How a Vintage Clothing Online Store Became a 7-Figure Business with Instagram (Without Spending a Dime)

True Vintage, a fast-growing online store for vintage clothes based in the UK, has turned Instagram into a highly profitable sales driver. Here’s how they did it.

“We make sure to have something new on the site every day, so people come back often to see what we have on sale,” says Rory Westbrook, founder of True Vintage. New product listings are a simple but powerful driver for his company’s success.

Rory founded his vintage clothing online store when he was just 18 years old. It’s been profitable from day one. Always self-funded, True Vintage arrived at the seven-figure revenue mark in fewer than three years.

Source: True Vintage / Instagram

The idea for the online store came to Rory when he was going from one vintage shop to another in Shoreditch, one of the hippest neighbourhoods in London at that time, searching for outfits for himself.

“There was no one place to easily find vintage clothing so I started an online store and began selling some of the things and thought would appeal to customers,” he says.

One of the first things he did was start an Instagram account, posting photos of his new products every day. His followers grew organically¹. People starting “tagging” their friends by mentioning them in comment section and their following soared.

“The target market was very young people who never stay away from social media sites. I started getting a real good following within only a week of setting up,” he says.

Competing for Shoppers’ Habits

Contrary to most social media advice² from experts in the field, True Vintage uses Instagram as an active sales channel, not an engagement tool. Instagram works for them because the company has an intimate understanding of how their target market behaves online. Their social media strategy is based on what PwC’s 2018 Global Consumer Insight report called “Competing for Shoppers’ Habits.”

“For today’s shoppers, triggers of mental activity are always close by,” the report says. “Popular ecommerce portals, websites, and social media platforms have developed sophisticated ways to engender superior customer experience, drawing people in and inspiring their loyalty with gratification, value, dependability, and transparency. Repeated again and again, the resulting behavior becomes a routine.”

When True Vintage displays new products every day, they’re tapping into their visitors’ addictive behavior³, fostered by social networks. Companies like Instagram, Twitter and Facebook became a daily (if not, hourly) habit in the lives of their millions of users via a habit-forming mechanism called “variable rewards.”

According to Nir Eyal, author of the book “Hooked: How to Build Habit-Forming Products,” social networks explore our endless desire for three types of rewards: those of the hunt, the tribe⁴, and the self⁵. Rewards of the hunt are at the core of True Vintage’s marketing strategy. As Eyal puts it:

“The need to acquire physical things, such as food and supplies, is part of the brain’s operating system and we clearly wouldn’t have survived the millennia without this impulse. But where we once hunted for food, today we hunt for deals and information.”

A habit is more likely to be formed if it’s performed daily, which is something Rory and his colleagues understood early on.

“We make sure we add new stock on every day, and that’s something we still do today. It’s a way of getting customers back daily, making visitors aware that there’s always something new to look at on the site. That has worked pretty well for us.”
Source: True Vintage / Instagram

Even if visitors don’t make a purchase, every time they visit the site or see a post on Instagram, the act of browsing through different clothing items as a pastime activity can eventually become a habit. In addition, the situations in which the habit starts (browsing while waiting for the bus or taking a break from work, for example) become triggers for that habit. It’s similar to biting your nails when you’re nervous or feeling triggered to have a cigarette when your stomach is full after lunch.

Our brains have evolved to form habits that are performed automatically given a specific trigger. It’s a shortcut that keep us from calculating and pondering every small decision, saving brain energy. A habit cycle constitutes of a trigger, an action and a reward. When it’s time to go to bed (trigger), you brush your teeth (action), and feel a freshness in your mouth after brushing (reward).

Brands have been trying to infiltrate in our daily habits for decades. In fact, the rewarding sensation of freshness in the mouth after brushing your teeth isn’t a necessary by-product of your teeth having been cleaned. It was added by a toothpaste company from the ’50s called Pepsodent as an after-brushing reward in order to increase the likelihood that people would brush their teeth and use their toothpaste. They were encouraging people to form a habit.

While brands like Coca-Cola and Unilever spend millions on advertising to ensure their customers have some type of contact with their brands on a daily basis, True Vintage manages to do the same for free by becoming a constant feature in their target market’s social media feeds. The practice of being present in the daily lives of people creates a type of affiliation between customer and brand. When facing the choice between similar products, customers will usually choose the ones from the brand with which they have more familiarity.

Source: True Vintage / Instagram

Retention and CLV

The familiarity between True Vintage’s brand and their target audience also causes their customers to be more reluctant to switch to a competitor. Customers that have a habit of visiting the store’s website or Instagram account daily will be more inclined to be loyal to it, while other customers might be more influenced by price, promotions and other ephemeral qualities. Because True Vintage customers are very loyal, the company doesn’t need to resort to promotions to increase sales often, other than special deals associated with Black Friday and the holidays.

Stores that are good at attracting first-time customers but have a hard time bringing them back to buy again resemble a leaking bucket, a common simile used to represent companies that lose customers as fast as they attract them. Leaky-bucket companies have a hard time remaining profitable because their Customer Lifetime Value isn’t high enough to sustain their marketing and operating costs.

Customer Lifetime Value (CLV or LTV) is the measure of how profitable the average customer is for a company during the time they are a customer. If the average customer of a shoe store shops there three times in their lives, spending an average of $80 in each purchase and the shoe store’s gross profit margin (profit before marketing spend) is 20%, their profit per customer (or their CLV) is $48⁶. If their cost per customer acquisition (CAC) is higher than $48, they are losing money.

With the increasing costs of online advertising due to the monopoly of Google and Facebook in the space, it’s become harder to maintain a low CAC, hence the importance of working in improving CLV to raise profits.

Higher customer retention translates directly into CLV and profitability. Online stores in our study that have the highest Repeat Purchase Rates are also among the ones with the highest profit margins. Top performing stores in Repurchase Rates have a profit margin much higher than average.

The combination of a sustainable growth channel and an efficient retention strategy will turn any company into a growth machine. It’s no coincidence that some of the most valuable companies in the world are also the best at retaining customers. Google’s search engine is an evolving tool that is so efficient at giving users the results they need that they dominate over 90% of the search engine market, a service most internet users utilize on a daily basis.

Facebook is one of the tech pioneers as far as their understanding of their customers’ habit-forming patterns and ability to leverage them in order to increase retention rates. Apple, in addition to its identifiable brand, “locks” customers in by creating a software ecosystem that makes it hard for their customers to leave for another provider. Amazon Prime is a subscription service aimed at keeping customers loyal to the Amazon brand, and Netflix has a recommendations engine, combined with a vast variety of content, that keep customers hooked on their binge-watching shows.

Key Takeaways

If you feel like social networks, such as Instagram, are difficult marketing channels for ecommerce, you’re not alone. According to our research, social traffic has the worst Conversion Rate for online stores. In addition, organic social traffic is dwindling fast. According to Instagram itself, people miss 70% of what happens in their feeds.

In spite of these difficulties, True Vintage has found Instagram to be a highly profitable sales channel. That’s because their understanding of their target market’s behavior online goes beyond the Instagram feed.

Rory Westbrook’s social media strategy starts from his inventory. From product research to the Instagram feed, everything is executed from a deep understanding of how consumers behave online. True Vintage uses Instagram as both sales channel and retention device that keep their visitors hooked and coming back for more.

About the author: Ramon Bez is a growth marketer who has worked for Compass (former Startup Genome) for two years. He has combined data from both their researches into his upcoming book, Ecommerce Genome, due to launch in December, 2018.

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Footnotes:

[1] True Vintage didn’t acquire their Instagram followers through paid advertising. They posted photos of their items and encouraged people to share their photos with friends.

[2] According to a 2017 study by Compass, conversion rates from social traffic (visitors coming from social sites and apps such as Facebook, Instagram and Twitter) into sales are much lower on average than visitors coming from SEO, SEM or Social Advertising channels. Because of this, brands tend to use social channels as part of their branding strategy, rather trying to convert social visitors into paying customers straight away. The mindset of an internet user on a social site is very different from someone using Google to search for a product, for example. Their buying intent is much higher. This makes the high number of sales that True Vintage generates from their Instagram followers all the more impressive.

[3] The use of these social engineering tactics, pioneered by companies like Instagram and Facebook, and formalized by authors such as Nir Eyal and BJ Fogg, has been facing harsh criticism. Studies suggest that extensive use of social networking services can lead to depression, especially among young people.

[4] Humans evolved to be part of a tribe, so we have a basic need to feel connected and accepted by other humans (even strangers). Facebook, Instagram, Twitter and others give users “variable social rewards” such as likes and comments to keep them engaged with their products.

[5] Rewards of the self has to do with personal gratification. Experiencing things like new sensory stimulation, a sense of mastery and gamification give us pleasure, which are used as rewards by companies that are interested in getting us hooked on their products.

[6] Roughly speaking. There are more complex and accurate ways of calculating Customer Lifetime Value, but I’m simplifying it for the sake of argument. But you can use the simple calculation explained above to get a rough idea. Most companies I met during the time I worked for Compass don’t measure CLV at all.