Shoptiques

The context

In 2015, e-commerce marketplaces such as Etsy, Farfetch, and GOAT were growing quickly. Shoptiques was one of the newer marketplaces making a name for itself by helping brick-and-mortar women's clothing boutiques around the world come online. The company aggregates their products into a central marketplace, and handles some of the logistics around product photography and shipping. Shoptiques was founded by Olga Vidisheva in 2012. A graduate of Y-Combinator's Winter class of 2012, the company received funding from Andreessen Horowitz, Greylock Partners, Benchmark Capital, SV Angel, and Y Combinator. I joined just as the company closed its Series A funding to help the CEO and Founder, Olga, with a wide variety of initiatives and projects, first as a Chief of Staff and later managing several functions and teams across Data, Business intelligence, and Operations.

Over the course of the next year, we would build out the senior leadership team, hiring a CTO, a Head of Product, and a COO and add structure to defined KPIs, board reporting, and build out a dedicated business intelligence and data science team.

Just a month into my time at the company, it became apparent that retaining buyers and earning their second and third purchase was THE most important issue facing the product and the company.

The challenge

How can we improve our customer retention and earn more repeat purchasers?

The approach

This is the most critical metric for any business and a young digital fashion marketplace is no different. Any growth expert will tell you retention is the key to growing and scaling. Looking at the fastest growing digital products in history, e.g. Facebook, Instagram, Dropbox, etc they have had the highest retention rates among their users. It was critical to solve this for the health and future of the marketplace.

1. To begin understanding buyer behavior we had to look at the data that was available. At the time, we didn't have session activity captured and tied to individual purchasers. We did, however, have an extensive set of order data captured at the point of purchase going back several years, almost for the life of the company.
2. As part of our quantitative analysis, we analyzed every attribute of the first purchase experience available in the record of transactional data.
3. Interestingly, first purchasers who returned to the site and purchased again within a given period of time (we examined 30 day, 60 day and 90 day cohorts) had no distinguishable difference in the first purchase experience from those that purchased once and churned. We looked at the shops they purchased from, order value, shipping estimates, shipping actuals, product category, product mix, dozens of different attributes. This was the case for all but 1 variable.

First time buyers who purchased from multiple boutiques in their first cart returned and repeated at a significantly higher rate than buyers who purchased from a single boutique. We coined this 'cart diversity'.

Cart diversity remained an important variable even when holding total cart value and total items in a cart constant. Meaning, that first time buyers who purchased 2 items worth a total of $100 from 2 different boutiques returned to the site and placed a second order at higher rates than first time buyers who purchased 2 items worth a total of $100 from 1 boutique.

The result

Our key finding was that 'cart diversity' allowed buyers to experience a magic moment with the product. This was a simple but important confirmation.

The stated mission of the company is to enable buyers to 'shop from the world's best boutiques'. The buyers that were actually taking the company up on this promise and using the product to its full potential, unsurprisingly - returned and purchased again.

Identification of the 'magic moment' is a key milestone for every product. There has been significant attention and coverage paid to the magic moment in many iconic technology products. E.g. Facebook's finding that 10 or more friends in 14 days was a key signal of stickiness. Twitter, Pinterest, Dropbox all have shared similar user behaviors that became vital milestones in user activation.

In hindsight, these magic moments appear obvious. They confirm the value proposition or at the very least [a] value proposition. Identifying them is only the start.  

The product recommendation was to infuse this magic moment - the realization that the platform enabled you as a buyer to purchase a pair of boots from a unique boutique in Dallas, a scarf from a shop in Paris, and a skirt from New York City all in 1 checkout experience - into the product and ENSURE it was felt buy every first time purchaser.

This could only occur by building the product experience around this key discovery. Thankfully one of the primary selling points of the platform to local boutiques was that the platform handled photography of the clothing. With a central product photography studio already established, clothing, shoes and accessories from multiple boutiques could all be photographed together. This allowed for natural cross merchandising and, from a buyer's perspective, a convenient way to build a look while reconfirming the value of the platform.