Case Study:

5 Struggles of Growing an Indian Consumer Tech eCom Brand 1982% Y-o-Y & $1.06M in Revenue

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In the Best Case Studies, the Results Speak for Themselves. Here Is a Sneak Peek:

Dashboard - 2020

Taking an eCommerce business in the consumer tech space and increasing their revenue by 20x within a year

✔ Generated Rs.77,882,686 ($1,066,886) in Sales

✔ Increasing Online Store Sessions by 2,284%

✔ Securing an average of 6.99% repeat transactions by increasing the Returning Customer Rate by 151%

✔ Average Order Value went up by 31%

✔ Smoothed out revenues in a cyclical industry

Here Is What You’re Going to Learn In This Case Study:

How to manage inventory orders in a cyclical and changeable environment

➜ Why good reviews and influencer feedback can make or break your launches

How to utilize your video ad campaigns in the consumer tech space to their best potential

➜ What strategies to take to optimize your advertising and appeal to the widest possible audience

Introduction

Here at the AdKing Agency, we like a challenge, so we constantly take on new projects to test our capabilities.

This time, we encountered the biggest one yet. It was a growing Indian consumer tech brand, which was set up in 2019 as an Amazon store. Shortly after that, they began selling directly to customers via their Shopify store.

So we were tasked to do the impossible, to grow a small to medium enterprise just as the largest pandemic in a century was raging. Oh and we also had to help various product launches in the middle of it.

Not only did we succeed, but increased their revenue by 20x, to $1,240,000 in just a year!

This wasn’t easy though, we don’t want to give you the wrong impression. There were sleepless nights and a lot of road bumps.

ECommerce is not always easy, often success takes a lot of effort and even more failed attempts. As such, we want to chronicle the journey so far because there is a lot to be learned from this case study.

This story has it all, inventory issues, product planning issues, competitors with celebrities and reviews greatly affecting performance, etc., and still, we managed to come out on top! It goes to show how experience and knowledge beat pure luck over time.

So, without further fanfare, here are the five main barriers we encountered with helping a growing Indian eCommerce consumer tech business in the year 2020:

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#1 - Cyclical Nature of Products (People Buying The Newest Gear)

Unlike other eCommerce businesses that can rely on similar or even the same, product for years on end, businesses in the tech space live on borrowed time.

No sooner is a new product announced, it has the potential to kill the existing line of products in your inventory.

This has been happening for decades and is known as the “Osborne Effect”, so-called after the Osborne Computer Corporation in the 1980s. Long story short, their computers were the latest and greatest in technology.

However, the founder Adam Osborne, pre-announced several next-generation computer models with a lot of capabilities, just as they were launching a new line of computers. Then, once the public figured out they would only have to wait for a couple of months to get these newer models, they decided not to buy their current generation of products.

So Osborne accidentally ended up with warehouses full of computers which nobody wanted to buy!

Shortly thereafter the Osborne Computer Corporation went bankrupt, and its specter has been haunting all consumer tech businesses since.

The reason is simple, most of the money you make in this industry is due to the early adopters. These are the individuals who want the newest model of a product because they're trendsetters and want to be at the cutting edge.

Due to their overwhelming desire to be first in line, they tend to be more price-insensitive than your average consumer. As such, they’re typically the target audience that will yield the highest ROAS.

The problem though is the early adopters will quickly move to other products. And if you’re not careful, you might be in the midst of an Osborne Effect of your own making.

Early Adopters are not the only clients you can target, but they’re of the few you can target profitably.

Other target audiences look for the best value for money, so they might not be as concerned about having the latest and greatest. But given how they’re price-conscious, the best you can hope for is to break even by targeting them.

This is not to say that they’re a pointless demographic to target. As if you ever end up with too much inventory, you might be able to organize product clearance sales. But this should only be done as a last resort.

Because of this, in order to have positive returns, we needed to cycle old products for newer versions, and there was often a noticeable bump in sales once we did that.

Nevertheless, it’s hard to predict demand. It’s a difficult balancing act for a few reasons:

    It’s easy to overestimate or underestimate how much inventory to hold. You order too much and inventory will be sitting in the warehouse. You order too little and you will have trouble scaling.
    Predicting which products will perform well can be challenging. Some product launches did spectacularly, others did well, but weren’t particularly noteworthy in comparison.
Sales over time - 2020

As you can see on the graph, demand comes cyclically and is related to product launches.

There is an ebb and flow, and in this particular niche in the consumer tech space, the typical life expectancy of the product is 6 months.

A good way to get around the inability to gauge demand and business cyclicality is to focus on pre-sales.

This way, you can get a much better understanding of the level of enthusiasm of your potential audience, and order inventory in proportion to what the demand is.

Our research has also shown that pre-sales typically generate higher ROAS than normal launches.

It makes perfect sense, as pre-sales allow you to hype up the product before there’s any possible negative press. They’re an excellent incognito marketing campaign.

Worth mentioning though is that you need to spread your new product launches evenly throughout the year.

Enthusiastic as early adopters might be, their pockets are not infinitely deep. So if you launch a bunch of products at the same time, one of them will take the limelight, while the others will be sitting in your warehouses, rapidly becoming outdated.

#2 - People Looking For External Reviews & Comparing You With Competitors in the Tech Space

Consumer tech, especially when higher-priced than average, is not an impulse purchase.

People shop around and see what the best options are available before making a decision.

Your advertisements are often thus the catalyst of their purchasing journey, rather than a persuasion tool.

This is especially true because customers will read external reviews, look at what influencers are saying about the product, etc. and you can’t control this independent review environment much.

To make matters worse, initial bad reviews can tank any chance of success - as negative reviews tend to snowball.

The quality of your product must be as good as feasibly possible, as your products will live or die based on reviews.

Once this brand started to get some mixed reviews from influencers we saw a huge decrease in conversion rates.

However, it bears saying that regardless of the quality of your product it will likely always have some negative feedback.

There are two main ways to satisfy user’s concerns, as well as provide them with the info they need to make a purchasing decision:

1. Advertorials: Adverts that are also tutorials, wherein you explain what the product is, how it works, why it’s better quality than the competition, etc.

2. Celebrities as Brand Ambassadors: By getting celebrities as influencers for your brand you can leverage people’s parasocial relationships with them and monetize them.

Nonetheless, this option is very expensive, so we haven’t taken this route. But advertising rivals have used this strategy with great success to create a premium-brand image and increase trust in the brand

#3 - People Going As Far As To Buy the Best Product via Different Ads

A massive mistake advertisers make is assuming they have control over their audiences.

No, you can direct where they might go through clever design, and you can persuade them, but you can’t control what they ultimately end up doing with the information you give them.

We were reminded of this lesson the hard way when we were trying to unload some of our older inventory.

Our advertising was geared towards pushing these older products which we wanted to get rid of. Nevertheless, given that people shop around, they started finding the newer models and ignored the ones we originally suggested to them.

More than half of the people end up choosing a different model than they had initially been advertised.

Worth remembering, upper-tier consumer tech isn’t an impulse purchase, so people compare characteristics and look for an item that best suits their needs, or is simply better quality.

This can cause issues from a stock management perspective, as keeping inventory that isn’t moving costs money. At one point, we even tried directing these target audiences to a specific landing page with the navigation options removed, so they didn’t search elsewhere.

Nevertheless, ROAS and conversion rates dropped drastically, as people were unhappy with being pushed in a direction they were unsure was the best one.

Hence we decided to focus on our bestsellers, and just have our older models occasionally sell in the background, but without actively losing money to get rid of them.

As such, one or two products get 70-80% of the sales even if you focus on advertising other products. This is known as the Pareto Principle, where success attracts success.

However, on Amazon, it’s the other way around, as people are algorithmically directed to buy certain products without them even being aware of it.

This variance between Shopify and Amazon can cause stock management issues, as there are different demands for the products and you can’t focus on selling specific SKUs.

So we were stuck with a harsh realization. If you control the platform itself, and can subtly direct people without them even realizing it’s happening, then you can direct them to buy specific inventory products.

However, if you’re not Amazon, you’re going to have to accept that there’s only so much control you can have over your customer’s purchase journey.

#4 - Making Video Ads Work

When starting with a client, especially if they’re in a different niche, there’s always a period of trial and error.

Every so often, we end up finding a strategy that works disproportionately well for them.

This is why 70% of our prospecting ads for this client ended up using simple images with a single product in them.

It’s not only great from a cost-benefit perspective, as images are cheap to make, and can retain relevance for longer. But they can be repurposed for all manner of projects in different niches.

The remaining 30% of our prospecting ads budget was spent on videos, and it took a while to understand which videos performed best. There are endless variants you can try - lifestyle videos where you show the product being used, review videos, 3D modeling videos, slideshow videos, etc.

We tried them all because you can’t know in advance what type of creative works best with a certain product, or even an industry.

Nevertheless, we soon came to realize most of these creatives underperformed compared to images.

Despite higher production costs and difficulty in producing these advertisements, the videos didn’t translate into higher conversions.

The one exception to this rule was 3D animation. And one look at our advertising rivals would confirm this assessment, as it was the primary means in which they were advertising their products as well.

In these 3D animation videos, the products are rendered in high fidelity and shown to be of superb quality, showcased from various angles. It almost looks like a movie trailer.

While they perform well, the downside is they take a long time to make, and are expensive when compared alongside still image creatives. Nevertheless, the ROI certainly made it worthwhile.

Furthermore, one 3D video could be cut into various creatives.

With a single 3D animated video, you can create 5 to 10 different intros & thumbnails. Thereby making the same ad look like different videos, which allows different segments of people to click on them.

In other words, by reframing the context and splicing different introductions, text, music, etc you can reuse the same animations while making it seem like an entirely new ad.

It’s a similar technique to what you’ll see in old cartoons, wherein the more expensive animations were given a different context and reused over and over.

Despite the high production costs, by virtue of the fact that 3D ads have longer longevity and reusability, they were a successful addition to our marketing strategy.

However, even with our repurposing strategy, ads reach a saturation point, and you then need to come up with entirely new creatives.

The numbers speak for themselves, our new campaigns that incorporate these lessons increased the direct sales attributed to marketing.

Dashboard(2) - 2020

#5 - Figuring Out Which USPs to Focus on With the Creatives & Ad Copy

Part of the issue of selling mass-market products is that they appeal to such a wide audience, that you can easily get lost in the hundreds of potential segments of people who use the products.

For this particular brand, we had various Customer Avatars, each with their specific desires and concerns.

At first, we grouped these Avatars by Unique Selling Propositions (USPs) and tried to address each angle to frame the products individually.

But we quickly realized that while these tech consumer products could be used in all manner of environments - from the office to the gym - and those different users had various utilities for the products, it didn’t make sense to advertise to each Avatar individually.

Yes, an office worker might be happy they’re being included in an ad, but this same creative can also alienate a portion of your audience.

It’s the issue Apple had in decades prior, and still does to an extent, in that people view it as a brand for artistic people who do creative things.

The average person doesn’t view it as a computer brand that you use to file your taxes or produce a report for your office.

This happened because it was initially framed as a “cool” electronic brand, and ostracized the people who engaged in “uncool” activities.

So, rather than artificially separate the different USP, we asked ourselves, what concerns do all of these people share?

Due to the adaptable nature of our mass-market product, it didn’t make sense to focus on hyper-segmentation.

And so, we began addressing the concerns that all the Avatars shared. We did so in a variety of ways, from occasionally using the overly technical language which only experts would understand, to using broad metaphors anyone might relate to.

Your marketing campaign has to be based on your goals and capabilities. It’s easy to overextend yourself, or not be ambitious enough.

By focusing on the broader-level source of appeal for the product, we were able to advertise to all of our target audiences.

Conclusion

Working with a client or having a business in an eCommerce consumer tech industry is a challenge. Unlike many other industries, you constantly have to switch products, even before you might have gotten a proper handle of the data.

However, on the other hand, it’s an industry with great potential for growth, if you know what you’re doing.

And that’s the key, it’s an environment that punishes mistakes severely, by filling your warehouses with unsold goods, potentially cutting your sales because of one bad review, and a myriad of other issues.

So with this in mind, here are the main lessons we learned on our way to achieving 1982% growth in a single year, despite having to contend with a major world health crisis:

  • New product launches are very effective and should be planned out with care. In order to have a successful launch, you have to build suspense and focus on pre-sales. Once you do this, ensure you have enough stock, to be able to scale aggressively but don’t have such a large inventory for it to become overwhelming.
  • When new products are pushed out, expect older models to underperform. People will usually want the newer model. There might be some who want to buy the older ones, but they will be a minority.
  • Product quality needs to be top-notch. If people associate your brand with quality, then a good portion of the initial resistance to purchase your product instantly disappears.
  • External reviews are very important as people research products before buying them. High-grade consumer tech is not impulse purchase territory, so people won’t buy based on your first ad and will make their decision based on the data they find elsewhere.
  • Focus your cold acquisition ads on the best-selling products and don’t try to force ads to work for older models. You don’t control people’s purchasing decisions, and basing your plans around the assumption that you can, will just lead to disappointment.
  • Focus on the creative types that work best. We tried a lot of styles before realizing how, for the Indian consumer tech market, single product images and high-quality 3D modeling videos worked best.
  • Don’t go too narrow with your USPs, but try to appeal to the biggest group of people. If you have a limited budget, you have to make every message work for the widest possible audience. By focusing on the general concerns your potential audiences share, you can strengthen your campaigns and broaden their appeal.
  • Trust should be built and kept high at all times. Your reputation as a brand is essential in the consumer tech space, given how people stay loyal to brands for years to come. A good example of this are mobile phone brands, as people buy phones from companies they know and trust.

And there you have it! These are the main lessons we learned throughout this exciting rollercoaster of a year.

We’re bound to learn many new things going forward, but it goes to show, even if you have an ad agency where it’s normal to have multi-million dollar campaigns, you can still learn new tricks!

Are You Ready to Transform Your eCommerce Store into an 8-figure Powerhouse?

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