We as a platform have come forth so far with your sincerity and dedication towards driving more sales. We are thankful to you for using our platform and the fantastic community we are all part of. Our team has been lately working on lot off data analytics over past few months on understanding how do we improve the profit margins of campaigners. Here are few interesting observations we made
Gross Profit of campaigner (P) = Revenue against delivered products(R) – Marketing spend for all orders(M)
P = R- M
To maximise P, R should increase and M should reduce.
R = Revenue of all products * delivery percentage
M = No of products sold * Cost per conversion
- On every 100 prepaid orders received in successful campaigns we are able to deliver products satisfactorily deliver 99.3 products
- On every 100 COD orders we receive, we are able to deliver only 60-85 products post cancellations and returns.
To maximize revenue we need to increase delivery percentage. The industry average return rate for COD for apparel category is 30% compared to prepaid where the delivery percentage is as high as 99.3%.
Why is this return percentage number so high in COD ?
- Customer behavior
- Poor logistics network
Here are certain interesting facts we observed when we did a return rate analysis
- The age group of 18-24 Male had return rate of 39.49% out of (100 COD orders) against 35+ which has only 16.9%
- Certain niches like devotional and local celebrity niches had return rate close to 50%
- The biggest seller birthdays niche has a return rate of 27% over all (prepaid + cod orders)
We had to constantly increase base prices to cope up with new return ratios and we did not like the way it was going. Certain bad niches or certain bad traffic was penalising other campaigners who otherwise should have better results.
“ To keep the platform democratic in its true sense , we decided to give more power to our campaigners by making them true owners of their business. My Dream Store would just be a technology enabler which still helps you growth hack and realize your dreams.”
Here are certain decisions we have taken which will in effect for campaigns launched from June 2nd 2017. All the campaigns in auto relaunch mode will also be converted to prepaid mode on relaunch. COD will enabled only a request basis on signing a separate service level agreement.
Summary of changes :
- Campaigners own their business completely
- We will be removing COD option for all campaigners and will be enabled on a request basis on signing a service level agreement.
- Base prices have been slashed (Tee – 295/ Polos & Full Sleeves – 399)
- MDS commission is only charged on successfully delivered products
- The returned products are invoiced at the cost price with zero margin to campaigner. This price includes the reverse logistics cost.
- MDS will offer a returns management solution which will help campaigners to sell their returns. More details in article below
Service level agreement: Download here!