As one of the world’s largest email marketing platforms, MailChimp sends billions of messages each week for millions of customers. Chief Marketing Officer Tom Klein says while the company continually improves its products and offers expert advice, it’s always wanted to learn more about the firsthand challenges of operating an e-commerce business.
In May, the company opened its own online store to better understand the day-to-day lives of its business customers. The store, called Freddie and Co., partners with MailChimp users to make limited-edition products. Each participating company pairs with a nonprofit, sells the custom collection through the website, and then donates every dollar to the charity.
While Freddie and Co. is raising money for a good cause, it’s also raising awareness about the trials and tribulations of running an e-commerce business. The experiment is a small operation, but it’s providing valuable insight into how to take products and ideas to the e-commerce market. The store has been open a few months, and MailChimp says marketing remains one of the most challenging parts of operating and growing an e-commerce business.
Marketing remains one of the most challenging parts of operating and growing an e-commerce business.
Behind-the-scenes store operations are being documented on a blog, written by Meg Lindsay, a MailChimp marketing associate who serves as owner of Freddie and Co. Sharing experiences, challenges and lessons learned, Lindsay’s posts have included a recounting of her trip to City Hall for a business license and the process of picking a name and designing a logo.
“Out-of-the-box experimentation is a core value of MailChimp’s marketing efforts,” Klein says, “so running an e-commerce store felt like a powerful way to connect with our customers in the pursuit of learning.”
Even before Freddie and Co., MailChimp saw how thousands of online retailers market themselves through its platform. Klein says many e-commerce businesses that work with MailChimp are sellers of niche and custom-made products. Whether it’s a joy of baking, making jewelry or designing kitschy crafts, he says many people get into e-commerce out of passion for their products.
These small entrepreneurs take to the web to sell their merchandise, but often encounter significant challenges when it comes to the business of e-commerce: Marketing, logistics, distribution, packaging and pricing are often new and confusing concepts to many of these users.
“The business end [of e-commerce] can be challenging for them,” Klein says. “At almost every turn, there’s something new and difficult for them to master.”
Marketing is often one of the most difficult tasks these businesses face. In a web awash with mega-retailers offering unbeatable prices, free shipping and generous return policies, small e-commerce businesses need unique products with compelling brand messages to even be heard.
To be heard, small e-commerce businesses need unique products with compelling brand messages.
Those without a strategy for building their brand simply won’t survive. While it’s now fairly easy and inexpensive to construct websites, design logos and set up an online store, marketing remains the main driver. “It’s not just about pictures and logos,” Klein says — retailers must actively engage their markets.
E-commerce companies need to constantly obtain names and email addresses through social media and point of sale and by offering free information, conducting polls and surveys or holding contests. As a company builds its list, it is essential to send compelling and targeted emails to the customers on that list.
Klein says one of the biggest barriers to growth for small online retailers is failure to capitalize on a list for email marketing. “We see it year after year, week after week,” he says. “If you don’t build your list and send to it, you’re never going to grow.”
Capitalizing on lists
Klein says digital marketing is “democratizing” retail and branding because small retailers can now bring products to market and reach audiences on their own. These e-commerce businesses no longer have to go through “impossible” channels, and can directly engage consumers through social media and email.
Craft beer is an example of a commoditized product market where even small players are attaining success through differentiation and branding. The Brewers Association reported that with more than 4,000 breweries, craft beer has grown to represent 12 percent of the total beer market.
While these local brewers will never individually capture the market share of MillerCoors or Anheuser-Busch InBev, small brewers are building their clientele with effective digital marketing and branding. Klein says small e-commerce players can leverage the power of these digital tools to establish relationships with customers and show “depth and richness” in their brands.
“We’re seeing that in a number of categories,” he says. “They realize they have a ‘craft local’ thing and can use [email] to create a sophisticated brand experience without a big investment or a large marketing department.”
Lindsay says the “What’s In Store” blog has 275,000 subscribers and Freddie and Co. has 5,000 subscribers. One email campaign during the soft launch had a 77 percent open rate and generated almost $2,000 in sales.
Klein says while e-retailers need to use a marketing mix, email remains the most effective tool and offers the best return on investment. He says retailers can use a variety of emails with targeted content to send at different times in the customer lifecycle. MailChimp’s automation allows users to send emails targeting customers based on behavior, preferences and previous sales. Businesses can also use built-in segmentation to create custom rules or trigger a series of emails with a single application programming interface request.
These emails can be used to welcome new guests, remind customers of a cart abandonment, follow up after a purchase, deliver a coupon triggered by shopping behavior or re-engage inactive subscribers.
“Use of these types of emails is continuing to grow,” Klein says. “There’s a lot of automation that makes it possible for you to deliver a highly personalized message at unique points in time, and it’s very effective.”
Aside from the low cost and ease of use, one of the great advantages of digital marketing is the ability to track efforts. Klein says users can see which communications generate store visits, entrances into the cart and purchases. MailChimp offers users an array of analytics and tools ranging from subscriber activity and revenue reports to trend monitoring and interactive graphs. These analytics enable small e-companies to constantly experiment, tweak their campaigns and find the most effective strategies.
“Sending the email is really just the beginning of the story because you can really optimize and fine tune your efforts,” he says. “I think the key is understanding what that customer journey looks like, and being able to say the right thing at the right time.”