Why Using Our Product Less Means We’re Succeeding
I've recently begun my fundraising journey for Denarri, and one thing I've noticed is the tendency for the first question to be “How many DAU do you have?”.
This is a fair question for many startups/industries. Social networking and messaging apps for example, should absolutely be tied to their Daily Active Users, as products like these increase their utility the more frequently users chat, share, create, etc.
Heck, I wouldn't be surprised if Hourly Active Users becomes a metric that some inquire about as messaging becomes more and more frequent.
E-commerce however, works differently. If I’m using a social networking app daily, that means the content is interesting, if I’m using an e-commerce app daily on the other hand, that means one of 3 things:
- I’m very rich and can afford to buy things on a daily basis.
- I’m addicted to online shopping (gotta have that antique Thai toothbrush with shaving attachment!).
- The app I’m using requires me to spend a lot of time/effort in it to accomplish my goal.
#1 and #2 are possibilities, but they make up a very small % of online shoppers. Numerous studies such as this showcase that:
“On average, European shoppers will make 15.2 online purchases this year…while American shoppers will make 15.6 online purchases.”
#3 is the current situation with incumbents, and it’s why we’re optimizing for a low DAU/MAU ratio, as unintuitive as that sounds.
The goal with Denarri’s user experience is for users to get the products they love, at the price they want, as quickly and efficiently as possible. This means that for those who fall under #3, having to use it daily is usually a bad thing.
If American shoppers make 15.6 purchases for the year, or an avg of 1.3 a month, Monthly Active Users is our most important metric by far. As a result, a low DAU/MAU ratio, when done right, means that users are going to Denarri for their monthly purchases (larger denominator), but accomplish their goal quickly (smaller numerator).
As people shop online more frequently, they'll pick the marketplace that did all the work for them and got out of the way, not the one that made them jump through hoops daily to finally find what they wanted.
I’ve lived and breathed e-commerce for years, buying/selling since the ripe old age of 10 to fund my video game addiction. However, I am learning a lot of this as I go along. If you disagree with any of the statements/assumptions I’ve made, I’d love to hear your take! Relatively speaking, I have no idea what I’m doing and am learning a ton every day, and I wouldn’t have it any other way.
