publications since they might still have some openings.

Step 2: Outreach

Since you are on a short timeline you need to find out quickly which paid and unpaid channels you are going to go forward with. Start by reaching out to the paid channels first to get an idea of deadlines and cost. Make sure to get all relevant data on the target market, reach numbers, and what assets you will need to create the best campaign ever.

Example Email:

Hi Cristina!

I hope you are great. I’d like to chat with you about November/December ad placement on Man Repeller. Could you let me know what your deadlines are for submission and your ad rates? Right now I am looking into <insert type of ads >.

Thanks!

Syama

Step 3: Budget

Now while we would love to do everything on our list of potential outreach, we need to optimize for budget and timing. Normally I would suggest we create the budget based on your overall marketing budget for the year, but if this is last minute here is what I suggest. Set aside a minimum of $50 a day on your digital marketing campaigns until you get some solid data on what is working. This should be evident after 7 days of advertising. Once you get a sense of your responsive target market then up your budget and keep trekking.

Creating graphic assets, while echoed throughout this guide, is often overlooked. This aspect can take time and you want to make sure you have the right dimensions and call-to-actions in place. If you aren’t creating these yourself then look to some outside help. A copywriter might also be in your budget if you aren’t the strongest writer. A general rule of thumb your annual marketing budget should be about 15% of your yearly sales. This very much applies to businesses that have tested and gained target insight.

Step 4: Develop Timeline

No matter how much (or how little) time you have a timeline is important. Create an excel spreadsheet with the platforms both paid and unpaid and track it out by week. What channels launch when and what assets need to be finalized by when. Also track your goals and expectations. Are you targeting a niche market? You might have a small outreach but a higher expectation on click throughs and conversions.

Tip on conversion: make sure you have a newsletter pop up ready on your site to capture all these new leads!

Step 5: Develop Assets

Get creative! If you don’t have Photoshop then I suggest using simple graphic design programs like Canva and PicMonkey. Make sure your graphic assets are cohesive, with the same branded fonts and design direction. For this reason it’s best to either have a style guide for consistency purposes or to have the same designer create all your assets and then create the style guide afterwards. Be clear on the dimensions you need and what content can be put on the graphics, or on the text portion of your post. Many ads allow you to create multiple variations to test your image and text, so be sure to take advantage of this.

Step 6: Launch

Whoohoo! You made it. The work is almost over. Remember to be patient and to keep in mind that marketing is a long tail game. The first time you see an ad will you buy it right it away? You might buy it, but you also might not. In many cases it takes up to 3 different social proofs before a potential client converts, hence why I push the multi pronged approach.

Step 7: Monitor & Pivot

Even if your campaign is only 7 days long it’s important to track data on performance. Use your timeline and goal sheet and add your results right next to it. If your campaign is longer, then monitor which ads are performing best and redirect your ad dollars to those ads. Having multiple styles of ads will allow you to compare more effectively. Maybe it’s the image with the model that’s getting the most traffic, maybe it’s the clear product shot. Creating the tests to get the answers you need.

Step 8: Recap

A post-mortem allows you to recap what worked and didn’t work during your campaign. Remember the whole point of doing all of this is to make sales! Over time you will develop the channels that work for your brand but you need to keep records so that next year when you start to plan for Holiday again you can improve your odds of conversions.

Tip: Add a reminder on your calendar for February of the following year to review your recap and start to think about holiday again.

E-M and Now Introducing S-Commerce

Social Commerce (S-Commerce) is the new sales channel brands are looking to exploit. S-Commerce apps blend the ease of mobile sales with the functionality of social networks. It became the new hot platform in China with the launch of Weiden in 2011, a platform that incorporates affiliate marketing with WeChat (like WhatsApp) in a mobile app shopping experience. This new “self-marketing” enables the consumer to share and sell products for a commission. This platform now boasts over 600 million users! There are also a host of shopping app’s in the US that are gaining market share: Spring, MallZee, Keep, StyleKick and LiketoKnowit are harnessing the power of social and mobile shopping. Did you know in the US mobile shopping accounts for over 21% of ecommerce sales? Yes- It’s time to jump on board this trend.

S-Commerce also refers to all the sales you make via Facebook, Instagram, Pinterest and other social networks. As social networks look to help you, the brand, monetize your audiences, they are also asking you to invest money and time into social advertising. So then how do you best decide which platforms to invest in? How to determine which apps are worth your time? It’s time to evaluate your marketing and sales initiatives and determine what experiments to say yes to, and where to draw the line.

S-Commerce App’s

  1. Look to distribute on social selling platforms that have robust marketing initiatives. No point on being on a platform without any users.
  2. Check out the requirements to be a brand on these platforms. Spring has a simple form to sign up: https://www.shopspring.com/for-brands and integrates seamlessly with Shopify, Rakuten and Magento.
  3. Most mobile commerce apps will need you to have an Affiliate Marketing setup. So if you are considering signing up for an Affiliate Marketing platform like Rakuten or Commission Junction, start the process now. These big platforms require you to have a strong front and backend to be able to work within their systems: http://www.cj.com/advertiser/join

S-Commerce Networks

  1. Don’t activate the sales functionality on social networks you aren’t intentionally active on. Example: you’ve linked your Shopify account to Facebook but you don’t even have a Facebook page you are building robustly.
  2. Don’t pay for mobile advertising if your site is not optimized for sales. This means Instagram advertising and mobile advertising for Facebook. Your website needs to be easy to navigate on mobile and the layout has to be intuitive. I suggest checking your site on your phone every few weeks to test out different pages and make sure its shoppable.
  3. Companies like LikeitWantit, Like2Buy, Chirpify and Soldsie have been helping brands create conversation between Instagram and ecommerce. Nothing has risen to the top as the go-to platform, but all of them are worth checking out.
  4. Brands like Dylanlex are creating “Shop Instagram” pages to drive traffic to one destination on a website. http://dylanlex.com/pages/shop-the-instagram This becomes an easy way to drive social images and messaging through a landing page that speaks to the Instagram user.
  5. Become active on networks that are actually ROI producing. Twitter is best for peer-to-peer connections, and Pinterest, Instagram and Facebook take the stage for sales conversion. Take down the platforms you are not using.

Syama’s Crystal Ball

I believe that social commerce will continue to be optimized and therefore become a market driver in sales. Websites from 5 years ago that were not built to be mobile friendly will need to be revamped and brands who are not building their brands through social networks will and are falling behind. You simply cannot and will not be successful with out cohesive messaging on all consumer platforms.

The social selling apps and platforms that will rise to the top will create their own affiliate marketing platforms to help brands onboard. Consumers will be looking to diversify their shopping experience, and will not be satisfied with only being able to find major advertisers on the mobile platforms. It’s redundant to see the same brands everywhere – so social selling apps will need to be more curated.

Brands will continue to shift digital advertising spends from desktop to mobile advertising, and integrations with apps like SnapChat and Instagram will allow for more targeted sales and discounts. Because these brands will need to adopt more sensitive analytic systems to be able to target cohorts on social; imagine if you could target users who like or open your content more than others. The tools to market via social will be akin to the email newsletter as the analytics and tools become more sophisticated.

As a brand the decisions always remain the same. When to adopt new technology, and how much time to spend on it? I remember a time back in 2008 when I was working at Barneys New York and we would meet with big brands, not naming names here, who didn’t see the value in selling online. Now look at where we are, social commerce is here to stay. Pick your platforms, build them out, and engage. Play with the new social selling apps out there and get your business ready to sell in a new way. The new integrations will likely roll out to big businesses then trickle down to API’s for Shopify and Woocommerce users. Sales and marketing strategies will need to adapt to this- so start turning the wheels!

If you are ready to implement new sales, marketing or merchandising strategies to your business then set up a consultation. Email: hello@scalingretail.com Scaling Retail is the consulting firm for retail globally. Specializing in startup and growth stage ecommerce, brick & mortar, and wholesale.

Choosing the Right Shipping for your Business

Lillian Anselmi is part of Modalyst an online distribution platform specializing in dropshipping for independent brands. Their technology allows e-commerce stores to easily add products, receive real time inventory level updates, and automate the ordering process. With their Shopify App, online stores are able to manage hundreds of suppliers from all over the world.

Recently she wrote an article on the Modalyst Blog about choosing the right shipping strategy for your online store and I thought it would be helpful for some of you who may be struggling with this decision. 

If you are an online retailer, you better get your ship together or you will certainly lose customers.

In all seriousness, shipping should be considered as one of the most crucial elements in your online strategy and should be analyzed like any other business decision.  A customer’s experience is influenced as much by the products you are offering as it is by the shipping costs associated with those products.

In fact, a UPS study shows that shipping is the number 1 reason customers abandon their carts. Say what?! Yep, the number 1 reason. So lets get down to business.

How do you determine which type of shipping policy is going to keep your customers interested but not at the expense of your business? Let’s go through some different scenarios.

#1 ) I am an experienced online retailer with a loyal customer base and predictable sales

Firstly, congratulations. Not an easy feat. This allows you some flexibility and creativity with how you want to deal with shipping. This is a great opportunity to offer free shipping. Of course as a business, nothing can actually be FREE, so be sure you are making up for it in another way.

For example, Wild Dill, a successful online baby boutique, offers free shipping when you sign up for their newsletter or follow them on Instagram. While the store will likely lose money on the first transaction, they have captured the customers information to use for direct marketing campaigns making the chances of a return visit very likely.

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Another popular e-commerce site BOUTQS, offers qualified free shipping. For example, if a customer purchases $100 or more in products, they will ship for free. No doubt this incentivizes the shopper to add more items to their cart, so this can be a win-win. However, the key is to know the difference between your average order size and your free shipping threshold. For example, if your average order size is $75 and you need an order of $100 or more to cover free shipping, it seems likely you can get them to buy $25 worth of additional items to reach that threshold.

 

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#2) I sell one of a kind / unique items to a niche demographic

If you are in the business of selling novelty items, you have one major advantage that offers you a guaranteed win on shipping. Due to low competition, you have relative flexibility in your product pricing. This allows you to embed the cost of shipping into your MSRPs and still offer “free shipping” while making sure your costs are covered.

#3) I offer a variety of products / price points to a wide audience

In this case, you may want to be careful. If your orders are unpredictable (in terms of type of products and price points) it will be difficult to devise a strategy that works site wide. In this case, calculated shipping is likely your best option. Try embedding a shipping calculator on your site so the rates are accurate and you can avoid cutting into your margin as much as possible. Otherwise, simply charge what you pay to ship the item. This requires a little more work as you will have to price out the shipping for each item but is well worth it.

#4) I am a specialty store selling similar size products

If you are a jewelry site, for example, you are most likely sending the same size box to each customer. Use this predictability to your advantage and offer flat rate shipping on all orders. Choose a standard box size that fits a certain amount of your average size items so that unless they choose an unusually high amount of products, you should be covered. Customers will like the transparency and easy to understand policy. Don’t forget to always adjust rates based on current pricing outlined by each carrier.

For example, HERE is a great guide on the new pricing announced by USPS for 2016.

 

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In conclusion, there is no one size fits all for shipping policies and it is best to take a deep dive into your customer base and understand what will work for them and for your business.

If you are interested in joining Modalyst, please sign up for a FREE TRIAL here. Modalyst is offering the Scaling Retail community a discount on membership so mention Scaling Retail in your sign up form to be eligible. Email Lillian@modalyst.co with any questions.