Nearly a month since the financial epicenters of our country closed for business the e-commerce, etail, marketing world have been deluged by report after report on how e-commerce is booming during these uncertain times.
Via Linkedin, I’ve declared shenanigans on these reports for two main reasons:
1) The SAAS firms pulling these reports together are only able to pull data from the companies they actually work with, and
2) This discussion is so dependent on vertical.
In my role as CMO of Industry West and Favor I am in the unique position of having a real-time view of how COVID-19 and the state of the economy is impacting e-commerce sales for two different verticals: One being high-end furniture and the other being meticulously produced but lower cost home decor, accessories, apparel, jewelry and apothecary.
COMPARING CYBER WEEK (11/27–12/4 2019 to APRIL MTD)
For the purpose of this piece I have looked at both brands — Industry West and Favor — comparing April 1–8, 2020 over November 27-December 4 2019 (the period of our Black Friday and Cyber Monday sales.) This seemed like the most apt comparison as over both periods we have run our best sales of the year (one scheduled and one … well … not)
Without a doubt Favor has seen an incredible uptick in performance in April and is destroying the Cyber Week KPI.
Over the periods reviewed, Favor has seen:
- A 28 percent increase in daily orders,
- A 29 percent increase in daily revenue, and
- A 59 percent decrease in cost per order.
(And that doesn’t include our partnership with Anchal to sell face masks, selling 140 in four hours on April 9, 2020)
Who is to say what we can attribute these amazing improvements in KPI to, but I would imagine there are a number of factors.
- According to several reports ad CPMs are at near-historic lows , which would contribute to the lower cost per acquisition. (See this report from Gupta Media)
- People want to buy things that
A. Make them happy; and
B. Won’t break the bank.
Favor undoubtedly fills that niche.
- While the community element of a brand can at times be overblown (see Outdoor Voices) people do want to feel like they’re part of something. Favor has been around for just a tick over a year and has invested a ton of time in creating a social media experience that creates community and a brand that people can trust.
Now let’s take Industry West
Industry West is a more established brand than Favor (founded 10 years ago) though very much still in startup mode. We are privately held and do not have the bloated employee count typical of many venture-based tech/e-commerce brands of the past five years.
However, Industry West deals in furniture, sees a much higher AOV than Favor and is having to deal with shipping large products into areas dealing with shelter-in-place orders. Industry West also works extremely close with the trade in outfitting restaurants, hotels and offices — sectors that are experiencing incredible hardships right now.
With that, Industry West’s data is a little trickier to unpack.
For April to date over that same Cyber Week period we’ve been looking at, Industry West’s web transactions are down 67 percent.
Trending GoBeyond.ai articles:
However, ad spend is down 74 percent, and our cost per acquisition/order is down 28 percent.
Faced with those last two KPI anyone in their right mind would ask: Well why aren’t you spending more on ads? Well, unlike most companies (furniture or otherwise) turning a profit isn’t just in our DNA but a goal we strive toward every month. While the website does an amazing job of generating online sales for Industry West, equally important is that it generates estimates and sales orders for our sales team. These orders tend to be for larger office and hospitality projects and make the difference between a quarter in the red and a quarter in the black.
With the current state of our economy those larger projects aren’t closing.
So how do we respond? Do we want to be like other popular furniture brands that may have seen an increase in sales this past month but for years have dealt with mounting losses to their bottomline? Or do we want to be like Industry West, which has always taken the time to strike the balance between spend and profitability?
All of this to say, this is a most difficult time we’re in, and there’s no one way, no playbook for a company to handle it. But we’ll continue to be us and strike the balance best we can.