The shipping cost was the conversion problem
A multi-channel home goods retailer moving into direct-to-consumer could not get its new store to convert. The product price was not the obstacle. What sat underneath it was.
The brief
A new retail channel that would not convert
The client is a leading multi-channel retailer of home goods expanding into the B2C marketplace. The new retail store was live and underperforming.
The category is dominated by big-box retailers, which trains the customer to be extremely price sensitive before they ever reach a smaller brand's site. Leadership read the low transaction rate as a product pricing problem and expected the answer to be a discount.
Discounting into a big-box category is a losing position, and it would have taken the margin the new channel existed to earn.
What we did
Find the real cost the customer is reacting to
Discovery and market study first, on the theory that a price-sensitivity problem is rarely about the number on the product. It was not: shipping cost was the root cause of the low transaction rate.
- Identified shipping cost, not product price, as the root cause of the low transaction rate
- Reviewed the operational infrastructure to find where the shipping model could move without hitting bottom-line profitability
- Built a pricing model with incremental shipping rules rather than a flat discount
- Supported the client through implementation and roll-out
- Provided guidance for managing customer impact through the transition
The numbers
Within 60 days of implementation
| Metric | Change | Reads as |
|---|---|---|
| Sales | +108% | Result |
| Conversion rate | +48% | Result |
| Add-to-cart rate | +40% | Corroboration |
| Average profit margin | Held | Guardrail |
About Gild
Gild Group is a fractional ecommerce team for mid-market Shopify brands. Performance, retention and storefront operations run by one embedded group of senior operators on a fixed monthly retainer. Charleston, South Carolina, since 2014.