Jet.com and Dollar Shave Club: A Contrast in Marketing Approach

What you can learn from their very different approaches to attract customers

Big news in e-commerce acquisition over the past month: In late July Unilever announced intent to acquire Dollar Shave Club for a reported $1 Billion; A few weeks later Walmart followed with an announcement to acquire Jet.com for a reported $3.3 Billion.

Dollar Shave Club and Jet.com have found very different marketing paths by necessity more than by choice. But you can glean insights from both to apply to your brand.

Jet.com is a general merchandise retailer with vast selection across every category, innumerable competitors, and a relatively new domain. Ranking organically for all these pages given the competitive landscape, no brand recognition, and no domain authority would take a long time to improve ranking. Hence as you’ll see below, they took a predominately pay-per-click approach to marketing. It also seems difficult for a reseller to engage in content/social marketing as there is little to define a brand — we’re cheap? We have lots of stuff?

By contrast Dollar Shave Club has essentially a single product/service that many people don’t know exist, and very few direct competitors. Single product focus allows content creation and huge lifetime value allows lots of viral marketing potential. They also have little opportunity to use search marketing because people don’t search for what they don’t know and there are very few search words to go after.

Jet.com Traffic Drivers

Joseph Schwartz at SimilarWeb posted an analysis of Jet.com’s primary sources of traffic over the past year. It grew web traffic from 6.8 million visits just after its launch in July of 2015, to a peak of 27 million visits in January 2016.

What stands out from the analysis is Jet.com’s increased use of pay-per-click search ads to drive/sustain traffic. It shows how daunting and expensive it can be to rapidly grow traffic to compete online, especially with Amazon.

“When looking at traffic to jet.com in the first half of 2016, 82% of its desktop search visits were from pay-per-click search ads. Compare this to amazon.com, which paid for 9% of its desktop search traffic over the same time period. It becomes evident that Jet struggled to gain market share even for its own keywords.”
– Joseph Schwartz, Digital Insights Analyst and Content Manager at SimilarWeb

Dollar Shave Club Traffic Drivers

Over the past five years, Dollar Shave Club has utilized a different approach to marketing. As you can see in the charts provided by SimilarWeb, DSC’s highest traffic so far this year has been in March, where they saw 4,663,000 visits on desktop and mobile web combined.

Looking at traffic sources on desktop for DSC: 34% of desktop traffic over this period came from Direct, 21% from Organic Search and then Display Ads with 13%. DSC is also strong on email campaigns and e-mail traffic actually doubled social media traffic on desktop, added Joseph Schwartz.

Dollar Shave Club’s marketing approach is a great example of the in-vogue term “Growth Hacking.” This encompasses a range of low cost forms of digital marketing such as quality organic search (SEO) optimization, social media — including content creation and developing a network of influencers for your brand, and building your email contact list for very low-cost marketing communication.

Start With Financial Analysis of Your Marketing Programs

For many brands, having a balanced strategy of pay-per-click advertising and low-cost traffic driving marketing is a prudent way to grow a business profitably.

The first step is analyzing your marketing investment. How much can your brand afford to spend to acquire new customers? How much should it spend to encourage repeat purchases from existing customers?

Netting down all digital marketing investments to two key measures will help direct what tactics to pursue. Those are short-term measure of profitability (ROI) and long-term customer profitability and repurchase rate, or Customer Life Time Value (CLTV).

“Many smart marketers are willing to invest the first year of expected customer lifetime value to acquire new customers in order to build a customer portfolio that generates profit in the longer term. Do this wisely by connecting the cost of marketing to the first purchase value of new customers acquired, and understand the lifetime value by acquisition source.”
– George Michie, Co-Founder, Former CEO and Chief Marketing Scientist at the Rimm-Kaufman Group

Some channels drive traffic that has higher long term value than others. If possible fold in seasonal variation in CLTV as many e-commerce companies find holiday shoppers have lower lifetime value than customers acquired off-holiday.

George continues: Be sure to differentiate “brand” search traffic (your company’s name, domain variants, and trademarks) vs “non-brand” search (general category search phrases or other companies’ trademark names whose merchandise you carry). Recognize value as the margin associated with the initial purchase usually defined as price paid minus cost of goods minus variable cost of sales (pick/pack/ship, commission, credit card fees).

Tailor Marketing Tactics to Customer Journey Map

The next step is defining your target customers and ensuring you are optimizing each form of marketing touchpoint/channel to align to the customer journey. For example, George’s comments also apply to Facebook pay-per-click advertising. Test campaigns and test target segments in Facebook to strike an optimal ROAS.

Growth Hacking tactics are very coveted because they are so cost-effective if done right, but often have a longer ramp up time than pay-per-click. This is because content created is targeting potential buyers who haven’t yet moved to the purchase phase of their journey.

These efforts often support long-tail marketing inquires. These are customers searching/researching but haven’t qualified a brand/product yet. They will be checking their online network of friends and family for potential word-of-mouth quality referrals; reading blog posts; and researching product reviews to narrow a purchase decision.

Rand Fishkin/Moz

Once a consumer has qualified a brand, this is where paid digital media can shine. Paid media — Retargeting Ads, Paid Search links (SEM), and Product Listing Ads (PLAs) help deliver transactions. And in most causes, all the above — paid media and growth hacking — will be necessary to land customers for most brands.

Understanding the purchase journey of your customers and the profitability of your marketing activities at each targeted stage of the customer journey can ensure you have developed an effective digital marketing approach.

About the author: Ken Mowry is a senior digital marketer and e-commerce executive who thrives on successful problem-solving. Ken has a record of simplifying data and utilizing analytics to change culture and create successful digital strategies, making him a trusted advisor to CEOs in start-ups as well as multi-billion dollar market cap organizations. He is a visionary leader accomplished in motivating and managing teams.