Huese Fab
Introduction
Hues Fab, an e-commerce brand specializing in unique cotton-printed shirts and kurtis, faced significant challenges in scaling their business. With a low-margin model and a low average order value, profitability was only achieved when their Return on Ad Spend (ROAS) exceeded 9x. To address these issues and enable sustainable growth, a comprehensive strategy was implemented.
Challenges
1.Low-Margin Business:
The brand’s pricing strategy resulted in thin profit margins, making it difficult to reinvest in growth initiatives.
2. Low Average Order Value (AOV):
Customers typically purchased only one or two items per order, limiting revenue per transaction.
3. High ROAS Requirement:
Given the low margins and AOV, Hues Fab needed a ROAS of 7x or higher to remain profitable, placing immense pressure on their advertising efforts.
Challenges
1. Strategy and Solutions
- Margin Constraints: Analyzed product pricing and production costs to understand the limitations imposed by low margins. Explored opportunities for cost optimization and considered potential price adjustments to improve profitability and bring down the profitable ROAS 7x
- Low AOV: Investigated customer purchasing behavior to identify why orders were consistently low in value. Lack of bundled offers or incentives to increase cart size was identified as a key issue.
- ROAS Pressure: The existing ad strategy lacked the necessary precision and targeting to consistently achieve the high ROAS required.
2. Introducing Offers to Increase AOV
- Developed and implemented bundling options, offering discounts on multiple-item purchases to incentivize larger orders.
- Introduced limited-time offers and loyalty programs, encouraging repeat customers and higher spending.
- Promoted seasonal sales events with special discounts on curated collections, driving urgency and boosting AOV.
3. Enhancing Trust on the Website
- Improved the website’s trust factors by adding customer reviews, ratings, and testimonials to product pages, reinforcing quality and reliability.
- Added trust badges and clear return policies to reassure customers during the purchase process.
- Implemented user-generated content features, such as customer photos, to build community and trust
3. Ad Strategy Optimization
- Refined targeting parameters to focus on high-intent customers, using data-driven insights to enhance ad relevance and engagement.
- A/B tested ad creatives to identify the most effective visuals and messaging, increasing click-through rates and conversion rates.
- Leveraged retargeting campaigns to capture abandoned carts and upsell complementary products, improving overall ad performance.
Conclusion
Through targeted interventions in pricing, offers, website optimization, and advertising strategy, Hues Fab overcame the challenges of a low-margin, low-AOV business model. The successful implementation of these strategies not only stabilized their profitability but also positioned the brand for scalable growth in a competitive market.
Conclusion
