Background and Challenge
A specialty apparel brand had recently identified online sales as an increasingly significant part of its business, but realized the segment was underperforming compared to its potential. To improve online sales, the client wanted to attract new and existing customers to the site and increase conversion. However, senior management was concerned about the significant risks that included:
- An inability to communicate its unique value proposition effectively (e.g., broad and unique assortment vs. competitors)
- A lost opportunity to establish online as a growth vehicle for the company
L.E.K. Consulting was asked to design a robust digital commerce strategy that would address the issues and ultimately serve as a significant value creator.
Approach and Recommendations
We first diagnosed the key drivers of online sales:
- Visitor traffic (new and existing customers)
- Bounce rate (percentage of visitors who leave the homepage)
- Conversion to cart
- Conversion to sale
- Average order size
At each of these stages, we evaluated the client’s current performance and identified key gaps constraining higher sales levels. For example, core traffic drivers such as email and paid search were dramatically underperforming. We also found that higher relative shipping fees were creating friction in the cart conversion process and resulting in lost sales.
To address these challenges, we developed a transformational digital strategy.
To increase traffic (sample):
- Improve search utility (SEO) and spend by optimizing key words as identified in the project
- Enhance the email program by leveraging the customer segmentation model developed by L.E.K. for the client, to enable more customized messaging and outreach strategies
To increase conversion (sample):
- Simplify the online shipping fee structure
- Introduce tailored, online-specific promotions and “limited time offers” to encourage basket building
- Provide incremental website features such as product recommendations based on consumer data
We estimated that the recommended digital strategy could increase online sales ~3 times, thus establishing online as a core growth vehicle for the company. Today, the specialty apparel brand has completely redesigned its website and online strategy around the core principles identified in this engagement and our prior studies. The client is in the process of launching its website and is additionally working with us on a variety of other strategic initiatives to enhance shareholder value.